November 27, 1999 Interview with trade policy expert Craig VanGrasstek, President of VanGrasstek Communications. As with most non-market trade agreements, the BTA between the United States and Vietnam remains in effect for a period of 3 years and is automatically renewed unless abandoned by one of the parties. Moreover, any extension requires the President`s determination that Vietnam satisfactorily extends most-favored-nation mutual treatment to U.S. exports. Under U.S. law, for Vietnam to receive annual NTR status, a bilateral trade agreement must be finalized and approved by Congress, and the president must waive the ”Jackson-Vanik” provision, suggesting that such a waiver would significantly promote Vietnam`s freedom of emigration. Since 1998, the president has granted the annual Jackson-Vanik exemption to Vietnam. Therefore, the conclusion of this agreement and its subsequent approval by Congress would pave the way for annual NTR treatment in Vietnam. This, in turn, would implement Vietnam`s trade commitments. Questions from Vietnamese conservatives. Since the 8th Congress of the Communist Party of Vietnam (VCP) in 1996, disagreements between reformers and conservatives within Vietnam`s 19-member Politburo – the country`s highest governing body – have paralyzed economic decision-making. With the bilateral trade deal with the US demanding that Vietnam step up its reforms and deepen its integration into the global economy, it is not surprising that the Politburo is equally divided over whether the deal should be concluded.

Telecommunication. Under the BTA, Vietnam will allow high-end telecommunications services (such as internet, email and voicemail services) to enter into joint ventures with a 50% cap on US ownership after two years. Internet services have a three-year phase. For basic telecommunications services (such as fax, cellular and satellite services), joint ventures are allowed after four years, with US companies limited to a 49% share. For local, long distance and international voice telephony services, joint ventures are licensed after six years, with a 49% cap on U.S. ownership. Vietnam has agreed that it will consider raising U.S. capital limits when the deal is reviewed in three years.

Obtaining most-favoured-nation status is likely to radically change the product range of Vietnamese exports to the United States. Since the lifting of the trade embargo in 1994, most vietnamese exports to the United States have been accounted for in items that are either duty-free (zero tariffs) or subject to identical tariffs for the most-favoured and non–preferential countries. In the short term, the BTA is likely to increase Vietnam`s exports of labour-intensive manufacturing products, with large differences between most-favoured-nation and non-MFN tariffs. Measured against Vietnam`s main exports to the European Union and Japan (see Figure 2), exports of the following items are expected to increase significantly: clothing, leather goods, footwear, plastic household products and processed foods. (18) Insurance. According to press reports, under the 1999 agreement, Vietnam would have allowed US companies to invest in its insurance sector in two to six years. The introduction phase varied by insurance sector. Details on foreign capital limits are not available. (26) Under the BTA of July 2000, Vietnam grants US companies the right to set up 50 to 50 joint ventures in its insurance sector after three years and wholly owned companies (100 % shareholders) after five years. People-to-people relations between the United States and Vietnam have flourished.

Nearly 30,000 Vietnamese are currently studying in the United States. The new Fulbright University Vietnam, which enrolled its first cohort in the fall of 2017, will help bring world-class independent education to Vietnam. More than 21,000 Vietnamese are members of the Southeast Asia Young Leaders Initiative. The United States and Vietnam signed an agreement with the Peace Corps in 2016. 2. (back) In 1998, a law was passed to replace the term ”most-favoured-nation treatment” in existing and future legislation with the term ”normal trade relations” (NTR). The first term is used in this report for reasons of historical continuity and because of its continued use in international trade relations, including in U.S. bilateral trade agreements. See CRS RL31558, Most-Favored-Nation (Normal-Trade-Relations) Policy of the United States, by [author`s name cleaned]. In addition, Vietnam has signed the Comprehensive and Progressive Agreement for Trans-Pacific Agreement (CPTPP) with 10 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore. The agreement officially entered into force for Vietnam on January 14, 2019. In July 1999, the United States and Vietnam announced an ”agreement in principle” on an FTA, but for nearly a year, Vietnam delayed the conclusion of the agreement due to intense divisions under the leadership of the Vietnamese Communist Party (CPV) (see the next section for an analysis of the reasons for Vietnam`s hesitation).

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