Vietnam-US ties beefed up within ASEAN-US cooperation

The United States is energising its multilateral partnerships to advance its shared prosperity in the Indo-Pacific, with ASEAN currently playing a greater role in the country's economic cooperation policy, with Vietnam on the radar of American businesses. The August 24-26 visit to Vietnam by US Vice President Kamala Harris is expected to further strengthen this outlook.

After concluding her visit to Singapore, US Vice President Kamala Harris will then move on to Vietnam. The visit is part of US efforts to boost its relations with ASEAN, considered by the US an important partner in economic, trade, and investment cooperation.

Fostering ties with ASEAN

The Biden Administration issued its Interim National Security Strategic
Guidance in March. The general themes of this strategy are clear: the US will reengage with Southeast Asia as part of its larger strategy giving priority to the Indo-Pacific region.

According to Carl Thayer, emeritus professor at the University of New South Wales, , the US will encourage cooperation for a rules-based international order and a region free and open for commerce. Moreover, the US will support ASEAN centrality and ASEAN’s Outlook on the Indo-Pacific.

“Vice President Kamala Harris’ visit is part of the Biden Administration’s comprehensive engagement with Southeast Asia, and follows the virtual meeting between Secretary of State Anthony Blinken and his ASEAN counterparts, and Secretary of Defense Lloyd Austin’s official visits to Singapore and Vietnam,” Thayer said. “Harris’ visit is unprecedented because she is the first sitting US vice president to visit Southeast Asia.”

Last November, during the Eighth US-ASEAN Summit, senior White House officials met with the leaders of ASEAN’s 10 member states to push the US-ASEAN Strategic Partnership. Both sides have since been working to boost mutual economic recovery.

For instance, the US International Development Finance Corporation (DFC) is actively investing in multiple sectors across Southeast Asia, with more than US$1 billion deployed to date.

The DFC has approved a US$25 million investment to support a regional equity fund, which will invest in businesses introducing innovative technology in Indonesia, Vietnam, the Philippines, and Malaysia.

“These investments will help reduce costs for small and medium enterprises, facilitate trade, and foster innovation,” said the US Mission to ASEAN in a statement on its website. “The DFC has committed to invest US$40 million to help Frontiir (which is a provider of affordable digital access and useful information services) expand broadband access for the people of Myanmar. Another US$5 million project in Cambodia will extend financial services to underbanked populations. The DFC’s qualified pipeline includes investments in telecommunications in Myanmar, education in Vietnam, and renewable energy projects across the region.”

In fact, the DFC is just one among many organisations from the US that have been expanding their relationship with ASEAN economies.

According to the US Mission to ASEAN, the Third Indo-Pacific Business Forum in October 2020 brought together business and government leaders to spur economic innovation and collaboration. US firms signed more than US$11 billion in commercial deals. The US government organised high-level public-private panels on human capital development entitled “Building ASEAN’s Workforce for Tomorrow” and “Sustainable Smart Cities,” as well as a discussion on business outlook and investment opportunities in Mekong countries with all five US ambassadors to Mekong countries.

Recently in April 2021, the US-ASEAN Business Council brought a delegation of leading US companies to Hanoi as part of its fourth food and agriculture (F&A) industry mission to Vietnam. The council’s delegation met with government officials and key stakeholders in the F&A sector to discuss how US businesses could support Vietnam’s post-pandemic recovery and learn the priorities of the Vietnamese government and their plans for the agriculture sector in the new leadership term of 2021 to 2026.

“The business relationship between the US and Vietnam continues to be dynamic. According to the United States Foreign Agriculture Service, US exports totalled US$3.4 billion in fiscal year 2020. Vietnam is also ranked as the US’ seventh largest agricultural export market” said the council’s senior vice president and regional managing director Michael W. Michalak.

With a view to increasing trade and investment in ASEAN, through the ASEAN Single Window (ASW), the United States Agency for International Development has continued working with the bloc to carry out a self-certified system to expedite select traders in securing government certificates of origin and thereafter to qualify for lower tariff rates.

“We have reached the first step of linking the ASW with the United States Customs and Border Protection’s Automated Commercial Environment to share electronic plant inspection certificates (e-phyto certificates) between ASEAN and the United States,” reads a statement from the US Mission to ASEAN.

At present, as many as 90,000 documents are issued by ASEAN and the US annually, totalling about US$13 billion in two-way trade revenue. Expansion of the ASW allows for increased intra-ASEAN trade and will eventually lead to streamlined trade with the United States once both sides’ electronic commercial systems are linked.

The US began engaging with ASEAN as a dialogue partner in 1977, and has cooperated with the bloc ever since. Starting in the early 1990s, development cooperation increased dramatically through the launch of economic programmes focusing on trade and investment, technology transfer, and education.

Vietnam a big trade and investment partner

On July 23 the United States Trade Representative’s (USTR) office said it had determined that no tariff action against Vietnam was warranted after the State Bank of Vietnam (SBV) agreed with the US Treasury not to manipulate its currency for export advantage.

Specifically, the office issued a formal determination in the Vietnam Currency Section 301 investigation reflecting the agreement reached earlier between the Department of the Treasury and the SBV.

The determination finds that the Treasury-SBV agreement provides a satisfactory resolution of the matter subject to investigation and accordingly that no trade action is warranted at this time. The USTR, in coordination with Treasury, will monitor Vietnam’s implementation going forward.

“I commend Vietnam for its commitment to addressing US concerns with its currency practices, setting an important example for the Indo-Pacific region. American workers and businesses are stronger when our partners value their currency fairly and compete on a level playing field,” said US Trade Representative Katherine Tai.

“Going forward, in coordination with Treasury, we will work together with Vietnam to ensure implementation, and we will continue to examine the currency practices of other major trading partners.”

In the 26 years since the US and Vietnam established diplomatic relations, bilateral trade has skyrocketed from almost nothing in 1995 to US$90.1 billion in 2020, and US$62.5 billion in the first seven months of this year. Vietnam is now the US’ 10th largest trading partner worldwide, ahead of India and France.

Earlier this year, Vietnamese Deputy Prime Minister Pham Binh Minh held phone talks with US Secretary of State Antony Blinken. Both sides agreed that the bilateral ties have advanced across fields over the past years, vowing to cooperate in deepening the ties “in a more comprehensive manner, with a focus on economy-trade-investment, overcoming the consequences of war, enhancing maritime capacity, fighting COVID-19 and adapting to climate change.”

Blinken affirmed that the US continues attaching great importance to their relationship with Vietnam.

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi said that he expects US-Vietnam trade and investment ties will further thrive in the time to come.

“As major investors here, American investors are optimistic about business prospects in Vietnam and we support efforts to create a modern economy that will attract future investment and high-paying jobs for Vietnamese people,” Sitkoff said.

According to the Vietnamese Ministry of Planning and Investment, as of July 20, US investors had registered US$9.68 billion in Vietnam across nearly 1,120 projects, making the US the 11th largest foreign investor in the Southeast Asian nation. In the first seven months of 2021, the US ranked seventh in investment in Vietnam, with total newly-registered capital of US$415.7 million.

At present, many US firms are exploring opportunities in Vietnam, such as ACORN International, Nue Capital LLC, Morgan Stanley, BlackRock’s Asian Credit, General Dynamics, Lockheed Martin International, Google, Smart City Works, among many others. Many are well performing in the country such as Cargill, Jabil, and Intel.

However, much remains to be done for Vietnam to attract more US investment.

A representative from Cargill Vietnam said that in Vietnam, the building of an advanced and integrated transport infrastructure will not only greatly improve the Vietnamese economy but will attract further investment from US companies especially in the F&A sector.

“In addition, further alignment of policies with international standards, expansion of tax investment schemes and improvements to the legal framework, regulations and policies will go a long way to making Vietnam a more attractive destination for US companies looking to invest,” said the representative.

“Also continuation of dialogue between the Vietnamese government and US companies who invest in Vietnam on policy reform, global best practices and any regulation, legal or policy obstacles will continue to attract further foreign investment by US companies,” he added.

Source: Nhan Dan Online