No one had thought US-Vietnam trade turnover would ever reach $80 billion when negotiating the bilateral trade agreement in 1995, said Nguyen Dinh Luong, Vietnam’s chief negotiator for the deal.

Import-export turnover between the two countries was only $450 million at that time, he said. The BTA was signed on July 13, 2000.

Luong said the U.S.-Vietnam Comprehensive Partnership, which set an overarching framework for advancing the bilateral relationship, launched by former U.S. President Barack Obama and former President of Vietnam Truong Tan Sang in 2013, was also an "unimaginable outcome".

Negotiation of the sweeping trade agreement had been particularly difficult, as Luong had only ever negotiated with socialist countries, which had similar institutions and legal systems with Vietnam, he recalled.

"At the time, our leaders had objectivized negotiations to normalize economic and trade ties with the U.S., to fully normalize relations with the country which Vietnam only had normalized diplomatic relations. The BTA would also set the basis for Vietnam’s accession to World Trade Organization (WTO)."

"The biggest obstacle to reaching an agreement was trust. The legacy of the war was heavy and painful. Both leaders and the people were wary of accepting the return of U.S. presence, suspecting a ploy to harm Vietnam, while the Americans, who had lost the war, had doubts about Vietnam’s goodwill," Luong noted.

The BTA was initially scheduled for signature in September 1999, in Auckland, New Zealand, but this did not take place for lack of mutual trust. Negotiators from both countries had struggled to build social consensus for the agreement, particularly for Vietnam, when the people had little access to information on WTO or BTA, and it was taboo for the press to praise the U.S., he said.

Between 1995 and 2000, Vietnam’s negotiators had also extensively researched U.S. history, culture, politics, law, as well as agreements that the U.S. had signed with other countries to understand their negotiation partners.

The BTA’s value was forcing Vietnam to abandon its subsidized, planned and monopolized economy, which had been a mess, for having trivialities such as a two-price system for domestic and foreign consumers of items like electricity, water, or air and rail travel. It gave Vietnam impetus to play by international rules, and reform its legal system to satisfy these requirements, Luong said.

"The BTA conferred to Vietnamese exports to the U.S. most-favored-nation (MFN) status, meaning if any of the two parties gave better concessions, privileges, or immunities to goods of another country, it must also confer them to the other."

"After 25 years, the U.S. and Vietnam had grown from enemies to friends. The economy had been the keystone to this development. As economic growth speeded up, the more we interacted, understood and built trust with each other. We have even gone on to cooperate on issues such as national security and defense."

Geopolitics had also been key in the two countries’ partnership, with Vietnam now playing an important role, a country whose support the U.S. cannot ignore when implementing its foreign policy in Asia, he added.

The way forward

Vietnam should not be too optimistic over the prospects of the U.S. shifting its supply chain from China to Vietnam as a result of the Covid-19 pandemic impacting China’s economy, and U.S.-Sino trade tensions, as profit plays a key role in their decision-making, regardless of U.S. President Trump’s or anyone else’s policies, Luong stressed.

"There will likely not be an exodus of corporations to Vietnam as some people predicted. Talk of the U.S.’s intentions to restructure its global supply chain has only been an idea, I have not seen any concrete policy for this yet."

Vietnam still has challenges to face in order to attract more FDI from the U.S., such as creating a good and transparent legal and business environment for U.S. firms, who do not like to gamble but prefer to have long-term strategies, to invest, he added.

And with each U.S. presidential era comes a different approach to globalization. Under Bill Clinton and Barack Obama, the U.S. had always promoted globalization, allowing their corporations to access the openness and resources of the world economy, a strategy that had brought great benefits to the U.S. economy, Luong explained.

"However, President’s Trumps tenure has brought changes. He believes America should stop subsidizing the world, U.S. corporations should stop moving out to benefit other countries, and that America should come first."

"He does not abandon globalization but his policy is protective. However, the U.S. economy cannot be separated from the global economy. Therefore, President Trump wants to rewrite the rules," Luong said.

"It is not immediately possible for him to fix the rules of the game formed by global economic organizations, so President Trump is trying to change things bloc by bloc, country by country, such as the North American Free Trade Agreement, South Korea, Japan, and soon the U.K. and EU."

At present, Vietnam's biggest problem with the U.S. is the latter’s trade deficit with it, which came to around $40 billion last year. "The U.S. had put forward this issue, but had not been too heavy on us."

Vietnam has been proactive in showing interest in improving the situation, and both sides have set up mechanisms to jointly review trade relations.

"Vietnam is also been actively buying more American goods, from agricultural products, to aircraft. But it would be better to continue improving our business environment to attract investment from America, to help economic and trade relations become more balanced and sustainable," Luong said.

Recent statistics show trade revenue between Vietnam and the U.S. had climbed to $19.5 billion in the first quarter of 2020, with Vietnam enjoying a trade surplus of $12.4 billion, according to the General Department of Vietnam Customs.

Vietnam's trade turnover is likely to have reached $238.4 billion in the first half this year, down 2.1 percent year-on-year, according to the government portal.

Source: VNExpress

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