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Prospects and Solutions to Promote Vietnam - US Trade Relations After Vietnam Joins WTO


CHAPTER 3: PROSPECTS AND SOLUTIONS TO PROMOTE VIETNAM - US TRADE RELATIONS AFTER VIETNAM'S WTO ACCESSION

I. Prospects for Vietnam-US trade relations after Vietnam joins the WTO

1. Vietnam's trade development policy in the coming time and the State's viewpoint on the US market

Vietnam's trade policy in the coming time

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Trade policies are policies and regulations that central and local governments use to control, restrict and encourage trade activities in general and import and export in particular.

Realizing the importance of international cooperation, export, import, investment activities ... for the development of the domestic economy, the Government has introduced an open-door policy with many extensive reforms in the economy. The abolition of the foreign trade monopoly, the issuance of policies to encourage exports, the creation of conditions for production to serve exports, and the introduction of many policies to attract foreign investment... have promoted the strong development of foreign trade activities. The development of foreign trade activities, in addition to the meaning of increasing foreign currency revenue for the country, also entails the development of many economic sectors serving it, thereby creating jobs, generating income for workers, and creating opportunities to receive many new modern technologies. Thus, the development of foreign trade activities has become the driving force for the development of many economic sectors.

Prospects and Solutions to Promote Vietnam - US Trade Relations After Vietnam Joins WTO

Vietnam is adjusting its foreign trade policy in a way that further facilitates the development of foreign trade activities while still ensuring economic efficiency, ensuring that the development of foreign trade activities will support the implementation of long-term goals in economic development in general.


The basic content of trade policy in general and foreign trade in particular in the coming time is:

- Develop international trade activities to restructure the economy, increase production sectors with high science and technology content and investment capital, effectively exploit resources to develop and grow the economy rapidly, solve employment and improve the lives of workers.

- Implement the process of trade liberalization from low to high following the general trend of countries in the region and the world. This is to minimize current obstacles in export and import activities.

- Ensure consistency and stability of the legal system, policies and regulations of all levels and sectors in the fields of ASEAN Free Trade Area (AFTA) and Asia-Pacific Economic Cooperation Forum APEC, World Trade Organization WTO.

- Building a suitable trade strategy with integration conditions from identifying key markets, planning appropriate export - import products, implementing appropriate investment policies, organizing an effective export distribution network ...

- Use a combination of exchange rate tools, subsidized interest rates and administrative management measures to regulate trade activities according to set targets. At the same time, it is necessary to pay attention to the separate impacts of each type of tool on import and export activities in order to use it flexibly and appropriately for each type of trade relationship in each development stage.

- Improve the relationship between the legislative and executive agencies in issuing and implementing documents on trade policies. Reasonable harmonization of the relationship between macro and micro management in regulating international trade activities. Avoid the situation where competent management agencies


Not only does it not create favorable conditions, it also causes congestion for businesses' import and export activities.

- Strengthen the implementation of legal documents on trade (strengthen trade legislation). Strictly handle violations of legal regulations on trade management by competent state management agencies and import-export enterprises.

- Ensure a balance between exports and imports to improve the trade balance. Avoid importing goods that can be produced domestically or produced with higher quality. Actively promote the principle of market diversification and multilateralization.

Implementing the above policies, we believe that Vietnam's foreign trade activities in particular and economic and commercial activities in general will have strong developments, contributing to promoting economic development.

The Vietnamese State's View on the US Market

In recent years, the two countries have established constructive and frank dialogue channels between all levels, sectors, people's organizations, social organizations... including many delegations of high-ranking officials of the government, parliament, economy, trade... of the two countries have visited each other, such as the delegation of President Clinton, Secretary of Defense Cohen, National Security Advisor, Ministers of Foreign Affairs... On the Vietnamese side, there were Deputy Prime Ministers, Ministers of Foreign Affairs, Ministers of National Defense, Prime Minister Phan Van Khai and most recently at the end of June 2007, President Nguyen Minh Triet... also visited the United States. In addition, the two countries' senior leaders also have regular contacts at a number of international and regional forums such as APEC 2006 held in Vietnam. Up to now, the leaders of the two countries have agreed to jointly build a stable and long-term relationship between the two countries.

Commenting on the US market, Vietnam believes that: The US market has a purchasing power of 1,700 billion USD per year with a full range of goods belonging to


different grades, is a market with high purchasing power. Vietnam always considers the United States a major trade partner, a potential market for the Vietnamese business community".


2. Prospects for Vietnam - US trade relations after Vietnam's accession to the WTO

Vietnam and the United States have gone through a long journey of more than 30 years to normalize relations in almost all areas as today. From zero, the United States has become Vietnam's largest trading partner with two-way trade turnover in 2006 reaching 8.6 billion USD, an increase of 8 times compared to 2001. Up to now, the United States has had more than 300 investment projects in Vietnam with a total value of 4 billion USD, ranking among the largest foreign investors in Vietnam. The two countries have also signed a series of agreements to strengthen bilateral cooperation, along with a series of visits by delegations of leaders of the Government, National Assembly and ministries and branches of the two countries.

The positive trade activities in 2006, along with Vietnam's accession to the WTO and the granting of permanent normal trade relations (PNTR), are a re-affirmation of the achievements of the BTA and the determination of both countries to bring the Vietnam - US trade relationship to a new level. The strong growth in bilateral trade turnover in 2006, along with the tireless efforts of both the government and businesses, are great premises, demonstrating development potential and creating new opportunities to attract the attention of US businessmen and investors.

It has been more than 5 years since the BTA came into effect (December 10, 2001), Vietnamese enterprises have grown a lot. It can be said that the successes as well as the failures in the trade process between the two countries in recent years have been significant.


The past has brought valuable and necessary lessons for our trade staff and businesses. Doing business with the United States is no longer something distant and strange. We have been quickly integrating and playing fairly with the world's rules. Vietnam's accession to the WTO shows that advantages and difficulties will always go hand in hand. We will look forward to opportunities and proactively strive to turn expectations in developing trade relations between the two countries into reality in the future.

Vietnam - US economic and trade relations will develop strongly if each country knows how to promote its own comparative advantages; advantages due to geographical - economic - political position and economic position of each country in the context of the global economy. Vietnam is in need of the US - a potential market for capital, technology, business and management knowledge. The US is finding many great benefits in Vietnam in terms of consumer market, service market, economic restructuring market and above all, the market where the US can expand its influence in the Southeast Asia and Asia - Pacific regions. World economic experts have high hopes and highly appreciate the development of Vietnam - US economic and trade relations, especially after Vietnam successfully implemented the policy of innovation, trade reform and created an investment environment in Vietnam based on WTO regulations.

In the next few years, our export structure to the United States may not change much. The main product groups are still textiles, footwear, wooden furniture, seafood, oil, coffee, and cashews. After that, with increased foreign investment, the turnover of new products such as electronics, household appliances, mechanical processing, and processed foods will gradually increase, of which electronics may quickly become the main export item to the United States. In addition, Vietnam may be the place where some US companies outsource software.


On June 22, 2007, Vietnam and the United States signed a Trade and Investment Framework Agreement (TIFA). TIFA is often considered an important stepping stone to the establishment of a free trade area through the signing of a free trade agreement (FTA) between the United States and its trading partners. Currently, the United States has signed TIFA with 36 countries and four groups of countries. Although it signed a joint TIFA with ASEAN countries in 2006, the United States still approaches each country in this association separately and has so far signed bilateral TIFA with seven countries: Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore and Thailand, among which it has established a free trade area with Singapore and is in the process of negotiating a free trade agreement to establish a free trade area with Malaysia and Thailand. For Vietnam, the reason the US wants to initiate TIFA negotiations is because the bilateral TIFA will create a forum that allows the US to monitor the implementation of Vietnam's WTO accession commitments and the commitments in the bilateral trade agreement (BTA) signed in 2001. In addition, TIFA also creates an official dialogue mechanism to discuss new plans, in which the ultimate goal could be a free trade agreement.

II. Some solutions to promote Vietnam - US relations after Vietnam joins WTO

Although the diplomatic and trade relations between Vietnam and the United States have been normalized, they still contain many complex factors. For the relationship between the two countries to be truly normalized and to develop further, many issues need to be resolved. This issue does not only require efforts from one side but also requires efforts from both Vietnam and the United States. On the Vietnamese side, the Government as well as businesses are making every effort to promote Vietnam-US trade and truly normalize.


The diplomatic relations between the two countries have since progressed further in world trade relations, improving Vietnam's position in the world economy.

1. Macro solutions


1.1. Continue to improve the legal system and trade policies, and make laws transparent.

Vietnam has joined the WTO, which means we must adapt to the rules of the game in this large and challenging playground. Although since the two countries signed the Bilateral Trade Agreement, Vietnam has also adjusted its laws to comply with this Agreement. However, because the legal systems of Vietnam and the United States have many differences, it is necessary to continue to improve the legal system. Especially at a time when Vietnam has joined the World Trade Organization. This not only protects the rights of Vietnamese enterprises, helps enterprises have a solid legal basis when doing business with the US, avoiding high risks, but also helps US enterprises access the Vietnamese market more easily.

Completing the legal system is a huge, complicated, costly task, involving many state management ministries and branches, requiring unity and concentration. Reviewing the legal system regulating trade activities in general and export activities in particular in Vietnam to eliminate outdated and inappropriate documents, and mechanisms and policies that are no longer suitable also need to be changed, such as the import-export mechanism, should move towards having long-term management regulations in a period instead of having a separate decision each year. Enacting the Law on Competition and Anti-Monopoly to create equal competition for Vietnamese enterprises, including state-owned enterprises and private enterprises, enterprises with domestic investment capital and enterprises.


Foreign invested enterprises to increase the competitiveness of Vietnamese enterprises in exporting goods abroad.

The Vietnamese government also needs to make the Laws transparent and implement its commitments on legal transparency. In recent times, many businessmen and foreign business representatives have complained about the lack of transparency in our legal documents, which hinders their investment and business in Vietnam. Therefore, transparency is more necessary than ever for Vietnam. Transparency not only helps domestic businesses operate smoothly but also helps foreign businesses feel more secure when doing business in Vietnam.

Regarding foreign exchange policy, Vietnam is gradually loosening foreign exchange controls on import-export enterprises to help enterprises be more proactive in business. The State applies an appropriate exchange rate regime for each import-export entity and market area. For goods that need to be encouraged for export, the State needs to apply an exchange rate regime in an encouraging direction. However, this is not easy to do, and it must be accompanied by a mechanism to ensure the implementation of appropriate exchange rate regimes to avoid using exchange rate regimes that are not in line with the set goals.

Vietnam is building export support funds such as export insurance funds... to facilitate export activities. There are still some initial difficulties in implementation, but we believe that these measures will bring about effective export development. In addition to the above measures, we can consider export financing. Export financing is carried out in the direction of determining sponsored items based on comparing the sponsorship results with the costs incurred. When sponsoring exports, it is necessary to clearly define the purpose, method and guarantee mechanism to avoid the situation where businesses rely on, stagnate and do not try to reach out to the world market...

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