dialogue on u.s.-vietnam relations domestic dimensions · 2012. 8. 15. · vietnam totaled $711...

Dialogue on U.S.-Vietnam RelationsDOMESTIC DIMENSIONS

Editor: Jonathan R. Stromseth

The Henry Luce Foundation funded this project. The conference at Georgetown University was organized by The Asia Foundation in cooperation with the Institute for International Relations

under the Ministry of Foreign Affairs of Vietnam. The contents of the report and the background papers should not be construed as reflecting the views of the

Henry Luce Foundation, The Asia Foundation, or the Institute for International Relations.

We would like to extend special thanks to our conference hosts at Georgetown University, particularly Ambassador Robert Gallucci, Casimir Yost, and David I. Steinberg.

© Copyright 2003The Asia Foundation

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LLiisstt ooff AAccrroonnyymmss........................................................................................................................................................ | 2

IInnttrroodduuccttiioonn................................................................................................................................................................. | 5U.S.-Vietnam Relations: An Overview

by Jonathan R. Stromseth and Chadwick Bolick........................................................................................ | 6

TThhee IInnssttiittuuttiioonnaall SSeettttiinngg........................................................................................................................................... | 17Institutions and the Making of American Foreign Policy: The Impact of September 11 on U.S.-Vietnam Relations

by Frederick Z. Brown...................................................................................................................................... | 18

Institutions and Processes in Vietnamese Foreign Policymaking: Implications for Policy Toward the United States

by Phan Doan Nam........................................................................................................................................... | 24

The Role of Congress in U.S. Foreign Policy and U.S.-Vietnam Relations by Mark Manyin................................................................................................................................................ | 30

The Vietnamese National Assembly in Foreign Policymakingby Pham Quoc Bao........................................................................................................................................... | 38

TThhee SSoocciieettaall aanndd EEccoonnoommiicc EEnnvviirroonnmmeenntt............................................................................................................. | 45Vietnamese Foreign Policy and Economic Renovation

by Vu Xuan Truong............................................................................................................................................ | 46

Business Interests in Vietnamese Foreign Affairs by Pham Chi Lan................................................................................................................................................ | 51

The Rise of Foreign Economic Policy in the United States and the Role of Organized Business by I.M. Destler.................................................................................................................................................... | 57

CCaassee SSttuuddyy:: NNeeggoottiiaattiinngg && RRaattiiffyyiinngg tthhee BBiillaatteerraall TTrraaddee AAggrreeeemmeenntt.............................................................. | 65The Bilateral Trade Agreement with Vietnam in Fin-de-Siecle U.S. Trade Policy

by Edward Gresser............................................................................................................................................ | 66

The Bilateral Trade Agreement: Negotiations, Commitments, and Implementation Issuesby Nguyen Van Long......................................................................................................................................... | 73

AAppppeennddiixx II:: CCoonnffeerreennccee PPrreesseenntteerrss aanndd PPaarrttiicciippaannttss......................................................................................... | 78

AAppppeennddiixx IIII:: CChhrroonnoollooggyy ooff UU..SS..--VViieettnnaamm RReellaattiioonnss............................................................................................ | 81

AAppppeennddiixx IIIIII:: BBTTAA IImmpplleemmeennttaattiioonn SScchheedduullee....................................................................................................... | 85

AAppppeennddiixx IIVV:: SSeelleecctteedd BBiibblliiooggrraapphhyy....................................................................................................................... | 86

1 | Contents

AAccrroonnyymmss

AFL-CIO American Federation of Labor - Congress of Industrial Organizations

AFTA ASEAN Free Trade Area

AIPO ASEAN Inter-Parliamentary Organization

APEC Asia Pacific Economic Cooperation

ASEAN Association of Southeast Asian Nations

ASEM Asia-Europe Economic Meeting

BTA U.S.-Vietnam Bilateral Trade Agreement

BIT Bilateral Investment Treaty

CETRA China External Trade Development Council

COMECON Council for Mutual Economic Cooperation

CRS Congressional Research Service

DHS Department of Homeland Security

EU European Union

FBI Federal Bureau of Investigation

FDI Foreign Direct Investment

GATT General Agreement on Tariffs and Trade

GDP Gross Domestic Product

HIRC House International Relations Committee

IPR Intellectual Property Rights

IPU Inter-Parliamentary Union

MARAD Maritime Administration

MFN Most Favored Nation

MIA Missing-in-Action

Dialogue on U.S.-Vietnam Relations | 2

MOT Ministry of Trade

NAFTA North American Free Trade Agreement

NASC National Assembly Standing Committee

NATO North Atlantic Treaty Organization

NEC National Economic Council

NSC National Security Council

NTR Normal Trade Relations

ODA Official Development Assistance

OPIC Overseas Private Investment Corporation

PNTR Permanent Normal Trade Relations

POW Prisoner-of-War

SOE State-Owned Enterprise

TPA Trade Promotion Authority

TRIMS Trade-Related Investment Measures

TRIPS Trade-Related Aspects of Intellectual Property Rights

USCIRF U.S. Commission on International Religious Freedom

USDA United States Department of Agriculture

USTR United States Trade Representative

VCCI Vietnam Chamber of Commerce and Industry

WTO World Trade Organization

3 | Acronyms

Introduction


This report is part of a broader research and publicationproject on U.S.-Vietnam relations being conducted byThe Asia Foundation in cooperation with Vietnam’sInstitute for International Relations (IIR), with fundingsupport from the Henry Luce Foundation. The projectsupports research activities that examine domestic andinternational factors affecting the bilateral relationship,especially in the context of economic normalizationbetween the two countries and a changing internationalenvironment in the Asia-Pacific region. Ultimately, itaims to promote greater understanding amongAmericans and Vietnamese about domestic conditionsand international factors that affect bilateral relations,leading to more informed policymaking on both sides.This first volume examines domestic factors in bothcountries that influence bilateral relations. A second vol-ume will address regional and global factors, and a thirdwill summarize the research findings and recommendnext steps for improved policies and cooperation.

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The project is being conducted in the wake of far-reach-ing changes in the bilateral relationship. Starting fromthe early 1990s, the evolution of U.S.-Vietnam relationscan be divided roughly into two periods: political nor-malization that culminated in the establishment ofdiplomatic relations in July 1995, and economic nor-malization that culminated in the ratification of theBilateral Trade Agreement (BTA) in late 2001. In theearly 1990s, the main focus of U.S. policy toward

Vietnam was obtaining the fullest possible accounting ofU.S. personnel listed as prisoners-of-war/missing-in-action (POW/MIAs).1 To this end, the United Stateswelcomed Vietnam’s agreement to host a U.S. office inHanoi to work on POW/MIA affairs in 1991.Subsequently, the United States ended restrictions onAmerican nongovernmental organizations (NGOs)working in Vietnam in 1992; withdrew its opposition tolending from international financial institutions in 1993;and then, in February 1994, lifted the U.S. trade embar-go against Vietnam that had been in effect since 1975.The embargo was lifted after several months of high-level U.S. interactions with Vietnam aimed at resolvingPOW/MIA cases, and a January 1994 vote in the U.S.Senate urging that the embargo be removed.2 All ofthese developments paved the way for the normalizationof diplomatic relations, which President Bill Clintonannounced from the White House on July 11, 1995.

Diplomacy for economic normalization began in earnestin May 1996, when the United States presentedVietnam with a blueprint for a draft trade agreement. Atthat stage, Vietnamese exports to the United States facedtariffs averaging roughly 40 percent rather than the 3-4percent faced by exports from countries enjoying “MostFavored Nation” status (now called “Normal TradeRelations" or NTR). Owing to requirements stipulatedin the Jackson-Vanik amendment to the Trade Act of1974, two things needed to occur for Vietnam to receiveNTR: (1) a U.S. presidential determination thatVietnam permits free and unrestricted emigration (or apresidential waiver indicating that this waiver as well as

UU..SS..--VViieettnnaamm RReellaattiioonnss:: AAnn OOvveerrvviieewwJonathan R. Stromseth and Chadwick BolickThe Asia Foundation

1 The United States announced a framework for normalization in April 1991. According to this "roadmap," normalization was dependent upon Vietnam providingfull cooperation in two main areas: 1) resolution of POW/MIA cases, and 2) implementation of a comprehensive peace settlement in Cambodia. For further dis-cussion of the normalization process, see the articles by Frederick Z. Brown and Le Linh Lan in the bibliography of this volume.2 See Mark Manyin, The Vietnam-U.S. Normalization Process, CRS Issue Brief for Congress (Washington, DC: Congressional Research Service, updated July 24,2002), p. 4.

7 | Introduction

current government practices in Vietnam promote unre-stricted emigration); and (2) conclusion of a bilateraltrade agreement. Vietnam first received a presidentialwaiver of the Jackson-Vanik emigration requirements in1998; however, Vietnam did not receive NTR statusuntil the BTA came into effect in December 2001.3The complex story of the negotiation and completion ofthe BTA — which involved significant delays and rene-gotiation — is conveyed in the chapters in this volumeby Edward Gresser and Nguyen Van Long.

Inked in July 2000 and ratified by the legislatures ofboth countries in late 2001, the BTA is the most com-prehensive bilateral trade agreement ever signed byVietnam or the United States. The BTA is described as a modern trade and investment agreement because itincludes extensive obligations related not just to importtariffs and quotas, but also to transparency, investment,intellectual property protection, market access for services,and business facilitation. Although a number ofVietnam’s obligations were due immediately when theagreement came into effect, other obligations will bephased in over time periods ranging from one to tenyears (see Appendix III), with most key commitmentsdue within the first three years. Of course, the most sig-nificant immediate result was the U.S. granting NTRstatus to Vietnam on December 10, 2001, whichreduced average U.S. tariffs on Vietnam’s imports fromaround 40 percent to 3-4 percent. The results have beendramatic. Fueled by garments, seafood products, andfootwear, the total value of Vietnam’s exports to theUnited States increased from $1.05 billion in 2001 to$2.4 billion in 2002. During the first six months of2003, moreover, Vietnam’s exports to the United Statesnearly equaled the entire amount from last year —reaching $2.24 billion.4

U.S. exports to Vietnam have increased as well, growingfrom $367 million in 2000 to more than $580 millionin 2002. In the first six months of 2003, U.S. exports toVietnam totaled $711 million — on track to top $1billion in 2003. U.S. exports fall largely into the cate-gories of aircraft, fertilizer, steel, and computers andparts. Foreign direct investment (FDI) in Vietnam byU.S. business interests currently totals more than $1.1billion, making the United States the eleventh largestinvestor in Vietnam, with the majority of projects focus-ing on the energy sector. However, this amount does notinclude large investments made via U.S. subsidiaries orthird countries in Asia.5

Symbolically, the most significant bilateral event over the past decade was the visit to Vietnam by PresidentClinton in November 2000, the first visit by a U.S.president since Richard Nixon traveled to the formerSaigon in July 1969. Clinton’s visit not only providedclosure to the earlier period of war and confrontation,but also underscored the new areas of cooperation thathad been developing during the previous decade ofpolitical and economic normalization. The visit achievedpractical results as well: U.S. and Vietnamese officialsagreed to meet later to discuss joint research on theeffects of Agent Orange; bilateral de-mining efforts wereexpanded; agreements were signed on science and tech-nology and bilateral labor cooperation; and the UnitedStates provided materials to help locate the estimated300,000 Vietnamese troops still missing from theVietnam War. Also during Clinton’s visit, the U.S.Agency for International Development (USAID) formallyopened an office in Hanoi. As discussed below, ties havedeveloped further under the administration of PresidentGeorge W. Bush, while the level of official U.S. assistancehas grown.

3 Until the BTA came into effect in December 2001, the practical effect of the Jackson-Vanik waiver was to make Vietnam eligible for certain U.S. governmentcredits, or investment or credit guarantee programs (e.g., of the Overseas Private Investment Corporation and the Export-Import Bank of the United States).4 For a comprehensive review of the BTA's impact to date, see CIEM and STAR-Vietnam (USAID), An Assessment of the Economic Impact of the United States-Vietnam Bilateral Trade Agreement: Annual Economic Report for 2002 (Hanoi: National Political Publishing House, 2003). U.S. Census Bureau figures for importsfrom and exports to Vietnam are available at http://www.census.gov/foreign-trade/balance/c5520.html.5 Singapore holds the number one FDI spot with more than $7.3 billion invested, followed by Taiwan, Japan, and South Korea. For information on U.S. foreigndirect investment in Vietnam, see Vietnam Economic Times, Supplement Issue 114, August 2003, pp. 6, 12-14.

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Vietnam and the United States are increasingly expandingrelations and exchanges in areas beyond trade, such aseconomic assistance, development, education, and culture.For example, programs administered by USAID haveincreased significantly in recent years from about $6million in 2000 to $16 million in 2003. This aid isdivided among programs that support improved urbanand industrial environment management ($2 million);improved access to services for vulnerable groups, suchas flood victims, persons with disabilities, and peopleliving with HIV/AIDS ($6.5 million); and an acceleratedtransition to a market economy ($7.5 million). The lastincludes a large technical assistance project to supporttimely and effective implementation of the BTA. Totalannual U.S. assistance now exceeds $30 million. In addi-tion to the USAID initiatives noted above, U.S. supportincludes funds for land mine victims, technical assistanceon labor issues, and food aid in the form of commoditymonetization programs.

U.S. assistance also includes a large Fulbright educationalexchange program. With about $4 million in annualfunding, the Vietnam program is the largest Fulbrightprogram in the world in dollar terms.6 In addition, thenewly established Vietnam Education Foundation (VEF)supports separate educational exchanges valued at $5million per year. Under U.S. law, Hanoi is required torepay outstanding loans made to the former Saigon gov-ernment prior to 1975, and the VEF applies these debtrepayments to educational exchanges in science andtechnology. At present, about 2,500 Vietnamese studentsare studying in the United States. While many are sup-ported by fellowships from Fulbright and the VEF, aswell as from private sources like the Ford Foundation,the vast majority are self-funded students pursuingundergraduate degrees at American universities. Thenumber of Vietnamese students in the United States

remains small compared to students from other Asiancountries — for example, 47,000 from Japan, 29,000from Taiwan, and 12,000 from Thailand — but isgrowing steadily. Meanwhile, the number of youngAmericans studying and working in Vietnam is growingas well, and is increasingly drawn from the new genera-tion of the large Vietnamese-American population in theUnited States.

Besides education and business, another major growtharea is that of development programs undertaken byAmerican NGOs. Of the approximately 380 interna-tional NGOs with offices or permits to operate inVietnam, slightly more than 100 are American — thelargest total from any country. Partnering with Vietnameseorganizations and agencies throughout Vietnam,American NGOs are addressing such urgent developmentproblems as poverty alleviation, women’s reproductivehealth, HIV/AIDs, education, injury prevention, demi-ning, and the trafficking of women and children.

Finally, in the cultural realm, Americans are obtaininginsights into modern Vietnamese life through a popularexhibition organized jointly by the Vietnam Museum ofEthnology and the American Museum of NaturalHistory (AMNH) in New York City. The exhibit,Vietnam: Journeys of Body, Mind & Spirit, opened inNew York City in March 2003. It is intended to pro-vide a snapshot of contemporary Vietnamese culture bydisplaying everyday objects and incorporating videofootage of a modernizing Vietnam. The AMNH exhibithas also benefited Vietnamese museums via an exchangeprogram that trains Vietnamese museum employees andcurators in modern museum techniques and conserva-tion. While originally designed as a training program,the exhibit has spawned numerous Vietnamese artshows in Manhattan galleries and is contributing togrowing American interest in a Vietnam that is nolonger associated with war.


6 In addition to supporting approximately 50 Vietnamese and American students and scholars in country-to-country exchanges, activities include the FulbrightEconomic Teaching Program in Ho Chi Minh City that trains about 60 mid-level managers per year in market economics. This teaching program is managed bythe John F. Kennedy School of Government's Center for Business and Government at Harvard University.

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Amidst this increasing cooperation and growing interac-tion in many areas, political irritants continue to aggra-vate the bilateral relationship. The most divisive issue ishuman rights. In September 2001, the U.S. House ofRepresentatives passed the Vietnam Human Rights Act(H.R. 2833) by a vote of 410-1. The act called for a banon increases in non-humanitarian aid to the Vietnamesegovernment if the president did not certify that Vietnamis making “substantial progress” in human rights.Vietnamese officials harshly criticized the bill at the time,insisting that U.S.-Vietnam ties must strictly adhere tothe principle of non-interference in each other’s internalaffairs. Although the bill eventually stalled in the Senate,as described in the chapter in this volume by MarkManyin, a new Vietnam Human Rights Act (H.R. 1587)was introduced by 31 U.S. congressmen in the House ofRepresentatives in April 2003. A revised version of thisact was subsequently added as an amendment to theHouse Foreign Relations Authorization Act (H.R. 1950),which the House passed on July 15, 2003. The authori-zation bill is now pending in the U.S. Senate.

Further aggravating relations are recent state-level initia-tives in the U.S. aimed at authorizing that the flag of theformer South Vietnam government be flown in publicbuildings. The issue first arose in Virginia in January2003, when State House legislators passed such a bill.The U.S. Department of State then contacted the bill’ssponsor and said the legislation, if passed by Virginia’sSenate, could set back progress in U.S.-Vietnam rela-tions and could have “potentially serious adverse conse-quences” on the way the United States carries out foreignpolicy.7 The bill died in February. This did not deterthe State of Louisiana, however. On July 14, 2003,Louisiana’s governor signed into law a bill requiring thatonly the South Vietnam flag be flown in public schoolsor during state functions.

Alongside these political tensions, new trade disputeshave emerged over garment quotas and Vietnamese cat-fish. In late 2001, the catfish issue came to the forewhen U.S. lawmakers moved to restrict Vietnamesecatfish exports to the U.S. despite the recent signing ofthe BTA. In particular, an appropriations bill includeda provision that required only the American ictaluridaespecies be called “catfish.” This bill passed, forcing theVietnamese to market their catfish product as tra andbasa. A domestic association, the Catfish Farmers ofAmerica, then filed an anti-dumping petition beforeU.S. government agencies alleging that certainVietnamese enterprises were “dumping” (i.e., selling atless than fair market value) frozen catfish fillets in theU.S. market. After a yearlong proceeding — duringwhich Vietnam was judged to be a “non-market econo-my” — the U.S. Department of Commerce agreed withthe petitioners and found that the frozen Vietnamesecatfish fillets had been dumped in the U.S. market.Shortly thereafter, the U.S. International TradeCommission concluded that the dumped catfish filletscaused material injury to the domestic industry. As aresult of these findings, the Department of Commercehas imposed anti-dumping duties on these productsranging from 37 to 64 percent. These developmentsrecently prompted the Vietnam Association of SeafoodExporters and Producers to comment that the U.S.seems inclined to impose another “economic embargoon Vietnam, one product at a time.”8

Tensions also surfaced over the negotiation of a garmentand textile agreement, initialed in Washington on April25, 2003 and signed in Hanoi on July 17. Under theagreement, 38 categories of garments and textiles aresubject to quotas for the first time. U.S. trade officialshave estimated that the agreement will allow the ship-ment of $1.65 billion in Vietnamese goods to theUnited States in 2003. In later years, the quotas willincrease 7 percent annually for cotton products and 2percent for wool items. At the signing ceremony in July,

9 | Introduction

7 "Va. Bill Promoting S. Vietnam Flag Dies," The Associated Press, 17 February 2003. Available at www.usvtc.org.8 Margot Cohen and Murray Hiebert, "U.S.-Vietnam Relations: Rocky Road," Far Eastern Economic Review, 24 July 2003, p. 22. See also "The Great CatfishWar," The New York Times, 22 July 2003.

U.S. Ambassador to Hanoi Raymond Burghardt said:“Reaching this agreement is one more piece in place inthe normalization of our trade relationship.” In contrast,Vietnamese Trade Minister Truong Dinh Tuyen saidVietnam “would like to lengthen the period of unfet-tered export of products to the U.S.,” adding that Hanoiwould have preferred not to sign the agreement.9 TheVietnamese government has repeatedly voiced concernsthat the imposition of quotas will have detrimentaleffects on its domestic garment and textile industry,which supports about two million jobs. Nevertheless,American textile manufacturers reportedly pushed hardfor strict quotas on Vietnam, arguing that Vietnameseexports had grown too rapidly at a time when domesticmills were suffering under a weak U.S. economy.10

World Trade Organization (WTO) members will phaseout similar textile quotas by January 2005. However, asa non-WTO member, Vietnam will not benefit fromthis phase out and will likely continue to face such quo-tas until it joins the WTO.

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In the world of diplomacy, policymakers are acutelyaware of the internal pressures shaping their own policies,but rarely are very cognizant of how similar pressuresinfluence the policies of their foreign counterparts. Yet,domestic factors and developments often exert a majorimpact on bilateral relations between countries, and thekey to developing an effective partnership is the abilityof each country to understand the internal pressures ofanother and anticipate or respond to those pressures in aresponsible fashion. As a seasoned American observer ofEast Asia has stated with regard to relations between theUnited States and China, such an understanding is nec-essary if the two countries “are to establish mutual trustand to craft effective, realistic policies that take into

account the domestic political realities that inevitablyimpinge on the relationship in each country.”11

Domestic factors are particularly conspicuous in U.S.foreign policy. Whether due to the proliferation of insti-tutional actors or the growing influence of societalgroups, U.S. foreign policy is replete with examples ofhow domestic politics shape and restrain U.S. actionsabroad, especially in the post-Cold War world. This facthas not been lost on Vietnamese observers. Writing in1999, a Vietnamese researcher noted that the Vietnameseneed to comprehend the U.S. political system and howit affects foreign policy. “There are different privateinterest groups and government agencies in Americawhich have different opinions about the normalizationwith Vietnam,” he said. “They will influence the pace atwhich the U.S. government can move its relations withVietnam forward.”12

Indeed, the process of economic normalization in U.S.-Vietnam relations has required Vietnamese officials tointeract with a broader spectrum of governmental andsocietal actors in the United States than was the caseduring political normalization in the early 1990s. Policychoices on economic issues involve a variety of actors inaddition to the White House and the State Department,such as the Office of the United States TradeRepresentative, the Department of Commerce, and theDepartment of the Treasury. Congress has become morecentral to the relationship as well. The annual waivers ofthe Jackson-Vanik amendment and ratification of theBTA have involved congressional action. In addition,these legislative actions have provided opportunities forU.S. advocacy groups focusing on human rights, laborissues, and religious freedom to influence relations withVietnam. Until Vietnam joins the WTO, it will contin-ue to depend on annual presidential extensions of NTRbased on the Jackson-Vanik legislation. The extensions


9 "Vietnam-U.S. Garment and Textile Deal Becomes Official," Financial Times Information (Global News Wire - Asia Africa Intelligence Wire), 18 July 2003.10 Margot Cohen, "U.S., Vietnam Sign a Trade Pact Setting Limits on Textile Exports," The Wall Street Journal, 28 April 2003.11 Kenneth Lieberthal, "Domestic Forces in Sino-U.S. Relations," in Living with China, ed. Ezra F. Vogel (New York: W.W. Norton & Company, 1997), p. 275.12 Bui Thanh Son, "Vietnam-U.S. Relations and Vietnam's Foreign Policy in the 1990s," in Vietnamese Foreign Policy in Transition, ed. Carlyle Thayer andRamses Amer (New York: St. Martin's Press, 1999), pp. 212-14.

are likely to be forthcoming, as explained in the chapterby I.M. Destler, but they also will provide opportunitiesfor members of Congress and interest groups to high-light concerns about Vietnam generally.

While recent analyses of bilateral relations have tendedto focus on the complications caused by new actors inthe U.S. policy environment, few observers recognizethat profound complexities are also emerging inVietnamese foreign relations as a result of the reformprogram that has been underway since the mid-1980s.Shortly after initiating doi moi (“renovation”) reforms in1986, Hanoi adopted a “multi-directional” foreign poli-cy that led to Vietnam’s military withdrawal fromCambodia in 1989, rapprochement with China in 1991,restoration of official assistance from Japan in 1992, andthen, in 1995, normalization of relations with theUnited States, membership in the Association ofSoutheast Asian Nations (ASEAN), and the signing of aframework agreement with the European Union. Thesechanges were implemented to help create external condi-tions favorable to Vietnam’s economic reform program,as explained in the chapter by Vu Xuan Truong, but overtime the reforms themselves have affected both thedeterminants and the decisionmaking processes ofVietnamese foreign policy.

Prior to doi moi, Vietnamese foreign policy was primari-ly the responsibility of the Politburo of the CommunistParty, the External Relations Commission of the PartyCentral Committee, and three government ministries:the Ministry of Foreign Affairs, Ministry of Defense,and Ministry of Interior. During the reform period,however, Vietnam has witnessed a broadening anddecentralization of the foreign policymaking process, aseconomic reform and international economic integrationhave necessitated that the government specialize in awidening array of issues — the full range of whichexceeds the policy expertise of the traditional decision-making bodies. Particularly noticeable, with the increas-ing importance of foreign economic policy in Vietnam,

has been the growing role of economic ministries such asthe Ministry of Trade, Ministry of Finance, and theMinistry of Planning and Investment. The NationalAssembly is playing a more active role as well, asdescribed in the chapter by Pham Quoc Bao.13

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The chapters in this volume emerged from papers presented at a bilateral conference at GeorgetownUniversity in November 2001, organized by The AsiaFoundation in cooperation with Vietnam’s Institute forInternational Relations. The papers were subsequentlyrevised and expanded based on discussion at the confer-ence, and also were updated to cover events through theend of 2002. The volume begins with chapters on theinstitutional setting in which policy is made in bothcountries, proceeds to an analysis of the socioeconomicenvironment in which policy takes place (focusing espe-cially on business interests and the rising importance offoreign economic policy), and ends with a specific casestudy on the negotiation, signing, and ratification of thelandmark Bilateral Trade Agreement. Taken together, thechapters provide a fresh and penetrating look at thedomestic institutions, groups, and issues that affect notonly the overall foreign policies of each country but alsothe bilateral relations between them.

The Vietnamese chapters offer the first extensive dis-cussions by Vietnamese authors about the domesticdeterminants of Vietnam’s foreign policy in a bilateralcontext. The chapter by Phan Doan Nam, a formerAssistant Foreign Minister who currently serves as anadvisor to IIR, describes how various internal pressuresand institutions have affected Vietnamese foreign policy.Discussing the origins of doi moi, he points out that theimpetus for renovation — and by extension, the diversi-fication of Vietnam’s foreign relations that followed —came not from the collapse of the Soviet Union but

11 | Introduction

13 For American perspectives on the domestic sources of Vietnamese foreign policy, see the articles by Zachary Abuza, Kent Bolton, and Mark Sidel listed inthe bibliography of this volume.

from the government’s response to an economic crisisthat had domestic roots. With regard to institutions, hedescribes the predominant role of the Communist Partyin developing the general lines of foreign policy as wellthe interaction between the Party and executive agencies,most notably the Ministry of Foreign Affairs, in puttingthis line into effect. He also notes that the process of foreign policy decisionmaking can be especially protractedwhere the United States is concerned. Drawing an his-torical example from the late 1970s, he describes howlengthy deliberations within the Politburo (on whetherto drop Vietnam’s demand for post-war reconstructionaid) precluded more rapid diplomatic moves by Vietnamduring the failed 1977-78 negotiations with the Carteradministration on normalizing relations.14

In the next Vietnamese chapter, Pham Quoc Bao offersan original discussion of the National Assembly’s role inforeign policymaking in the context of broader reformsto the legislature under doi moi. In particular, he explainshow the National Assembly ratifies international agree-ments with foreign governments and organizations,adopts general foreign policy orientations that areexpressed in annual resolutions, and addresses specificbilateral issues on a case-by-case basis. He also highlightsthe role and activities of the Foreign Affairs Committeeof the National Assembly between and during the bi-annual sessions of the Assembly, showing how it interactswith the National Assembly Standing Committee(NASC), other Assembly committees, government min-istries, and Assembly members in the process of prepar-ing and examining bills and resolutions. To illustrate thisprocess, Bao concludes his chapter by recounting theprocedures, dynamics, and actual debates that led to theratification of the BTA in November 2001. Although itwas approved by a safe margin, the debate revealed a“mixed mood” among Assembly members — one col-

ored by opposition to the Vietnam Human Rights Act,recently passed in the U.S. House of Representatives,and concern over new labeling requirements forVietnamese catfish.

A third Vietnamese chapter, written by Vu Xuan Truong,depicts the rising importance of foreign economic policysince Vietnam initiated doi moi in 1986. The chapternot only discusses the origins of the “new thinking”embodied in doi moi, showing how foreign policy hasbeen reoriented to support economic reform, but alsorecounts key developments in Vietnam’s path towardinternational economic integration — including itsmembership in ASEAN in 1995 and the Asia PacificEconomic Cooperation (APEC) forum in 1998, thesigning of the BTA in July 2000, and its ongoing negoti-ations to join the WTO. On a practical level, the chapterpoints to a new emphasis in Vietnamese foreign policy,which the author describes as “diplomacy serving eco-nomic development.” Vietnamese diplomats are allocatingmore time and effort to expanding Vietnam’s externaleconomic relations, Truong notes, often by lobbyingindividuals and groups to facilitate the entry ofVietnamese goods and services into their host countries.He also describes recent meetings within Vietnambetween Vietnamese diplomats and local business people.First convened in late 2001, these meetings have providedthe diplomats with first-hand knowledge of local businessneeds, and presented opportunities for business peopleto learn how Vietnamese embassies and consulates canpromote their interests overseas.

Picking up on this theme, the ensuing chapter by PhamChi Lan shows how Vietnamese business interests havebeen expressed in Vietnamese foreign policy both beforeand during doi moi. Lan focuses especially on the role ofthe Vietnam Chamber of Commerce and Industry


14 These negotiations occurred between May 1977 and October 1978. Until late in the negotiations, the Vietnamese insisted that as a condition of normaliza-tion, the United States provide Vietnam with reconstruction aid based on Article 21 of the Paris Peace Agreement of 1973 and a letter sent from PresidentRichard Nixon to Prime Minister Pham Van Dong in February 1973. The American negotiating team refused to comply with this demand. The American position,as enunciated by Leonard Woodcock during a mission to Hanoi for President Carter in March 1977, was that the 1973 Paris Agreement, the basis for Nixon'sletter, had been invalidated by Hanoi's violations of the agreement in 1974-75. For a neutral account of the negotiations, see Nayan Chanda, Brother Enemy(New York: Harcourt Brace Jovanovich, 1986), pp. 136-157, 263-272.

(VCCI) in advancing and diversifying Vietnam’s foreigneconomic relations.15 As early as 1976, she notes, VCCImerged with the Saigon Chamber of Commerce andbegan developing relations with other chambers of com-merce in Asia and Europe. In the early 1980s, it alsobecame actively involved in developing a policy proposalto the government to diversify Vietnam’s import-exporttrade. As a result, the trade monopoly of the Ministry ofForeign Trade came to an end, and new business linkswere developed with partners in non-socialist countries.The author also depicts Vietnam’s urgent need to furtherdiversify trade relations in the early 1990s following thecollapse of the Soviet Union and the Soviet-led Councilfor Mutual Economic Assistance (COMECON). Sheexplains that it was the demand for economic develop-ment and trade promotion that ultimately forcedVietnam to escape from economic isolation, diversify itstrade partnerships, and improve relations with foreigncountries and international institutions. The chapterconcludes with three brief case studies — on SouthKorea, Taiwan, and Israel — showing how businessinterests have been the decisive factor influencing theevolution of Vietnam’s relations with these countries.

The final Vietnamese chapter, written by Nguyen VanLong, discusses the BTA negotiations as well as the chal-lenges for Vietnam in implementing its commitmentsunder the agreement. He explains how the Ministry ofTrade played the key role in negotiating the BTA overnine rounds of negotiations that began in 1996 andended in July 2000. Owing to the broad scope of theagreement, however, many other ministries participatedas well, including those of Planning and Investment;Finance; Industry; Agriculture and Rural Development;Science, Technology and Environment; Justice; Cultureand Information; Fisheries; and Foreign Affairs. It wasthe responsibility of the Ministry of Trade to coordinatewith these ministries and guide the overall negotiationswith the United States. The chapter also reviews

Vietnam’s commitments in the BTA in the areas of tradein goods, intellectual property rights, trade in services,investment, and transparency. In discussing implementa-tion issues, the author emphasizes the tremendous chal-lenge for Vietnam not only in carrying out the broadlegal reforms required by the BTA, but also in enhancingthe competitiveness of Vietnamese goods and services asdomestic tariffs, non-tariff barriers, and other protec-tionist barriers are phased out.

Like the chapters by Vietnamese authors describedabove, the American chapters address the institutionsthat formulate U.S. foreign policy, the socioeconomicenvironment in which it is made, and the negotiationsthat led to the BTA.

The first chapter, by Frederick Z. Brown, discusses theinteractions and dynamics among the principal foreignpolicy institutions in the United States as well as the far-reaching impact of the terrorist attacks of September 11,2001. The chapter examines the formal institutionsinvolved in foreign policy (i.e., the National SecurityCouncil, Department of State, Department of Defense,and Central Intelligence Agency), the role of Congress,and the growing influence of the media, public opinion,and organized pressure groups. It also reviews the emer-gence of other institutional foreign policy actors, such asthe Office of the United States Trade Representative(USTR) and the recently established Department ofHomeland Security. Brown concludes that the mainfocus of U.S. foreign affairs, including all bilateral rela-tions, is now on handling the threat of internationalterrorism successfully. Bilateral relations with no con-nection to this fight will not be ignored, but they willreceive a lower priority of attention. He also notes thathuman rights will remain a contentious issue in U.S.-Vietnam relations due to the presence of human rightsand religious freedom advocates in American society andgovernment. With the normalization of relations, he

13 | Introduction

15 The Chamber of Commerce was established by official decree in the early 1960s to promote economic relations between North Vietnam and the rest of theworld, including non-socialist countries. For information on the changing role of VCCI and other Vietnamese business associations during doi moi, see JonathanR. Stromseth, "Business Associations and Policy-Making in Vietnam," in Getting Organized in Vietnam: Moving In and Around the Socialist State, ed. David Kohand Russell Hiang-Khng Heng (Singapore: Institute of Southeast Asian Studies, forthcoming).

adds, it is necessary to recognize the existence of suchinterests “as part of the American system, just asAmericans must recognize certain political realities inVietnam.” Still, Brown maintains that these problemscan be managed by both sides and need not impedeoverall consolidation of the bilateral relationship.

The next chapter, written by Mark Manyin, focuses onhow Congress influences U.S. foreign policy in generaland policy toward Vietnam in particular. The chapterfirst reviews the tools that members of Congress use toaffect foreign policy (e.g., amendments to appropriationslegislation, public hearings, and congressional resolu-tions), and then examines the factors that heighten ordiminish Congress’s foreign policy influence. Manyinalso explores changing congressional attitudes towardVietnam over time, analyzing the ways in whichCongress has both hindered and promoted the relation-ship. Until the early 1990s, he notes, the vestiges of theVietnam War hurt Vietnam’s standing in Congress. Butafterward, Congress began to take a more supportiveview of normalizing relations with Vietnam.

According to Manyin, an important influence on thischange was the 1991-1992 bipartisan Senate SelectCommittee on POW/MIA affairs, which helped defusethe passion surrounding the POW issue. Another turningpoint came in January 1994, when the Senate passed aresolution urging the lifting of the U.S. trade embargoon Vietnam. Manyin recounts how several members ofCongress who were Vietnam War veterans played a crucialrole in convincing colleagues — and the Clinton adminis-tration — that the time was right to normalize relations.Without this bipartisan “political cover,” he writes, theClinton administration would have taken longer to movetoward a policy of normalization. Finally, Manyindescribes how human rights have replaced the POW/MIAissue as a vehicle for congressional critics of Vietnam. Healso cautions that with bilateral trade increasing rapidly,Vietnamese officials need to be prepared for high levels ofcongressional attention to economic relations andVietnam’s implementation of the BTA. A key challengefor Vietnam, he adds, will be to identify new championsof the relationship who can carry it into the future.

Next, I.M. Destler examines the role of organized businessand the rise of foreign economic policy in the UnitedStates. He opens the chapter with the observation thateconomic interests have not been the dominant forceshaping U.S. trade relations with Vietnam over the pastquarter century. Rather, those with stakes in the legacyof the war have played that role. But organized U.S.business has been an important supplemental player inthe liberalizing events of the past decade, he says, and islikely to play a growing role in the years ahead. In themain body of his chapter, Destler traces the increasingrole of economic interests and business engagement inAmerican foreign policy with the establishment of theUSTR and the end of the Cold War. The latter weak-ened the influence of national security concerns on U.S.trade and economic policy, he notes. This was reflectedin President Clinton’s creation of the National EconomicCouncil and his initiatives on free trade agreements.Destler also characterizes Clinton’s 1994 decision onChina to de-link trade and human rights as a “coming ofage” for organized U.S. business, which had mobilizedand lobbied the government to sever this linkage.

Destler points out that Vietnam brings a weak hand totrade negotiations with the United States because, unlikeChina and other major trading partners, it occupies onlya small share of overall U.S. international commerce. Inthe short run, he argues, Vietnamese officials must makethe most of the present situation and cultivate alliesoutside established negotiating channels. He suggestsfocusing on (1) individuals and groups committed, fornon-economic reasons, to deepening the bilateral rela-tionship; (2) business firms with important investmentsin Vietnam; (3) business firms with important exports toVietnam; and (4) distributors and industrial users ofimports from Vietnam. As long as trade remains modestin U.S. terms, Destler says the first category will be themost influential and the fourth will be the least impor-tant. However, he maintains that Vietnam can aspire tohave much greater influence on U.S. trade policy overthe long term if it continues to open up its economy. If American firms increasingly find Vietnam to be ahospitable place to invest and initiate or expand trade,


he writes, U.S. business interests will “give increasedpolitical priority to lobbying on issues affecting Vietnambecause it will be in their interest to do so.”

In the final American chapter, Edward Gresser describesthe story of the BTA’s development and ratification onthe U.S. side. Gresser identifies three phases in the BTA’sdevelopment: an initial phase from 1993-1995 that setthe foundation for trade normalization through a seriesof small economic steps; a bumpy negotiation phasefrom 1996-2000; and finally a ratification phase lastingfrom 2000-2001. He also provides a close analysis of theAmerican interest groups that had a stake in promotingor opposing an agreement. These included the familiarbusiness, labor, and foreign policy groups as well asVietnamese-American community associations, veteransorganizations, and families of soldiers listed as MIA.Gresser describes the objectives, internal deliberations,and tactics of the Clinton administration in vivid detail— including considerations of the BTA’s risks to theDemocratic Party and to the president himself. He alsoreveals how domestic politics caused delays in U.S. rati-fication both at the end of the Clinton administrationand at the beginning of the current Bush presidency. Inthe end, of course, the BTA passed both houses ofCongress with a broad consensus supporting economicnormalization with Vietnam. For Gresser, this quietconclusion is a sign that the “final stone in the arch ofreconciliation is firmly set.”

CCoonncclluussiioonn

As the chapters in this volume make clear, future progressin U.S.-Vietnam relations will depend increasingly oneach side’s appreciation of the domestic influences atplay as the two countries engage across a broader rangeof bilateral issues. A common theme running through-out the volume is the growing importance of foreigneconomic policy. For Vietnam, this was first reflectedin the “diversification and multilateralization” of foreignrelations early in the doi moi period, designed to createexternal conditions that would support the country’s

ambitious economic reform program. Subsequently, ithas been seen in Vietnam’s drive for international eco-nomic integration. For the United States, it is reflectedin the increasing significance of foreign trade policy inU.S. foreign relations. In both countries, these changeshave led not only to more complex bureaucratic inter-actions in the way that foreign policy is made, but alsoto growing influence by societal actors and economictrends on the foreign policymaking process. The terroristattacks of September 11, 2001 have complicated thispicture for the United States, bringing national securityconcerns to the fore once again, but have not reversedthe overall trends.

What are the lessons that each country can take awayfrom this study? For Vietnam, as the chapters by theAmerican authors would suggest, it is no longerenough simply to enhance understanding about thedomestic sources of U.S. foreign policy. In the newbilateral context in which legacy of war issues arereceding and the politics of trade are becoming moresalient, Vietnam will need to make strategic choiceswhen cultivating friends and allies in American politicsand society. The growing trade and investment rela-tionship has created newly shared interests between thetwo countries, but it also has engendered new conflictsand disputes. In this context, and with Congress andU.S. lobby groups becoming more central to bilateralrelations, who are the future champions in the UnitedStates for improved relations with Vietnam? In thelong term, as one author in this volume argues, themost politically influential allies will come from keysectors of U.S. business as long as trade and investmentcontinue to develop. But other groups are likely to bereceptive as well — including U.S. NGOs with programsin Vietnam, and even young Americans who have studiedor worked in the country.

Finally, what lessons does this study suggest for theUnited States? First, it is no longer possible to viewVietnam as a unitary state that is immune to societalpressures. With a shrinking state sector and a laborforce growing at 1.5 million workers per year, Vietnamese

15 | Introduction

policymakers are under considerable pressure to createjobs by promoting faster growth and increased exports.Meanwhile, a formal private sector has emerged in recentyears, tripling in size since a landmark Enterprise Lawcame into effect in January 2000. Through a process ofpublic consultations that has expanded under doi moi,the aspirations and grievances of business people arebeing increasingly felt in domestic policies and laws. Asdescribed in one chapter in this volume, such consulta-tions are now also being extended into the foreign policyarena to ensure that Vietnamese diplomats can representthe country’s business interests overseas. Lastly,Vietnamese diplomats are no longer the only actors inVietnam’s foreign relations. While the general lines of foreign policy are set by the Party and carried outprincipally by the Ministry of Foreign Affairs, othergovernment ministries are becoming involved as thewidening array of international issues requires special-ized expertise. In sum, it is important for Americans toview Vietnam in all of its complexity, both in terms ofdecisionmaking about foreign policy and the socioeco-nomic pressures which affect the decisions that are made.


The Institutional Setting


This essay discusses the dynamics of the principal U.S.institutions involved in the formulation and execution ofAmerican foreign policy. Those institutions include theOffice of the President and some of the foreign policyentities that serve it: the National Security Council, theDepartments of State, Defense, and the CentralIntelligence Agency (CIA). The U.S. Congress, themedia, public opinion, and organized pressure groupsalso qualify as “institutions” in any discussion of policy.The essay then discusses the far-reaching impact of theevents of September 11, 2001; speculates on howAmerican foreign policy may be focused in the yearsahead; and offers some thoughts on how the war againstinternational terrorism may affect the conduct of U.S.-Vietnam bilateral relations.

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How the U.S. government formulates foreign policy canbe only partially explained through a simple organiza-tional chart showing the executive branch with its vari-ous departments, agencies, commissions, and special rep-resentatives. In theory, these organs are under the firmdirection of, and rigorously responsive to, the president;in practice, such discipline is rarely the case. The U.S.constitution written by our country’s Founding Fathersonly briefly prescribed the powers in foreign affairs givento various actors in the government, and it provided noinstruction on how these powers would be used in reallife situations two centuries later. The constitution gavethe Senate powers to “advise and consent” in certainareas of foreign affairs, gave the House ofRepresentatives the authority to originate money bills(which has become influential and frequently decisive inthe conduct of foreign affairs), and named the president

as commander in chief of the military establishment.But the men who wrote that document were savvypoliticians, and they were far too pragmatic to expectthat their 18th century view of ways and means to con-duct the nation’s external affairs could be a precise guideto the future. The passage of time has naturally seenmany changes in America’s place in the world and, con-sequently, how foreign policy is devised and conducted.The prime actors — the president and the Congress —have often disagreed and accused each other of over-stepping their respective constitutional boundaries.There have been many institutional changes in the pasthalf-century that bear upon the conduct of Americanforeign policy. Four major changes, including the recentlycreated Department of Homeland Security, are discussedin this paper.

First, in response to Cold War pressures and the UnitedStates’ emergence as a global power after World War II,the National Security Act of 1947 enhanced the execu-tive powers of the president by creating the NationalSecurity Council, headed by a national security advisor,to develop policy alternatives and to coordinate theirimplementation. The Department of Defense replacedthe War Department. Within it were created the depart-ments of the Army, Navy and Air Force headed by civil-ian secretaries. To unify military planning and imple-mentation, a Joint Chiefs of Staff under a senior militarycommander as chairman replaced the organizationalstructure that had overseen the conduct of World WarII. The Central Intelligence Agency was created toreplace the Office of Strategic Services and a gaggle ofother wartime intelligence services. The CIA directorwas given a second hat as “Director of CentralIntelligence” (DCI) or senior coordinator for allAmerican intelligence functions (State, Defense, Federal

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19 | The Institutional Setting

Bureau of Investigation, etc.). This responsibility of theDCI has taken on considerable breadth since the eventsof September 11.

A second significant development was the War PowersAct passed by Congress in 1973 to restrain the “imperialpresidency” of Richard M. Nixon and to assertCongress’s own constitutional authority. Under the Act,which was approved over Nixon’s veto, the president isobligated to consult Congress before committing troopsoverseas and to report to Congress immediately after-ward about the need to continue the mission. The presi-dent must terminate the mission within 60 days unlessCongress agrees to extend it, a provision designed toforestall the kind of “mission creep” that occurred inVietnam. The act was a reaction to the August 1964Tonkin Gulf Resolution that authorized PresidentLyndon B. Johnson “to take all necessary measures torepel any armed attack against the forces of the UnitedStates…” in practical effect tantamount to a declarationof war, a power constitutionally reserved to theCongress. (The House of Representatives passed theTonkin Gulf Resolution 416-0; the Senate approved themeasure 88-2.) Although rejected by later presidents asunconstitutional and rarely invoked by Congress, theWar Powers Act symbolizes the national mood thatblamed the war on excessive presidential power. To myknowledge, there was very little discussion in Congressregarding possible implementation of the War PowersAct with regard to President Bush’s deployment ofAmerican military forces to Afghanistan.

Thirdly, with the end of the Cold War and the emer-gence of the United States as the “unipole” in worldaffairs, the phenomenon of globalization and the prima-cy of international economics and trade became promi-nent themes of what became known as the new worldorder. A major institutional change in the United Statesgovernment was the creation of the United States TradeRepresentative (USTR), an office that quickly accruedgreat power in foreign affairs by reason of its responsibilityfor negotiating international trade agreements. Having

been elevated to cabinet status, USTR in effect noweclipses the Department of Commerce, and in someinstances even the Department of State, in internationalmatters, simply because there is no longer a separation ofeconomic and commercial affairs from the political rela-tionships between nation states. Similarly, theDepartment of the Treasury has become a major playerin foreign policy deliberations, again because the U.S.dollar has become the virtual common currency of glob-alization. Nowhere have these new realities been moreevident than in the long process of political and eco-nomic normalization of relations between Vietnam andthe United States.

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The president is obviously at the center of the executivebranch’s bureaucracy, which formulates the issues fordecision and tasks agencies and departments to gatherinformation. The other actors — Congress, public opin-ion, the media, and various pressure groups — surroundthe chief executive, attempting either to restrain hisactions or, conversely, to urge him onward. But the criti-cal question is how faithfully the president’s decisions areactually implemented. President Dwight D. Eisenhower,a former general, noted: “I give the orders as presidentand nobody follows them.” This complaint has beenechoed by Eisenhower’s successors. It is not so much thestructure of the executive branch that determines policy,as it is the myriad political, economic, and psychologicalfactors that act upon the projection of the president’spower. In 1939-40, President Franklin D. Roosevelt, inhis efforts to assist Great Britain during the darkest daysof World War II, was hemmed in by isolationist senti-ment in public opinion and hostility in Congress toAmerican involvement in the war. Presidents Johnsonand Nixon were similarly constrained by public opinion(and increasingly by Congress after the Tet offensive of1968) in their conduct of the war in Vietnam. PresidentBill Clinton’s foreign policy team and the president him-self were notoriously sensitive to what they perceived as


public opinion as measured by polling data. The Clintonadministration was sharply criticized for its vacillationand actual missteps on policies toward Haiti, Somalia,Bosnia, and Kosovo, among others.

In addition to the statutory changes and specific casescited above, it is important to understand the quantumshift in attitude of American society with regard to theU.S. government that took place in the late 1960s andearly 1970s. This shift was due to the activist spirit ofthe 1960s, the turmoil of the domestic civil rights move-ment, dismay over the assassinations of President John F.Kennedy, Martin Luther King, and Senator Robert F.Kennedy, and of course, popular disagreement over thewar in Vietnam. During this period, Indochina domi-nated the deliberations of the U.S. Senate ForeignRelations Committee. Within the Congress, in themedia, and among Americans of all political persuasions,American foreign policy — indeed many aspects of ourvalue system — were examined in the light of the war.The repercussions went well beyond Indochina. Thebipartisan congressional consensus that had been thebasis for foreign policy under Presidents Harry S.Truman and Eisenhower and that extended into theKennedy era was soundly shaken. The Watergate scandaland Nixon’s forced resignation were the direct result ofthe president’s anxiety over the antiwar movement.

These events and the congressional elections ofNovember 1974 ended official U.S. financial and mate-rial support for the government of South Vietnam.President Kennedy’s inaugural address call to “go any-where and pay any price” no longer rang true with eitherCongress or the American public. At that time, theeffects of the Vietnam experience were felt throughoutour national life and in particular on the traditionalbelief about the benign role of America in the world.The Vietnam War era changed profoundly the relation-ship between the executive and legislative branches ofgovernment in making and managing foreign policy.The concept of government service as a noble calling foryoung Americans was shaken.

The information and communication revolution is a fac-tor that intrudes into every institution involved in theforeign policy process. Compared to a generation ago,there is vastly more information relevant to public policynow available, and it is communicated instantaneouslyfrom many sources. Not only is that information mas-sive in quantity and instantly available, it is all too oftenindiscriminate, undifferentiated, and even contradictory.How can policymakers and the general public evaluatethe avalanche of raw data that descends upon themevery day? The president, of course, has his experts toorganize and evaluate the data. In the past, Americanforeign policy officials would listen to a relatively smallband of elite commentators in the print media (e.g.Walter Lippmann, James Reston). But with the adventof television, popular attitudes were influenced rapidlyand deeply: for example in February 1968, WalterCronkite, reporting from Hue for CBS-TV, bluntlyquestioned the United States’ capability to achieve itsobjectives in Vietnam. This is but one case where mediareporting helped shape perceptions of the American peo-ple and influenced the decisions of their government.Today, heads of state and their foreign ministers gaintheir impressions of breaking foreign news beforereceiving reports from their diplomats. In sum, in therealm of foreign affairs the media is an institution in itsown right that must be taken into account byAmerican policymakers.

It would be impossible to over-emphasize the importanceof individual personalities in the high reaches of the U.S.government. We are all familiar with how formerNational Security Advisor Henry Kissinger, a man ofextraordinary intellect and massive ego to match, eclipsedSecretary of State William Rogers, excluding Rogers fromnegotiations with Vietnam from 1969-73 and thenreplacing him as secretary in September 1973. Similarly,Zbigniew Brzezinski, President Jimmy Carter’s nationalsecurity advisor, 1977-81, was often at odds with thenSecretary of State Cyrus Vance, for example on the issueof normalization of relations with Vietnam.

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During the administration of the elder George Bush,1989-93, American foreign policy was wrenched fromits Cold War framework. With the sudden demise of theSoviet Union and the collapse of Soviet power in EasternEurope and Central Asia, the United States found itselfindisputably the single most powerful nation in theworld. This new reality was confirmed by the rapidallied victory over Iraq in the 1990-91 Gulf War, under-scored by a stunning display of technological sophistica-tion. While some Democrats were critical of PresidentBush’s determination to roll back Iraq’s conquest byforce, the Gulf War was conducted for the most partwith a high degree of political bipartisanship. What theelder Bush failed to reckon with was that althoughAmericans honor military success, they vote with theirpocketbooks. The economic downturn of the early1990s ended the Bush I administration, and it reaf-firmed those indelible truths of American political life:“All politics are local” and “it’s the economy, stupid.”

The foreign policy decisionmaking process worked wellin Bush I (with the president himself making the finaldecision over strong objections of some of his advisors)in confronting the Iraqi invasion of Kuwait, if not dis-posing of Saddam. The implementation of that policy informing a broad coalition, including the major Arabcountries, and then bringing off a brilliantly efficient airand land campaign against Iraq was widely praised.

But that was then. The administration of his son,George W. Bush, which took office eight years later inJanuary 2001, initially adopted a general approach toforeign policy that has been seen by many observers, for-eign and domestic, as starkly unilateralist and dismissiveof the views of America’s allies. What the administrationdescribes as “consultation” often appears to be a stancewhere the United States simply informs its friends ofdecisions already taken. The rapid American militaryvictory over the Taliban in Afghanistan, underscoring asit did the superiority of American technology and abilityto deploy its military might in a terrain where the

Soviets had foundered, has reinforced the impressionthat the United States (with some support from GreatBritain) intends to “go it alone.” At the same time, thepresident’s black and white approach of “you are eitherfor us or against us” has blunted the willingness of somecountries normally disposed favorably toward the UnitedStates to cooperate.

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September 11 has radically altered the character ofAmerican foreign policy. For the first time in Americanhistory, international terrorism is seen as a threat to thesurvival of the United States government, and indeedour whole society. Americans used to say that where foreign policy was concerned, politics stopped “at thewater’s edge.” This myth has been shattered — now for-eign policy begins explicitly at home and is an integralpart of our national defense. The game is no longer vic-tory or defeat on a single Cold War battlefield. Duringthe Cold War, mutually assured destruction (MAD) car-ried an inherent limitation. As the theology of nuclearwar developed, both the Soviet and the American sidesbecame convinced of the certainty of global suicide shouldeither employ the ultimate weapon. Arguably, MAD wasthe key stabilizer in the U.S.-Soviet competition.

Not so in the war against international terrorism. Thereason is simple. The cold war was waged between“rational actors,” especially where MAD was concerned.The implications of international terrorism are todayvastly different. Osama bin Laden and the al Qaeda net-work have stated unequivocally that their objective is thedestruction of the United States. Whether they actuallypossess the physical capability to grievously injure thecountry is another matter. The American governmenthas no choice but to take bin Laden’s vows seriously, toprepare the strongest defense possible, and to plan forworst-case scenarios in the event of further attacks. Atissue is the possible use of nuclear devices or otherweapons of mass destruction against the territory of the

21 | IThe Institutional Setting

United States and its population. It has become axiomat-ic that September 11 has changed everything.

On November 25, 2002, President Bush signed into lawa bill that created a new cabinet-level entity, theDepartment of Homeland Security (DHS), marking achange in the organization of the executive branch of theUnited States government that ranks in importance withthe National Security Act of 1947. This DHS joinstogether 22 federal agencies, with 170,000 employees,that have national security responsibilities. These includethe Immigration and Naturalization Service, the U.S.Customs Service, the Federal Emergency ManagementAdministration, and the U.S. Coast Guard. The objectiveof the DHS is to preempt, intercept, and counter inter-national terrorist attacks. Significantly, the CIA and theFederal Bureau of Investigation, two powerful actors inthe campaign against international terrorism, are notincluded in the Department of Homeland Security, anexclusion that could seriously complicate its operations.

The CIA has been resurrected from a bureaucraticdecline caused by internal security scandals, the “Iran-Contra” affair in the 1980s, and the decimation of itsclandestine service under the drastic personnel reorgani-zations in the 1970s. Its role has been significantlyexpanded as a consequence of September 11. It wasdeeply involved in information-gathering and clandestineoperations during the war in Afghanistan, and remainsthe lead U.S. agency in the continuing effort to pinpointand neutralize Osama bin Laden. In early November2002, for example, the CIA, operating in Yemen, neutral-ized a senior al Qaeda official through the use of a guidedmissile-bearing “Predator” remotely controlled aircraft.

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What does all this mean for the bilateral relationshipbetween Vietnam and the United States? First of all, theprimary focus of U.S. foreign affairs, including all bilat-eral relations, is now on handling the threat of interna-tional terrorism successfully. U.S. bilateral relationships

generally will be conducted within that framework.Vietnam no doubt understands the concerns of theUnited States in this regard. This is not to say thataspects of bilateral relations that have no direct connec-tion to this fight will be ignored, only that they willreceive a lower priority of attention.

Immediately after September 11, Vietnam appeared tobe relatively forthcoming with regard to sharing infor-mation. Enhancement of such cooperation would be ahighly positive factor in the bilateral relationship.However, since 2000 the issue of the United Statesgranting asylum to Central Highlanders fleeing Vietnaminto Cambodia has become an obvious irritant thatwould seem to make active cooperation more difficult.

Second, consolidation of bilateral relations will dependin large measure on how well the Bilateral TradeAgreement (BTA) is implemented. The USTR wasresponsible for concluding successfully the BTA over aperiod of five years. USTR remains a key player in thebilateral relationship. We are constantly urged to recog-nize that “Vietnam is a country, not a war,” and thisframe of reference should certainly be borne in mind.But the concerted and energetic drive to normalize eco-nomic relations spurred on by American firms seeking todo business in Vietnam from 1995 onward has largelysucceeded. The impetus for further progress will dependheavily on Vietnam’s willingness to implement the BTA,particularly if American investors and commercial part-ners meet with disappointment in the application of theBTA on the ground. While we can hope that situationssuch as the current U.S. restraints affecting the importa-tion of Vietnamese catfish are the exception rather thanthe rule, such problems must be addressed realisticallyyet imaginatively by both sides.

Third, the operation of the BTA will have the effect ofsignificantly increasing Vietnam’s exports over the nextdecade. Already, Vietnam’s exports to the United Stateshave increased from about 1.05 billion in 2001 toalmost 2.4 billion in 2002. Assuming full implementa-tion, American direct investment can also increase


substantially. Both developments will be beneficial toVietnam’s economy and will in turn enhance the pros-perity (and hence the stability) of Vietnamese society.However, it would be a mistake to conclude that theconsumption capacity of the large American middle class— no matter how many shopping malls we build — isinfinite. The American market’s ability to absorb manu-factured goods imported from Asia is large but nonethe-less limited. The economy has yet to bounce back fullyfrom the recent recession. Consequently, the BTA byitself cannot be seen as the savior of the Vietnameseeconomy.

Fourth, the presence of human rights and religious free-dom advocates on the White House staff and in theCongress means that the Vietnam Human Rights Act(known as H.R. 2833), which the government ofVietnam strongly objects to, will remain a contentiousbilateral issue. The Congress has displayed an activeinterest in promoting the observance of human rightsinternationally since 1975, when it levied on theDepartment of State a country-by-country reportingrequirement. In 1998, Congress passed the InternationalReligious Freedom Act and created the U.S. Commissionon International Religious Freedom, which recommendsthe use of sanctions on countries that are deemed abusiveof religious freedom. The Commission concerns itselfwith many other countries besides Vietnam.

H.R. 2833 was passed by a wide margin in the House ofRepresentatives but did not come to the floor of theSenate in 2001. The Senate did not take up the bill dur-ing 2002. However, its supporters remain determined tosee this legislation, or similar legislation, enacted in2003. With a larger Republican majority in the Houseof Representatives and with the Senate now inRepublican hands as a result of the November 2002elections, the issue is by no means closed. The U.S.Commission on International Religious Freedom hassupported adoption of the Act. With normalization ofour bilateral relations, both sides must recognize theexistence of such interest groups — and the Americansentiments they represent — as part of the American

system, just as Americans must recognize certain politi-cal realities in Vietnam. Again, these are problems thatmust be managed by both sides; they must not impedethe overall consolidation of the bilateral relationship.

Lastly, in my opinion a key element in broadening thefoundation of the bilateral relationship is to strengthenthe strategic dialogue on Asian security issues with theadministration and the Congress. The strategic dialogueobviously includes enhancement of military-to-militaryrelations. Vietnam’s membership in the Association ofSoutheast Asian Nations (ASEAN) and its unique geographic location carry an inherent significance forthe United States that should work to the advantage of Vietnam. There has been considerable speculationregarding the future of Cam Ranh Bay once theRussians depart definitively. While Vietnam has madeperfectly clear that Cam Ranh will never again become a base for foreign forces, it would seem logical that it can eventually become the site of ship visits, commercialdevelopment, and a tourist destination.

But a strategic dialogue comprehends much more thanthis. People-to-people and institution-to-institutioncontacts should be increased rapidly, including com-munication between the National Assembly and theCongress. There should be room to expand the existingmodest program in higher education sponsored by theFord Foundation and Fulbright Program, among others.The kind of constructive program conducted by TheAsia Foundation and other nongovernmental organiza-tions can be immensely helpful to Vietnam — and alsoto Americans seeking to understand Vietnam. The creation of the Vietnam Education Foundation, withfunds that come from debt payments Vietnam is makingto the United States, should become an important ele-ment in this effort.



As in other countries, foreign policymaking in Vietnamis a long and complicated process because it concernsrelations with many countries and important interna-tional institutions. Apart from that, a country’s foreignpolicy always follows its internal policy in order to bestserve national interests. It means that the interests ofevery stratum of the people should be reflected in its foreign policy. In this connection, this chapter willdescribe at length the processes and institutions involvedin Vietnamese foreign policymaking as well as the corre-sponding domestic factors that affect it.

To show the complications in this foreign policymakingprocess, the chapter will also deal with the relationshipand interplay between policymaking institutions inVietnam when foreign policy is actually formulated. Inorder to help the reader get a clearer picture of thisprocess, some concrete examples from recent historicalexperiences will be provided. As this paper will discussthe implications of Vietnam’s foreign policymakingprocess for its policy toward the United States, twoexamples are provided from the experience of Vietnam-U.S. relations: (1) Vietnam’s attitude toward the question of the U.S. government’s promise to helpVietnam heal the wounds of war as stipulated inArticle 21 of the Paris Agreement on Vietnam signedin January 1973; and (2) the issue of troops listed asmissing-in-action (MIA), which has been the mainconcern of the United States.

In the conclusion, the author will try to draw someimplications for Vietnamese foreign policy toward theUnited States in the future.

TThhee FFoorrmmuullaattiioonn ooff VViieettnnaammeessee FFoorreeiiggnn PPoolliiccyy

The main objective of this chapter is to describe howour foreign policy is formulated. Vietnam is a socialistcountry under the leadership of the Communist Party ofVietnam. The Party exercises its leadership through itsstrategy and policy, which are carried out not only byParty members but also by the whole society. To workout strategy and policy, the Party convenes its NationalCongress every five years. At each National Congress,the general secretary of the Party has to present a politi-cal report in which the general lines of the Party ondomestic and foreign policy are laid down. This policy-making process is a collective one. It takes months, evenyears, to come to the final draft. In preparing the workof the National Congress, the Party sets up various adhoc committees on various subjects. The Committee forForeign Affairs has the responsibility to draft the sectionof the political report dealing with the international situ-ation and foreign policy in the following five or ten years.

The second step in the preparation of the Party politicalreport is the discussion and approval of the draft by theCentral Committee. The third step is the decision of theCentral Committee to make public the draft of thepolitical report for national discussion. Every citizen ofVietnam, whether a Party member or not, has the rightto participate in the discussion of the political report.They have the right to make recommendations to theCentral Committee. The fourth step includes discussionsin the Central Committee about the recommendationsand amendments put forward by the people throughpublic discussion. Only after that can the draft of thepolitical report be presented to the National Congress.Here again the delegates to the Party Congress will makerecommendations and amendments before the report is adopted.

IInnssttiittuuttiioonnss aanndd PPrroocceesssseess iinn VViieettnnaammeessee FFoorreeiiggnn PPoolliiccyymmaakkiinngg::IImmpplliiccaattiioonnss ffoorr PPoolliiccyy TToowwaarrdd tthhee UUnniitteedd SSttaatteessPhan Doan NamAdvisor, Institute of International RelationsFormer Assistant Minister of Foreign Affairs


Once the general lines of the Party strategy and policyare adopted by the National Congress of the Party, thewhole nation — specifically the executive branch and allmass organizations — have the duty to work out theirconcrete plans of action to carry out the Party directions.

The next phase of our policymaking process is for thegovernment to present to the National Assembly its pro-grams for carrying out the Party line; the prime ministerhimself is responsible for this task. In the domain of for-eign policy, sometimes the prime minister entrusts theforeign minister to report to the National Assembly. Theforeign minister has to explain or reply to all questionsput forward by members of the National Assembly.Based on the general line worked out by the NationalParty Congress and approved by the National Assembly,the Foreign Ministry formulates its plan of action to putthe Party line on international affairs into effect. TheForeign Ministry has the duty to handle the daily rela-tions with foreign countries and international agencies.

Deputy foreign ministers and assistant foreign ministerssupport the foreign minister to fulfill his duty. Each is incharge of one geographical region or specific interna-tional domain with the help of the regional departments,departments on international law and treaties andnational borders, and departments on international insti-tutions. In order to coordinate the work of all regionaland functional departments since 1978, we have estab-lished the foreign policy planning staff and now theDepartment of Foreign Policy, which serves as a directassistant to the leadership of the ministry.

The role of the Institute for International Relations(IIR) in the policymaking process of the ForeignMinistry is also significant. IIR is entrusted by the for-eign minister with two functions: first, to train youngdiplomats for the ministry and other departments forinternational relations; and second, to carry out strategicresearch as a think tank for the ministry in its foreignpolicymaking process.

The Foreign Ministry is a strong institution withinVietnam’s executive system and is usually headed by amember of the Politburo. In handling its daily work, incase of very important matters, it can seek the approvalof the whole Politburo or its key members like the partysecretary general, the president of state, and the primeminister. In case of an emergency, especially duringwartime, the Foreign Ministry can recommend that thePolitburo convene a special session of the CentralCommittee to discuss the problems and adopt the neces-sary resolution which the whole Party will follow. Anexample of this is the resolution to launch a diplomaticoffensive adopted by the Party Central Committee in1967 leading to the Paris talks in May 1968 betweenVietnam and the United States to reestablish peace inVietnam. Another example is the resolution of thePolitburo in July 1972 deciding to change the strategyfrom war to peace, leading to the signing of the ParisAgreement in January 1973.

In sum, the overall responsibility for the conduct of ourexternal relations lies with the Ministry of ForeignAffairs. To carry out the Party line on foreign policy,however, the Ministry of Foreign Affairs has to cooperatewith the Party’s Commission for External Relations onmatters relating to political parties in power in othercountries; as well as with the Defense Ministry on secu-rity-related matters, and with the Finance and Tradeministries on international trade and commerce. Apartfrom the Commission for External Relations, the otherministries mentioned above are not foreign policy insti-tutions, but their cooperation is very important for theMinistry of Foreign Affairs to carry out successfully thetasks entrusted to it by the Party. In some cases, theseministries have a big say in helping the Party to formu-late its foreign strategy.

So in reality, Vietnam has many institutions, formal andinformal, involved in the foreign policymaking processes,but all of them are under the leadership of the Party,which has the final say in deciding a foreign policy.Once the leadership of the Party passes a resolution,every ministry must carry it out.

DDoommeessttiicc FFaaccttoorrss iinn tthhee VViieettnnaammeessee FFoorreeiiggnnPPoolliiccyymmaakkiinngg PPrroocceessss

Since independence in 1945, Vietnam has experiencedsevere problems with some major powers and neighbors.Resolution of such problems is vital to the survival ofany nation, particularly when they concern nationaldefense and reconstruction. Usually national defense is apriority that follows the construction of a country’s basicinstitutions, but in this case the reverse was true. From1945 to the end of the Cold War, Vietnam sufferedsuccessive aggression from different great powers in collaboration with its neighbors. Thus, during this period,the question of national defense was of first priority.Only after the signing of the Paris Peace Agreement onCambodia in 1991 could Vietnam dedicate itself fully tothe task of national construction.

I say “fully” because in reality Vietnam had alreadyadopted doi moi (renovation) after the Sixth PartyCongress in 1986. Many people still think that thechange in Vietnam’s foreign policy resulted from thecollapse of the Soviet Union and the Eastern Europeansocialist countries, which were the country’s main sup-porters. This is not true, even though at that timeVietnam still received a great deal of aid from the SovietUnion, equivalent to $2 billion annually. In fact, thedriving forces behind the course of renovation weredomestic. In 1985-1986, Vietnam suffered from a severeeconomic crisis. Our economy was on the brink of col-lapse due to poor management. The economic policycarried out during wartime, based on state subsidies,state command and bureaucracy, became an obstacle tothe development of production, so Vietnam had toenact reforms and change its basic economic thinkingand governance.

A related question is why Vietnam was able to carry outthe renovation course only since 1986. Many of ourleaders, especially at the provincial level, actually wantedand tried to initiate some kind of reform of the economyas early as the end of the 1970s, but they were unable todo so due to disagreement in the top leadership about

the basic theories and priorities of socialism. Fortunately,Vietnam had a new leadership by mid-1986, whichdecided to launch doi moi to save the economy fromcollapse. As a result, Vietnam also had to modify itsforeign policy to support the reforms enacted as part ofthe renovation process.

In reality, only after the settlement of the Cambodiancrisis could Vietnam enter a new phase of developmentin which national reconstruction became the first priorityof any agenda. The seventh, eighth, and ninth NationalParty Congresses in 1991, 1996, and 2001, respectively,set forth the task of our foreign policy as follows: createfavorable international conditions for the reconstructionand defense of the country. In order to implement thenew strategy formulated by the Party, the generalapproach of Vietnam’s foreign policy is to be friends toall countries in the world community striving for peace,cooperation, and development. The Party also set forththe guiding principles for a foreign policy of independ-ence, self-reliance, and multilateralization and diversifi-cation of relations with other countries and internationalinstitutions. This policy has enjoyed the full support ofall strata of people because it serves their interests. Whilepeople may have differing opinions on a given subject,being soft on some and tough on others, it would be amistake to try and divide members of the Politburosimplistically into hawks and doves when it comes toforeign affairs. All the leaders are elected by the peopleto represent their interests. As a small country, Vietnamwants to live in peace with other nations. In this regard,Vietnam’s national interests conform to the interests ofall countries in the world community — that is, peace,stability and development.

In order to create a favorable environment, regionallyand internationally, for the reconstruction and defense ofthe country, Vietnam attaches great importance to thedevelopment and improvement of the relations with itsneighbors and the major powers, while unceasinglymaintaining traditional, friendly relations with old alliesall over the world.



Frankly speaking, during the Cold War Vietnam was notable to maintain good relations with most of its neighborsor with all the great powers because of the confrontationbetween the two major blocs. Just after regaining inde-pendence, Vietnam sought to establish good relationswith its neighbors, but again failed to do so due to foreigninterventions. This could be seen clearly in Vietnam’srelations with the United States, France, and the UnitedKingdom. In the atmosphere of the Cold War and facingthe danger of losing national independence again,Vietnam had no other alternative but to lean to the social-ist camp for national defense and economic rehabilitation.

That is why Vietnam immediately started to normalizerelations with all its neighbors and the major powerswhen the Cold War ended. As a result, Vietnam was ableto find a negotiable solution to the Cambodian crisis incooperation with its friends in ASEAN. Vietnam fullynormalized relations with its neighbors and became amember of ASEAN in 1995. In addition, normal diplo-matic relations between Vietnam and China wereresumed in 1991. And thanks to the efforts of bothsides, Vietnam and the United States established diplo-matic relations in 1995 and signed a bilateral tradeagreement in 2000. At present Vietnam has diplomaticrelations with about 170 countries in the world. It is rec-ognized that Vietnam is now a country, not a war, and itcan be said that Vietnam’s foreign policy has deep rootsin domestic requirements and considerations.

TThhee IImmppaacctt ooff PPoolliiccyymmaakkiinngg PPrroocceesssseess aanndd IInnssttiittuuttiioonnssoonn VViieettnnaammeessee FFoorreeiiggnn PPoolliiccyy ((eessppeecciiaallllyy ttoowwaarrdd tthheeUUnniitteedd SSttaatteess bbeeffoorree nnoorrmmaalliizzaattiioonn))

Although Vietnam and the United States had alreadynormalized diplomatic relations in 1945, destiny keptthe two countries at loggerheads for half a century.History will show which side was responsible for thisstalemate. From the Vietnamese side, however, it wasVietnam’s policymaking processes and its institutionsthat did not allow a quick decision on every question,especially those relating to Vietnam-U.S. relations. Thetwo examples below clearly illustrate this point.

The first concerns attitudes toward the question of U.S.contributions toward healing the wounds of war inVietnam, as stipulated in Article 21 of the ParisAgreement on Vietnam in 1973. To make theVietnamese side confident in the U.S. commitment onthis matter, President Richard M. Nixon even sent a letter to Vietnamese Prime Minister Pham Van Dong inFebruary 1973 promising that Washington would provideVietnam with $3.25 billion in reconstruction aid over afive-year period. Subsequently, the United States andVietnam started to negotiate in Paris from March to July1973 on the question of how to use this aid. By the endof July 1973, the two delegations hammered out a docu-ment describing in detail not only the list of goods to besupplied to Vietnam, but also the procedures for imple-mentation. After finishing this job, the U.S. delegationleft Paris saying they had to report to the president. Theynever returned to Paris again, however. Given the diffi-culties facing President Nixon as a result of the Watergatescandal, the Vietnamese leaders decided to wait.

When Jimmy Carter replaced Nixon’s successor GeraldR. Ford as president of the United States, he decided tostart the process of normalizing relations with Vietnam.In July 1977, the United States did not veto Vietnam’sapplication to the United Nations and commencednegotiations on normalizing relations with Vietnamwithout conditions. Nevertheless, the negotiations pro-ceeded very slowly because the U.S. delegation, headedby Richard Holbrooke, would not agree to discuss thequestion of U.S. reconstruction aid as stated in the 1973Nixon letter. Given the complexity of the situation inthe world at that time and in the United States itself,Vietnam’s Ministry of Foreign Affairs proposed thatVietnam should hasten the process of normalizing rela-tions with the United States by giving up the demandfor reconstruction aid. This proposal won the support ofthree key members of the Politburo — General SecretaryLe Duan, Premier Pham Van Dong, and Le Duc Tho,the chief negotiator of the Paris Agreement with HenryKissinger. They wanted a consensus within thePolitburo, however, and asked the Ministry of ForeignAffairs to explain the situation to other members of the


Politburo in order to win their support. As a result ofthese deliberations, the Vietnamese side could only initi-ate the agreement on the normalization of relations with-out conditions in October 1978. By then it was too late.Carter decided to normalize relations with China first anddelayed the normalization of relations with Vietnam. Anopportune time didn’t come for another 17 years.

The second episode concerns our handling of the ques-tion of MIAs. This is a more complicated question. It isdifficult for us to achieve a consensus on the handling of this question not only in the Politburo of the Party,but also among different agencies of the government andespecially among the people. There were many factorsthat made it difficult to reach a national consensus,although the Vietnamese side realizes this is a humani-tarian question.

First, the United States maintained a hostile attitudetoward Vietnam after the war by colluding with China,and by imposing an economic embargo against Vietnam.Vietnam’s reaction was: why should we cooperate withthem when they try to isolate us and remain hostile tous? Second, although ordinary people realize that this isa humanitarian question, they of course also think aboutthe fate of Vietnam’s MIAs. Many Vietnamese think theUnited States should do more to help Vietnam on thisissue. This is also a humanitarian question for Vietnam.Third, the war mentality still haunted the Vietnamesepeople’s spirit, especially within the military. The suspi-cion could not be overcome overnight. To let U.S. heli-copters hover over people’s heads in searching for U.S.MIAs reminded them of the wartime atmosphere. Somepeople still doubted whether the United States was reallysearching for their MIAs, and suspected that it wasinstead trying to make an excuse to carry out spy mis-sions. Fourth, most of the Vietnamese people, includingmany leading figures in the Party and Government,raised questions over U.S. sincerity: why shouldn’t theU.S. normalize relations first and settle the question ofMIAs later? The United States still has thousands ofMIAs from World War II and the Korean War; why did

they focus so much attention on their MIAs in Vietnam?

These questions show that Vietnam met many difficul-ties in settling problems with the United States, whichfor decades was considered the No.1 enemy.

However, the Sixth Party Congress in 1986 and especial-ly Politburo Resolution No. 13, passed by the Politburoin May 1988, adopted new approaches in foreign policy.At the same time, the attitude of the United Statesbecame more flexible and realistic. This was apparent intalks between Vietnam’s Foreign Minister and the U.S.Secretary of State in 1988 and especially in the decisionof President George Bush to send a personal emissary onMIAs, General John W. Vessey, to Vietnam during thesame year.


Although the relations between the two countries havebeen fully normalized with the ratification of theVietnam-U.S. trade agreement, it does not mean thatbilateral relations can develop rapidly. As a result ofVietnam’s processes of foreign policymaking and itsinstitutions, no decision about improving the relationswith the United States can be made without caution orsuspicion. So far, U.S. policy toward Vietnam in manycases has not helped to accelerate Vietnam’s policymak-ing processes, and sometimes it makes it worse due toU.S. double standards.

The second factor that does not permit Vietnam to gofaster in its relations with the United States is the suspi-cion still haunting the Vietnamese people when dealingwith the United States. Former President Bill Clintonmade it clear that there was an ulterior motive of theUnited States toward Vietnam in his speech on the decision of the U.S. to normalize relations. He said thatnormalizing relations would “advance the cause of free-dom in Vietnam, just as it did in Eastern Europe andthe former Soviet Union.”1 So in a word, the two sides

1 The White House, Office of the Press Secretary, Remarks by the President in Announcement on Normalization of Diplomatic Relations with Vietnam, July 11,1995. Available at: http://www.ibiblio.org.

need more confidence-building measures in order toimprove bilateral relations.

In Vietnam, the United States is still seen as an ambi-tious great power that wants to impose its will on othercountries. Every move toward more rapid improvementof relations with the United States should be consid-ered carefully and cautiously. In spite of continuingsuspicions, however, Vietnam will try its best toimprove relations with the United States based on oursupreme national interest. Vietnam will treat theUnited States on an equal footing, without leaningtoward other big powers against the United States. Theball is now in the U.S. court.



IInnttrroodduuccttiioonn:: TThhee AAddvvaannttaaggeess ooff aa ““WWeeaakk”” SSttaattee

Since the time of the Vietnam War, the U.S. Congresshas strongly influenced American policy towardVietnam, in ways that have both promoted and hin-dered the relationship. Congress’s role in foreign policy-making in general — and toward Vietnam in particular— often seems confusing to non-Americans. The consti-tutional division of powers in the United States meansthat the U.S. often appears to have a cacophony of voic-es speaking on foreign policy, representing interests thatare global, national, and highly local.

While the division of foreign policy powers may frus-trate foreign countries by creating doubts about the abil-ity of the presidents to deliver on promises, a relativelyweak (in structural terms) executive can confer enor-mous advantages to a country in international negotia-tions. Skilled presidents can use their lack of ultimatedecision-making power to demand concessions, on thegrounds that if concessions are not obtained, the agree-ment will not be ratified by the legislature.

Moreover, having multiple voices on foreign policyallows a country to experiment with foreign policyoptions that a unitary government might consider toorisky or threatening. Indeed, executive branch officialsoccasionally use members of Congress to float trial bal-loons by proposing initiatives that the president isunwilling or unable to initiate at the moment. In thecase of Vietnam-U.S. relations, for instance, Congress’sseat at the foreign policymaking table allowed individualmembers in the 1980s and 1990s to take the lead in has-tening the normalization process.

This paper identifies the ways Congress influences U.S.foreign policy in general and U.S. policy towardVietnam in particular. It is divided into three parts. Thefirst two discuss the tools that the members of Congressuse to affect foreign policy, and the factors that tend toheighten or diminish Congress’s foreign policy influence.The third section explores the shifts in congressionalattitudes toward Vietnam and offers some predictionsfor the future.

CCoonnggrreessss’’ss FFoorreeiiggnn PPoolliiccyy TToooollss

The authors of the U.S. Constitution, suspicious ofoverbearing executive authority, deliberately divided for-eign policy powers between the executive and legislativebranches. Congress’s role in foreign policy formationderives from Article 1 (principally, Sections 7 and 8) ofthe Constitution, which grants Congress certain powers,including the power to raise revenue, regulate interna-tional commerce, declare war, raise and support a mili-tary, and to “make all Laws” deemed “necessary andproper....” Additionally, Article 2 (Section 2) gives theSenate the special powers of confirming presidentialappointees, and of ratifying treaties.

The bifurcation of authority often makes it difficult toidentify when and where a particular U.S. policy origi-nated, decide when a proposal actually influences policy,and determine when a modification creates a newpolicy.1 As a general rule, the president, as the head ofstate, is the initiator of U.S. foreign policy, with theCongress playing a reactive role. On this point, the his-

TThhee RRoollee ooff CCoonnggrreessss iinn UU..SS.. FFoorreeiiggnn PPoolliiccyy aanndd UU..SS..--VViieettnnaamm RReellaattiioonnssMark ManyinForeign Affairs Analyst Congressional Research Service

1 Richard F. Grimmet, Foreign Policy Roles of the President and Congress, CRS Report RL30193, June 1, 1999, p. 1.


torian Edwin Corwin made an observation on U.S. for-eign policy that is still relevant today: “While the presi-dent is usually in a position to propose...the Congress [is]often in a technical position at least to dispose. The ver-dict of history, in short, is that the power to determinethe substantive content of American foreign policy is adivided power, with the lion’s share falling usually,though by no means always, to the president.”2

TThhee BBuuddggeett PPrroocceessss

Congress’s most important foreign policy tool is thepower of the purse. The president’s need to haveCongress pass the annual budget provides members ofCongress with a vehicle to restrict the president’s free-dom of action or require the president to undertakenew foreign policy initiatives. Often, these congressionalmeasures take the form of amendments to (or inser-tions into) appropriations legislation that the presidentis unlikely to veto.3 The passage of the so-calledJackson-Vanik amendment is one example of Congressusing the budgetary process to affect foreign policy. In 1974, the Nixon administration was attempting tonormalize trade relations with the Soviet Union, as part of its policy of détente. Congress defied theadministration by passing amendments to the TradeAct of 1974 that made the granting of Most FavoredNation (MFN) treatment to most communist countriesconditional upon those countries liberalizing their emigration policies.4 As is well known in Vietnamesegovernment circles, another requirement of theJackson-Vanik amendments is that the United Statesmust sign a bilateral trade agreement, which is subjectto congressional approval, before commercial relationscan be fully normalized.

CCoonnggrreessssiioonnaall OOvveerrssiigghhtt

Congress also influences U.S. foreign policy through itsongoing oversight of executive branch activities. Themost common examples are hearings, which may beheld by any congressional committee on any subjectwithin its jurisdiction. Hearings provide members withan opportunity to shape U.S. policy by raising questionsfor public discussion. During the Vietnam War, forinstance, Senate Foreign Relations Committee hearingscontributed to public opposition to U.S. policy inSoutheast Asia. Members of Congress can also use theiroversight duties to support a particularly controversialpresidential policy. As will be discussed below, PresidentClinton’s normalization of relations with Vietnam wasmade politically possible by the bipartisan public sup-port and prodding given by several members who wereveterans of the Vietnam conflict, most notably SenatorsJohn Kerry, John McCain, Bob Kerrey, and Chuck Robb.

Other examples of congressional oversight include con-ducting investigations and imposing reporting require-ments on the executive branch, such as the requirementthat the president report to Congress on human andreligious rights conditions in various countries. TheSenate’s confirmation and treaty-approving powers alsoprovide it with a powerful means of exercising oversight,and influence, over the president’s foreign policy.Additionally, members of Congress frequently travel toforeign countries to oversee and take positions on U.S.foreign policy.

CCoonnggrreessssiioonnaall RReessoolluuttiioonnss

Every year, individual members of Congress introducelarge numbers of resolutions expressing the sense of theHouse, Senate, or both. When passed, these resolutionsin effect become the official policy of the legislative

2 Edward S. Corwin, The President, Office and Powers, 1787-1957 (New York: New York University Press, 1984), p. 171, as cited in Grimmet, p. 1.3 Grimmet, p. 17.4 Grimmet, p. 18. Over the years, this emigration requirement has become interpreted to mean liberalization of human rights more broadly defined.


branch. They therefore may be considered a channel ofcommunication between the Congress and the president,and between the Congress and foreign countries.5Resolutions generally are considered to be a weak tool;since they are not legally binding, the executive branchoften ignores them. However, resolutions can play animportant role in gauging the level of congressional sup-port or opposition to controversial policies. For instance,as will be discussed below, in 1994 President Clintonwaited to order an end to the U.S. trade embargo onVietnam until after the Senate had passed a resolutionsupporting such a move.

TThhee DDeetteerrmmiinnaannttss ooff CCoonnggrreessssiioonnaall IInnfflluueennccee

Congress’s ability and willingness to modify and initiateforeign policy has ebbed and flowed over the years, asthe relative power of the two branches changed in accor-dance with the needs of the day. The degree of congres-sional influence depends on two primary variables: thepresence or absence of a foreign policy crisis, such as awar; and the particular issue-area involved.

FFoorreeiiggnn PPoolliiccyy CCrriisseess

Typically, the pendulum swings toward the presidencyduring times of foreign policy crises, which place a pre-mium on having one national voice and quick, central-ized decision-making. Thus, the following historicalperiods are often considered to be ones of presidentialdominance:

1789-1820s (formation of the republic; War of 1812)

1861-1869 (American Civil War; Reconstruction period)

1898-1918 (Spanish-American War, World War I)

1936-early 1970s (World War II, Cold War, and Vietnam conflict)

In the late 1960s and early 1970s, the distrust of thepresidency brought about by Watergate and the failureof U.S. policy in Vietnam led Congress to reassert itsrole in forming U.S. foreign policy. Individual membersof Congress such as Senator William Fulbright emergedas prominent critics of Presidents Johnson and Nixon,most notably by holding hearings that gave opponentsof the War a platform. It was during this period thatCongress increased its resources greatly, by creating theCongressional Budget Office and the Office ofTechnology Assessment, and by expanding the capacitiesof the General Accounting Office and the CongressionalResearch Service.

During the presidencies of Ronald Reagan and the firstGeorge Bush, the pendulum swung back somewhattoward the presidency, though by most measures, notnearly to the extent that it had been at the height of theCold War. Congress had become too accustomed to arole in foreign policy, and now had the institutionalpower to assert itself. Divided government — with theDemocrats in firm control of the House and often of theSenate — provided an additional political rationale forchallenging the President’s foreign policy prerogative.Furthermore, the thawing of the Cold War and the per-ceived decline in U.S. economic power provided open-ings for Congress to directly challenge the executivebranch’s foreign policy rationale. Thus, during the1980s, Congress pushed the Reagan and first Bushadministrations to become increasingly assertive in for-eign economic policy, particularly in U.S. trade relationswith Japan. Congress also acted to reverse U.S. policiestoward South Africa and Latin America.

Congressional influence over foreign policy peaked againduring the 1990s. The removal of the Cold War rudderthat had guided U.S. policy for 50 years led to a searchfor a new paradigm. Bill Clinton captured the presidencyin 1992 with an explicitly domestic agenda; foreign policywas to be a secondary concern. Congress threw itselfinto the vacuum, particularly after the Republicanssecured a majority in both Houses in 1994. The Clinton

5 Grimmet, p. 14.


years saw Congress force the executive branch to under-take initiatives ranging from major policy commitments,such as the development of a missile defense system tomore narrow ones like the imposition of conditions onmilitary relations with Indonesia. In contrast, normaliza-tion with Vietnam was a case where the Clinton admin-istration, with the assistance of individual members ofCongress, was out in front of the majority in Congress.

The current consensus on the administration of GeorgeW. Bush is that the war on terrorism has swung the bal-ance of power back toward the presidency. It remains tobe seen, however, whether this shift is temporary orlong-standing. The longer a sense of crisis persists, thelonger and more successfully the President is likely toseek congressional deference in foreign policy.

IIssssuuee AArreeaass:: TTrraaddee aanndd HHuummaann RRiigghhttss

Congressional influence over foreign policy also varies byissue area. In general, Congress is best able to take theinitiative, or block presidential initiatives, on narrowissues. In part, this is due to the difficulties of marshal-ing hundreds of lawmakers to support a broad policyinitiative. Also, it is due to Congress being in many wayscloser to the American people. Members of Congressoften find themselves to be the best voice of interests,particularly economic ones that percolate up fromAmerican society. Many of these interests tend to beparochial, and thus their advocates often find thempassed over by the executive branch, which has to beconcerned with the broader elements of U.S. foreignpolicy. It is not surprising, for instance, that complaintsabout Vietnamese catfish imports entered the policydomain through the Congress, during the Senate’s confirmation hearings of U.S. Trade RepresentativeRobert Zoellick.

Human rights have become another issue tailor-made forCongress to assert itself. Since Congress does not have

the responsibility for executing foreign policy, it has theluxury of insisting that political and religious freedomsbe included on the U.S. foreign policy agenda.Additionally, allegations of human rights abuses areoften most forcefully raised by members of exile com-munities and non-governmental organizations, groupsthat members of Congress are better prepared to hearand represent than the executive branch.

Congress has been principally responsible for institution-alizing human rights on the U.S. foreign policy agenda.Even when promoting human rights has been officialpolicy, presidents typically find it difficult to maintainthis priority while managing broader security and economic concerns, as Presidents Jimmy Carter andClinton discovered. To counter this tendency, Congresshas used all its tools available to try to elevate the impor-tance of human rights. In 1975, Congress required thatthe State Department monitor and report to Congresson human rights conditions in all recipients of U.S. for-eign aid. In 1998, Congress elevated religious rights onthe foreign policy agenda by passing the InternationalReligious Freedom Act, which was signed by PresidentClinton. The law created the U.S. Commission onInternational Religious Freedom (USCIRF) and theState Department Office of International ReligiousFreedom. The latter is headed by an ambassador at large,who is subject to Senate approval and must report toCongress annually on the state of religious freedom inother countries. The law also identified sanctions to beplaced on countries if they are found to have engaged inor tolerated particularly severe forms of religious perse-cution.6 The House International Relations Committee,Senate Foreign Relations Committees, and the USCIRFhave held hearings on the religious rights situation inselected countries.

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For the past 25 years, Congress has taken a special interest

6 See Vita Bite, Religious Persecution Abroad: Congressional Concerns and Actions, CRS Report 97 968F, January 15, 1999.


in Vietnam, at a level out of proportion to Vietnam’sactual strategic or economic importance to the UnitedStates. In 2000, for example, the monthly report thatthe Congressional Research Service (CRS) produces onVietnam, The Vietnam-U.S. Normalization Process,received nearly twice as many requests from congression-al offices as the CRS’s monthly report on U.S.-Japanrelations. Since the end of the Vietnam War, no presi-dent has been able to act on Vietnam without producingintense, often impassioned congressional responses.

Congress’s peculiar fascination with Vietnam has beenprimarily due to the emotional legacies of the VietnamWar, particularly after the Vietnamese withdrawal fromCambodia and the resettlement of most of the “boatpeople” effectively removed Vietnam from U.S. strategicthinking in Southeast Asia. Until the early 1990s, thevestiges of the war hurt Vietnam’s standing in Congress.This situation gradually reversed itself over the course ofthe 1990s, to the point where the desire to close thechapter on the Vietnam War actually helped the U.S.-Vietnam bilateral trade agreement (BTA) sail throughboth Houses in 2001. The agreement’s leading propo-nents on Capitol Hill were Vietnam War veterans. AndAmerican unions offered little opposition to the pact inpart because their rank and file viewed it as an “end ofWar” issue.

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Until the mid-1990s, congressional interest in Vietnamwas dominated by a desire to obtain a full accountingfor U.S. prisoners-of-war/missing-in-action (POW/MIAs). In 1977, both Houses passed resolutions oppos-ing U.S. aid to Vietnam following Hanoi’s refusal toprovide information on American POW/MIAs untilafter it received a promise of billions of dollars in aid. A widespread belief pervaded Capitol Hill that Vietnamwas “warehousing” several hundred remains and releas-ing them incrementally to gain tactical advantage innegotiations with the United States. Faced with strong

pressure from veterans groups, Congress throughout the1980s continued to insist that normalization could notoccur until Vietnam cooperated in providing informa-tion on POW/MIAs, a position that became official U.S.policy. Members of Congress also expressed their con-cern about human rights in Vietnam, focusing on theplight of political prisoners, and about the situation ofVietnamese refugees.

Starting in the early 1990s, Congress began to take amore supportive view of normalization. A major con-tributor to this change was the bipartisan Senate SelectCommittee on POW/MIA affairs, which betweenAugust 1991 and December 1992 conducted what manyconsider the most extensive independent investigation ofthe POW/MIA issue undertaken. Chaired by JohnKerry and vice-chaired by Senator Bob Smith, the com-mittee’s report concluded that there was some evidencethat POWs were alive after the U.S. withdrawal in 1973,and that although there was no “conspiracy” inWashington to cover up live POWs, the U.S. govern-ment had seriously neglected and mismanaged the issue,particularly in the 1970s. Perhaps most importantly, thecommittee’s televised hearings were cathartic for manyAmericans; they played a major role in defusing much ofthe passion that had surrounded the POW issue. Thecommittee is an excellent example of how Congress canuse its oversight and investigative powers to influenceU.S. policy.

Legislatively, a turning point was passed on January 27,1994, when, following months of high-level interactionwith Vietnam on resolving POW/MIA cases, the Senateapproved a resolution urging the lifting of the U.S. tradeembargo on Vietnam. The following week, PresidentClinton formally ended the embargo. The language ofthe Senate resolution, attached to authorizing legislation,proved controversial in the House, but ultimately survived.

Following the lifting of the embargo in 1994, each steptoward normalization confronted passionate yet declin-ing opposition from Congress. As before, the key toovercoming opposition was progress on the POW/MIA


issue. The increased support for normalization is indicat-ed by the steadily increasing support for presidentialwaivers of the Jackson Vanik amendment restrictions(see Figure 1), and by the overwhelming margins bywhich the U.S.-Vietnam BTA was passed in late 2001.7

A number of factors were responsible for the shift incongressional opinion on Vietnam. Most importantly,Vietnamese-U.S. cooperation on resolving POW/MIAissues began to convince members of Congress that theHanoi regime was sincere about improving relations andcould be a reliable partner. Other signs of change inVietnam — the withdrawal from Cambodia, the doi moieconomic reforms, the change in leadership followingthe Sixth and Seventh Party Congresses in 1986 and1991 — contributed to the transformation in percep-tions on Capitol Hill. Changes in Congress and theUnited States helped as well. The passage of time andthe U.S. victories in the Cold War and the Gulf Warhad dulled the emotional edge of Vietnam War-eraissues. Also, the leadership of several members ofCongress who were veterans of the Vietnam conflict was

crucial in convincing colleagues that it was time to support bilateral normalization. Additionally, led bySenators John Kerry, John McCain, Bob Kerrey, ChuckRobb and Ambassador Pete Peterson (a former congress-man), these members worked behind the scenes to per-suade the Clinton administration that the time was rightto accelerate the normalization process. President Clintoninitially was reluctant to do so because throughout hisfirst term he was dogged by allegations that he had avoid-ed military service in Vietnam in the 1960s. Without thebipartisan political cover afforded by these veterans inCongress, it certainly would have taken the Clintonadministration longer to push a policy of normalization.

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With the defusing of the POW/MIA issue, Vietnam’shuman rights record has emerged as the sorest point ofbilateral contention. In particular, congressional critics ofnormalization have seized upon human rights as a vehi-cle for opposing the policy. These members, who tend tocome from the far right on the political spectrum, arekept well-informed of accounts of persecution by overseasVietnamese, exiled ethnic minority groups, and religiousorganizations. Congressional critics have intensified theircampaign in recent years, even as most individualVietnamese began to enjoy more personal freedom thanperhaps at any time since Vietnamese reunification.Until recently, the legislative results of their efforts generally were confined to a number of resolutionscondemning the Vietnamese government for persecutingone or more groups. Their most ambitious project todate, the Vietnam Human Rights Act (H.R. 2833),sought to up the ante.

The act was introduced by Congressman Chris Smith inlate June 2001 and passed the House in a 410-1 vote inearly September. It ultimately stalled in the Senate dueto an anonymous “hold” placed on the measure by at

7 These restrictions prohibit the President from normalizing commercial relations with selected socialist and formerly socialist countries if they do not meet cer-tain requirements regarding freedom of emigration.

Figure 1: House Votes on Vietnam’s Jackson-Vanik Waiver, 1998-2002


least one member.8 Its supporters were able to achievesuch a lobsided victory in the House in part because theact was weakened to such an extent that even the cham-pions of U.S.-Vietnam normalization could vote infavor, particularly since they knew that it was unlikely topass the Senate. As originally proposed, the act wouldhave created a congressional-executive commission onVietnam to monitor how well Vietnam lives up to inter-nationally recognized human rights standards. It wouldhave withheld bilateral, non-humanitarian aid unlessVietnam received a presidential certification that it ismeeting certain human rights conditions. U.S. supportfor aid from international financial institutions wouldhave been subject to a similar requirement. The bill alsorequired that additional money should be allocatedtoward promoting democracy in Vietnam, through sup-port of non-governmental organizations and Radio FreeAsia broadcasts.

Realizing that most of these measures were likely todoom the bill in the House, its sponsors allowed mostof them to be eliminated or significantly watereddown. The commission on Vietnam was eliminated.The final bill banned only increases in non-humanitarianaid absent an affirmative presidential certification. U.S.support for international institution aid is effectivelyfreed of any conditionality. Most importantly, the billallowed the president to waive the provisions of the acteven if Vietnam is not found to have met its humanrights standards.

Although the act stalled in the Senate, it is likely that inthe future its supporters will try to circumvent the“hold” by inserting the act’s provisions into an amend-ment to another bill.

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Congress’s perception of Vietnam has undergone aremarkable transformation over the past decade, fromthat of a war to a country. In large measure, this shiftmay be attributed to the Vietnamese government, whichthrough its actions has demonstrated an eagerness toundertake domestic reforms, cooperate with the UnitedStates on POW/MIA cases and other issues, and rejointhe international community. Because of these steps byHanoi, wartime legacies moved from blocking to aidingthe normalization process.

In the coming years, however, Vietnam will be less ableto use the war to its advantage on Capitol Hill, as histo-ry’s resonance fades and becomes largely confined to thefew remaining normalization issues between Vietnamand the United States. The war may also remain a sub-text — albeit a diminishing one — of clashes overhuman rights, as many minority ethnic and religiousgroups in Vietnam fought with U.S. and SouthVietnamese forces. In other areas — such as trade andsecurity issues — U.S. relations with Vietnam will betreated on their own terms, judged by their presentstrengths and future potential. In particular, with U.S.-Vietnam trade likely to increase significantly in the nextfew years, Vietnamese officials will have to brace them-selves for a high level of congressional attention to bilat-eral economic relations and Vietnam’s implementationof the BTA.

Also, contrary to conventional wisdom, the war on ter-rorism is likely to increase congressional scrutiny ofVietnam’s human rights situation. Unlike other Asiancountries — such as Indonesia — that are the targets ofhuman rights accusations, Vietnam as yet has little tooffer the U.S. in combating terrorism. Hanoi may there-

8 "Holds" are informal devices that permit a single senator or any number of senators to stop — sometimes temporarily, sometimes permanently — floor con-sideration of measures or matters that are available to be scheduled by the Senate. A hold, in brief, is a request by a senator to his or her party leader to delayfloor action on a measure or matter. It is up to the Senate majority leader to decide whether, or for how long, he will honor a colleague’s hold. Scheduling thebusiness of the Senate is the fundamental prerogative of the majority leader, and it is done in consultation with the minority leader. Holds are unique to theSenate. Although there have been attempts to end the practice of anonymous holds, the practice still continues. See Walter Oleszek, “Holds” in the Senate,CRS Fact Sheet on Senate Legislative Process: 98-712 GOV.

fore prove to be a “safe” outlet for human rights propo-nents, who may find their arguments on other countries’abuses falling on deaf ears. Furthermore, the Jackson-Vanik waiver process will continue to provide an annualvehicle for Congress to continue to monitor Vietnam’sdomestic situation closely; a vehicle that few other coun-tries have to face. As mentioned earlier, Vietnam’s mostimportant backers in Congress have been veterans of theVietnam War. The challenge for Vietnam will be toidentify new champions of the bilateral relationship —perhaps looking in the ranks of the Vietnamese-American community — who can help to carry it into the future.



Discussing differences in the foreign policy approachesof the United States and Vietnam, a foreign diplomat inVietnam observed that U.S. foreign policy is issue-related,whereas Vietnamese foreign policy is more an extensionof the lines and policies set by the VietnameseCommunist Party. Vietnam’s foreign policy direction isrelatively consistent within the five-year periods betweenthe National Congresses of the Communist Party. Themain tenets of foreign policy are codified in the politicalreport of each Party Congress, and are further definedby Party Central Committee meetings (plenums). In thiscontext, decisions by the government and the NationalAssembly on foreign policy matters often have theirorigins in Party lines and policies. National Assemblydecisions focus on the ratification of international agree-ments, foreign policy orientations that are expressed inannual resolutions, and specific bilateral issues handledon a case-by-case basis.

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The National Assembly’s power in foreign policy,according to article 84 (13) of the 1992 Constitution(amended in December 2001), is to “decide on the fun-damental external policies; to ratify or annul interna-tional treaties signed in person by the State President;1[and] ratify or annul other international treaties signedor acceded to at the proposal of the State President.” Inpractice, the role of the National Assembly has changedsignificantly over the years, especially in the period sincedoi moi began. During the course of current administra-tive reform and following the trends toward globaliza-

tion, many debates for a more efficient government haveaddressed the need for further renewal of the organiza-tion and operation of the National Assembly. Theamendments to the 1992 Constitution at the very endof 2001 inserted a number of changes to facilitate a betterfunctioning National Assembly. To name only a few:confidence votes were introduced; full-time deputies(e.g., those who have no other profession aside frombeing a member of the National Assembly) wereincreased from 8 percent to 25 percent of the total; andthe oversight function over the issuance of legal docu-ments was transferred from the People’s Procuracy sys-tem to the National Assembly at the national level andthe People’s Councils at the local levels. The role of theNational Assembly in foreign policymaking cannot beisolated from this broader course of change.

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In order to describe the changes in the operation of theNational Assembly in foreign policymaking, this chapterwill discuss the following main questions:

How does the National Assembly help to implementParty guidelines or decide fundamental policies in external relations?

To what extent is the National Assembly actually involved in foreign policy as an actor in the formu-lation or implementation process?

What is the role of the Foreign Affairs Committee and other committees in matters of external relations?

TThhee VViieettnnaammeessee NNaattiioonnaall AAsssseemmbbllyy iinn FFoorreeiiggnn PPoolliiccyymmaakkiinnggPham Quoc BaoDirector of Foreign Affairs DepartmentOffice of the National Assembly

1 "Resolution No. 51/2001/QH10 on Amendments and Supplements to a Number of Articles of the 1992 Constitution of the Socialist Republic of Vietnam,"Official Gazette, no. 9-10 (8-15 March 2002), p. 7.


In addressing these questions, examples are given tofamiliarize foreign readers with the National Assembly’sforeign policymaking procedures. The chapter concludeswith a brief case study on how the National Assemblydiscussed and ratified the new bilateral trade agreementbetween Vietnam and the United States.

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The Constitution recognizes the National Assembly’ssupremacy in lawmaking, policymaking, and oversightof government activities. This supreme position, as com-pared to other state bodies, derives from the constitu-tional role of the National Assembly as “the highest rep-resentative organ of the people and the highest organ ofstate power in the Socialist Republic of Vietnam.”2 Thissupremacy could be interpreted as: (i) among other stateagencies, the National Assembly is the body with thehighest state power to decide state affairs at the macro-level; and (ii) there is a division of labor between thestate agencies, and the National Assembly is vested withthe power to deal with certain types of issues of a funda-mental nature. In a word, it is the body that can coordi-nate and overrule decisions of other state organs where itis permitted to do so by the Constitution.

Foreign affairs issues that are discussed and decided bythe whole National Assembly are of the followingnature:

General orientations and strategies. Debate by theNational Assembly on foreign policy orientations for thecoming year occurs at its year-end session, and usuallyfocuses on issues that are multilateral in nature. To facili-tate the debate, the government (often the Minister ofForeign Affairs on behalf of the Prime Minister and thePresident of State) reports to the National Assemblyabout the foreign affairs activities of the state and pres-ents the government’s viewpoint on world issues. TheNational Assembly then enters into floor debate, some-times preceded by small group discussions, to reviewthese activities and viewpoints before voting to adoptgeneral foreign affairs orientations and strategies in theform of a statement to be included in a legally bindingresolution on socio-economic tasks for the coming year.3

Specific bilateral issues. Debate on bilateral affairs isusually avoided unless a particular issue draws the atten-tion of lawmakers, or a review of bilateral issues is need-ed to ratify a bilateral agreement. If a particular issueattracts the attention of members of the NationalAssembly, the matter could be placed on the agenda of asession and may result in a resolution of the wholeNational Assembly, which expresses the attitude of theAssembly toward the specific issue. Unlike the legal nor-mative resolutions, this type of resolution is non-bindingand political in nature. In the May 2000 session, manymembers of the National Assembly called for discussionand a statement after some U.S. Congressmen intro-duced a human rights resolution into the House ofRepresentatives which, in the view of these members,constituted interference into Vietnam’s internal affairs.4

2 See Article 83 of the 1992 Constitution in The Constitutions of Vietnam: 1946-1959-1980-1992 (Hanoi: The Gioi Publishers, 1995), p. 183.3 According to Article 20(1) of the Law on the Promulgation of Legal Documents, enacted in 1996 and amended in 2002, "resolutions are issued by the NationalAssembly to decide the socio-economic development plans, national fiscal and monetary policies, policies on nationalities, religion, external relations, defense,security." See Official Gazette, no. 2 (31 January 1997), p. 14. Article 20 was not amended in 2002.4 At this session, when members of the National Assembly received information that a non-binding resolution had been introduced into the U.S. House ofRepresentatives criticizing both the human rights situation in Vietnam and the role of the Vietnamese Communist Party (as stipulated in Article 4 of theConstitution), many members urged the National Assembly Standing Committee to bring the matter to the whole National Assembly for discussion and appro-priate action, such as approval of a resolution to condemn the U.S. House resolution. The Standing Committee then instructed the Foreign Affairs Committee ofthe National Assembly to study the issue. The Deputy Chairman of the Foreign Affairs Committee, Phan Quang, also requested a meeting with U.S. Ambassadorto Vietnam, Douglas "Pete" Peterson, on May 18 to present the Committee’s views on the resolution. Subsequently, a written report of the Foreign AffairsCommittee was sent to the delegations of the National Assembly for their information; the matter ended there, and, in this case, did not result in a resolution.For further information, see "Uy ban Doi ngoai cua QH Viet Nam Phan ung ve Nghi quyet cua Ha Vien My Can thiep Tho bao Cong viec Noi bo cua Viet Nam"[Foreign Affairs Committee of Vietnam’s National Assembly Reacts to Resolution of the U.S. House of Representative Rudely Interfering in the Internal Affairsof Vietnam], Nhan Dan, 19 May 2000, p.8; and Congressional Record. Washington, D.C.: Congressional Record Online via Government Printing Office[www.access.gpo.gov], May 3, 2000, pp. H2417-H2422.


International agreements. The National Assembly alsodiscusses and approves ratification of international agree-ments with foreign governments or organizations,including both multilateral and bilateral agreements.International agreements that are signed by the Presidentof State must be ratified by the National Assembly.Agreements not signed by the president, but by otherstate authorities, must either be ratified by the presidentor submitted by the President to the National Assemblyfor ratification if approval by the legislature is deemednecessary. Successful debate on an agreement by theNational Assembly leads to the adoption of a resolutionfor ratification by the Assembly, which provides enforce-ment rules and instruction to the government to makenecessary diplomatic and executive steps to implementthe agreement. This type of resolution is legal normativeand binding in nature.

National Assembly procedures for discussing and ratifyinginternational treaties are relatively similar to the discus-sion and adoption of resolutions in general. The flowchart in Figure 1 illustrates this process by showing thenormal way in which the National Assembly raises anddeals with issues that end up in a resolution. For example,if the president proposes ratification of an internationalagreement with the National Assembly before a regularsession takes place, the National Assembly StandingCommittee (NASC) will likely forward it to the ForeignAffairs Committee for study and examination.Subsequently, the Foreign Affairs Committee will issuean “examination report” regarding the NASC’s propos-al. If it is satisfied with the result, the NASC will circu-late the report and proposal to delegations of theNational Assembly for discussion and solicitation ofconstituents’ opinions. Feedback and opinions from thedelegations will serve as grounds for the NASC to decidewhether to include the matter in the agenda of a NationalAssembly session.

In a session, members of the National Assembly listen toreports from the government and the committees —

followed by group discussion, floor debate, and adop-tion of a resolution, to be drafted by the Foreign AffairsCommittee and the secretarial board of the session(Doan Thu ky Ky hop), formed by the members of theNational Assembly. If at any stage the National Assemblyis not happy with the draft of a resolution, or a majorityvote is considered to be unlikely, the chairperson of thesession can ask the National Assembly to postpone thevoting to allow for additional study, group discussion,and floor debate prior to the vote.

Regarding ratification of international agreements inparticular, the role of National Assembly committees isvery important. An international agreement ofteninvolves at least two committees of the NationalAssembly. First, the Foreign Affairs Committee is incharge of examining an agreement with respect to for-eign affairs policy, general principles, and internationallaw. Second, as with any bill, the Law Committee is incharge of examining the agreement with respect to its“constitutionality, legality and uniformity” with the cur-rent legal system5 and for recommending changes to thebill or changes to current domestic legislation. An agree-

During National Assembly Session

Vote on Resolution

Floor Debate

Group Discussion

Report of Government; Examination

Report of Committee

Members’ Delegation

Committee Examination

Issue Identification

Members, NASC, Committees Prior to National Assembly Session

Draft of Session Agenda

NASC

NA Approval of

Session Agenda

Figure 1: National Assembly Procedures for Adopting a Resolution or Bill

5 Article 32(3) of the Law on the Promulgation of Legal Documents, Official Gazette, no. 2 (31 January 1997), pp. 16-17.


ment might also involve a different professional field ofresponsibility overseen by another committee of theNational Assembly (e.g., the land border agreementreached between Vietnam and China involved the com-petency of the National Defense and SecurityCommittee). To avoid duplication, the Foreign AffairsCommittee will then chair a “joint examination meeting”with input from other committees. An examinationreport presented by representatives of the Foreign AffairsCommittee will include all viewpoints and deliberationsby that and other committees.

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External relations activities are carried out by theChairman of the National Assembly, groups within theNational Assembly, and by parliamentary friendshipgroups of Vietnam. These actors engage in parliamentarydiplomacy and cooperation by participating in inter-par-liamentary institutions and forums, and by carrying outexchanges with other parliaments on a bilateral basis.The National Assembly believes that these activities helpto promote understanding, peace, security, and coopera-tion among peoples of different nationalities. Towardthis end, representatives of the people conduct dialoguewith other parliaments to consolidate and support coop-eration among governments.

For example, the National Assembly has participated inthe Inter-Parliamentary Union (IPU) since 1976, inher-iting its membership in this body from the formerRepublic of South Vietnam. The National Assemblysends delegations to IPU sessions and has participatedactively in all IPU forums. In practice until now, theChairman of the Foreign Affairs Committee has headedVietnam’s delegations to the IPU. Other participants inthe delegation are National Assembly members invited

from different committees and constituencies, and arechosen according to the topics of IPU meetings. As aresult of support from the Swedish Parliament (Riksdag)within the IPU support program, the National Assemblyhas installed a computer network and connection toconstituencies in all 61 provinces, and has learned andapplied many experiences of modern parliamentary lifeas it works toward efficiency, openness, and transparen-cy. For instance, the solicitation of public views onmajor draft laws has occurred on an increasing basis dur-ing doi moi. In addition, live broadcasts of “QuestionTime,” where members of the Assembly question cabinetmembers, have been carried out regularly since 1998,and the official website of the National Assembly wasinaugurated in 2000.

In Southeast Asia, the Vietnamese National Assemblywas admitted as a full member of the ASEAN Inter-Parliamentary Organization (AIPO) in September 1995at the 16th AIPO General Assembly in Singapore. InSeptember 2002, the National Assembly hosted the 23rdAIPO General Assembly meeting in Hanoi as thegroup’s chair. Many members of the National Assemblyin different committees and constituencies have attendedAIPO general assembly meetings and ad-hoc committeemeetings. This is the best opportunity for members ofthe National Assembly to be involved in the negotiationand formulation of multilateral foreign policy.6

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The Foreign Affairs Committee is one of seven special-ized committees of the National Assembly.7 Like theother specialized committees, the Foreign AffairsCommittee examines and prepares legislative matterswithin its issue area that are scheduled to be discussed in

6 Vietnam’s National Assembly is also a member of the Parliamentary Assembly of the Francophone (APF), and is a founding member of the Asia-PacificParliamentary Forum (APPF). In 1999, the Vietnamese National Assembly joined the Asian Association of Parliaments for Peace (AAPP). In addition, it is a mem-ber of the Asian Forum of Parliamentarians for Population and Development (AFPPD), the International Medical-Parliamentarians’ Organization (IMPO), and theAsia-Pacific Parliamentarian Cooperation for Environment and Development (APPCED).7 For further information on the structure and functions of the National Assembly, see "The National Assembly in a Nutshell," Nghien cuu Lap phap, SpecialEnglish Edition of the Legislative Studies Magazine (August 2001), pp. 57-65.


a National Assembly session. In this way, it has a super-visory role over foreign affairs activities carried out bythe government. It may send a supervisory delegationabroad to oversee the activities of Vietnamese diplomaticmissions, or dispatch delegations within the country tooversee foreign affairs-related activities at home. Examplesof the latter include its supervision of border provincesin 1998 to review the situation of border trade andsmuggling control, and its supervision of the managementof foreign borrowing and foreign aid in 1999, 2000, and2001. The resulting recommendations of the ForeignAffairs Committee on these issues led to amendments ofgovernment regulations on border trade control, themanagement and use of foreign aid (including ODA andNGO funds), and a draft decree on debt management.

An example of the role of the Foreign Affairs Committeein preparing for ratification of an international agreementis the U.S.-Vietnam bilateral trade agreement (BTA). In2000, after the signing of the BTA, the Foreign AffairsCommittee asked the Ministry of Trade to brief itsmembers (as well as members of the Law Committeeand the Economic and Budget Committee) on theprocess of negotiating the BTA and the main issues cov-ered in the agreement. Hearings with representatives ofstate agencies and business representatives were alsoorganized by the committee to identify issues, problems,and challenges. In addition, during the first six monthsof 2001, the Foreign Affairs Committee facilitated meet-ings with visiting U.S. senators and congressmen inorder to promote understanding and exchanges of viewson the BTA in preparation for ratification.8

After the 9th session (May-June 2001), the NASCreceived a proposal from President Tran Duc Luong tosubmit the BTA for ratification by the NationalAssembly in its year-end session of 2001. Because of thecomplexity of the BTA and its relevance to other lawsand regulations in Vietnam, the Foreign AffairsCommittee chaired several hearings with government

agencies to provide information on BTA negotiations,the main contents of the agreement, and implementa-tion issues. The Law Committee, Economic and BudgetCommittee, and National Defense and SecurityCommittee attended the hearings and cooperated withthe Foreign Affairs Committee to examine the BTA invarious aspects. The Economic and Budget Committeediscussed economic aspects and implementing measuresof the BTA, while the Law Committee provided viewson the constitutionality of the agreement and its consis-tency with domestic laws. A roadmap for legal compli-ance and dispute settlement was discussed. Subsequently,the Foreign Affairs and other National Assembly com-mittees reported the results of the examination to theNASC. The NASC then agreed to send the BTA (andthe opinions of the committees) to the delegations of theNational Assembly for review and feedback prior to thebeginning of the 10th session.

In sum, the Foreign Affairs Committee, like other com-mittees, is involved in foreign affairs issues in betweenNational Assembly sessions. It helps the NASC and theNational Assembly prepare views on legislation and policyconcerning foreign affairs in general and the ratificationof international agreements in particular. It also chairsdrafting committees formulating resolutions on the rati-fication of international agreements.

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This section describes the role of the National Assemblyas a whole in discussing and ratifying an internationalagreement during a National Assembly session. The rati-fication of the Vietnam-U.S. BTA is used as a case studyto illustrate this process.

Approval of the agenda: On November 19, 2001,before opening the session, the National Assembly metto approve the working agenda proposed by the NASC.

8 Report of the Foreign Affairs Committee to the National Assembly, dated 5 June 2001, on the foreign relations activities and work of the National Assemblyfrom the 8th Session (December 2000) to the 9th Session (May-June 2001) of the 10th National Assembly. See Ky yeu Quoc Hoi Khoa X - Ky hop Thu chin[Record of the 10th National Assembly - Session 9] (Hanoi: Office of the National Assembly, August, 2001).


In this meeting, the members approved consideration ofthe BTA for ratification in this session.9

Introduction of issue: As noted above, the members ofthe National Assembly had already had opportunities tostudy and discuss the BTA with their constituencies.However, the presidium of the National Assembly ses-sion could not be certain of the result or smooth han-dling of this issue during the scheduled floor debate.10

As is the precedent, the NASC arranged to hear thereports of the government and the Foreign AffairsCommittee on the BTA during the first days of the ses-sion. The report of the Foreign Affairs Committee out-lined opportunities and challenges facing Vietnam inimplementing the BTA. It also drew the members’ atten-tion to the volume of new or revised legislation thatwould be needed in order to implement the BTA.11

Group discussion: In general, large National Assemblydelegations like those from Hanoi and Ho Chi MinhCity hold discussions within their own delegations,whereas smaller delegations often merge into groups tofacilitate discussions on pending legislation. Issues andquestions raised by the members in the group discussions,together with an unofficial canvassing of the likely votingresult (sought by the Office of the National Assembly),are recorded in writing and sent to a secretarial board forcompilation. In this case, the group discussion reflecteddifferent opinions about the BTA. In all group discus-sions, members talked specifically about the VietnamHuman Rights Act passed by the U.S. House ofRepresentatives (H.R. 2833) as well as new U.S. labelingrequirements for Vietnamese catfish. Many memberscondemned the Vietnam Human Rights Act as clearinterference in Vietnamese internal affairs, saying itrepresented a lack of respect toward the independenceand sovereignty of Vietnam. The catfish labeling

requirements were seen as a barrier to trade since theserequirements would create difficulties for Vietnameseexporters from the Mekong Delta to enter the U.S.market.

Drafting the resolution to ratify the BTA: In its posi-tion as the “examination authority,” the Foreign AffairsCommittee was entrusted with the duty to coordinategovernment authorities and other committees of theNational Assembly to respond to questions and com-ments raised by members in group discussion. It alsowas entrusted with the responsibility to propose a draftof the resolution on ratification of the BTA prior to thefloor debate.

Floor debate: This was scheduled for the afternoon onNovember 28, near the end of the session. To start thedebate, the National Assembly Chairman asked the thenMinister of Trade, Vu Khoan, on behalf of the PrimeMinister, to deliver a report dealing with questions andissues raised by the members in the group discussion.

Subsequently, 11 members of the National Assemblyregistered to speak. The first, Nguyen Huu Khanh fromAn Giang Province, said he appreciated the signing ofthe BTA because it would boost economic cooperationbetween Vietnam and the United States. However, healso drew attention to the difficulties faced by his con-stituency in exporting catfish to the U.S. market becauseof the new labeling requirements. In introducing thisissue to the floor debate, Khanh warned the governmentthat it must carefully protect Vietnamese interests in thecourse of implementing the BTA. Ten other members —from Dak Lak, Nghe An, Hanoi, Can Tho, Yen Bai, HoChi Minh City, Ha Nam, Quang Ninh, Vinh Phuc, andDong Nai — expressed concerns about the VietnamHuman Rights Act as well as the catfish issue. Still, most

9 Approval of the agenda items for the session is undertaken through a majority voting mechanism. Preparations for discussing an issue before debate areimportant for National Assembly members, as they often oppose projects about which they are not well informed.10 The presidium is not a formal legal institution, but in practice refers to the persons chairing the session. They are the Chairman of the National Assemblyand his deputy chairmen. The presidium is assisted by the secretarial board of the session with the Chairman of the Office of the National Assembly as itshead.11 In the first analysis by the Ministry of Justice, about 130 current regulations would be directly affected by BTA implementation; of these, about 53 pieces oflegislation would need to be amended or reissued.


expressed support for ratification of the agreement. Thefloor debate reflected a mood of mixed sentiment towardthe BTA and its possible implementation. This senti-ment made it difficult for the Foreign Affairs Committeeand the secretarial board to predict the voting results.

The Foreign Affairs Committee was then asked to reportto the National Assembly on members’ opinions con-cerning the wording of the draft resolution for ratifyingthe BTA. It took considerable time after the floor debateto work out and finalize a compromise version of theresolution. In the end, the National Assembly ratifiedthe BTA on November 28, 2001 when members votedto approve Resolution 48/2001/QH10 on Ratificationof the Vietnam-U.S. Bilateral Trade Agreement. Passedby a vote of 278 in favor and 85 against, with 17 absen-tees, the resolution states that the NASC, government,and judicial agencies “shall expeditiously formulate con-crete and [uniform] action programs, [and] amend andsupplement legal documents according to the scheduleof the agreement.”12


In sum, the National Assembly is empowered withapproving the foreign policy orientation of the govern-ment for each legislative term and for each year. Thegovernment is responsible for carrying out foreign affairspolicy according to this orientation. In addition to thispower, the National Assembly ratifies those internationalagreements signed by the president of state and mayreview those signed by other governmental bodies. Thisconstitutional role of the National Assembly is exercisedby the whole National Assembly during its sessions,while the Foreign Affairs Committee supervises theimplementation of the foreign affairs policy of the gov-ernment (and examines legislative bills and foreign policy-related issues) in between the sessions of the NationalAssembly, in order to prepare necessary agenda items forNational Assembly sessions. Other committees of the

National Assembly and the Ethnic Council, in theircapacity as standing bodies of the National Assembly,share this responsibility and cooperate with the ForeignAffairs Committee in respect to their specialized missionentrusted by law.

12 The resolution appears in Vietnam Law and Legal Forum 8, no. 88 (December 2001), section on New Legislation, pp. 1-2.

The Societal and Economic Environment


Foreign policy is said to be an extension of domesticpolicy. The determinants of foreign policy are thereforecomprised of both long-term and short-term objectivesrelated to the political, economic, and cultural advance-ments of a country. In this way, foreign relations activi-ties must be consistent with and supportive of domesticpursuits. In times of war, foreign policy and its activitieshave to win external support and assistance for the strug-gle for independence and freedom; in times of peace,foreign policy can be used to make other nations awareof the need for (and convince them to render) greateraid. Broader economic cooperation and enhancement oftrade and investments to the country are also top priori-ties of foreign relations activities.

TThhee NNeeww TThhiinnkkiinngg

Major world events taking place at the end of 1980s andearly 1990s caused great changes in many parts of theglobe. The Cold War came to an end and many coun-tries shifted from an arms race to an economic race.Economic and social development became of greatimportance. Now, growing interdependence amongeconomies is seen as an inexorable trend, and competi-tion in the international market has become increasinglyfierce. These trends have significant effects on all coun-tries, large or small, with no exceptions.

In Vietnam, the economic system of excessive centraliza-tion of management, red tape, and subsidizationbrought about enormous difficulties, severe shortages ofconsumer goods and food, and triple-digit inflation. Inthe areas of trade and official development assistance

(ODA), Vietnam lost its principal markets and support-er with the collapse of the Soviet Union and the socialistgovernments in Eastern European countries. These eventsadded even more difficulties to the problems facing theVietnamese economy. During the second half of the1980s and the early 1990s, Vietnam was indeed facingan economic dilemma. New thinking and new ways ofdoing things were sought to meet these challenges. Thus,the Vietnamese Government launched the doi moi, orrenovation, policy. In Vietnam, we have the proverb“Cai kho lam lo cai khon” that can be translated as“Facing enormous challenges, you are even wiser.” Thisproverb was very applicable to Vietnam, as it had alreadybeen proven true in the past struggles for independence.

Vietnam’s new thinking in various areas has graduallydeveloped since the mid-1980s, and great importancehas been attached to economic development. In theareas of trade and ODA, the urgent need was to diversi-fy import and export markets and to seek new sources ofODA. Foreign direct investment (FDI) was recognizedas an important source of capital, while more marketsand more partners were needed.

FFoorreeiiggnn PPoolliiccyy iinn SSuuppppoorrtt ooff EEccoonnoommiicc RReennoovvaattiioonn

Since early in the doi moi period, the core focus ofVietnam’s foreign policy has been to support economicdevelopment by befriending all countries in the worldcommunity and striving for peace, independence, anddevelopment.1 In the mid-1990s, the main task of for-eign policy was further defined as “consolidating thepeaceful environment and creating further favorable

VViieettnnaammeessee FFoorreeiiggnn PPoolliiccyy aanndd EEccoonnoommiicc RReennoovvaattiioonnVu Xuan TruongDeputy Director General, Economic DepartmentMinistry of Foreign Affairs

1 See Communist Party of Vietnam, 7th National Congress (Hanoi: Vietnam Foreign Language Publishing House, 1991), p. 43.

47 | The Societal and Economic Environment

international conditions to step up socio-economicdevelopment and national industrialization and modern-ization in service of national construction and defense,making active contributions to the common struggle ofthe world’s peoples for peace, national independence,democracy and social progress.”2 This policy was updat-ed again at the beginning of the new millennium, withgreater emphasis placed on international economic inte-gration. As stated in the political report of the NinthParty Congress, convened in April 2001, the “govern-ment, all the ministries, agencies and enterprises are tosoon design and execute respective international eco-nomic integration plans with rational roadmaps andconcrete programs of action, promoting the initiatives ofthe ministries, agencies and enterprises; to press aheadwith a shift in economic structures and renewal in socio-economic management mechanisms, further completethe legal system, and improve the competitiveness ofenterprises and the economy as a whole.”3

The active implementation of this foreign economic pol-icy since the beginning of doi moi has resulted in severalimportant developments, including:

Formulation of the Law on Foreign Direct Investments in 1987 and subsequent adjustments tocreate better investment conditions. The law and related government decrees have helped to attract more than $36 billion of registered capital, of whichhalf has been disbursed.

Normalization of credit relations in 1992 with mul-tilateral lenders such as the World Bank, International Monetary Fund and Asian Development Bank, paving the way for ODA and loans for infrastructure projects and structural reforms of the economy.

Successful negotiations with the Paris and London Clubs of international donors in 1993, leading to the establishment of the annual Consultative Groupmeetings for pledging ODA to Vietnam. Total

pledged ODA reached $17.5 billion by the end of 2001, with annual total disbursements exceeding $1billion since 1998.

Membership in the Association of South East Asian Nations (ASEAN) in 1995. In a related develop-ment, Vietnam began to fulfill ASEAN Free Trade Area (AFTA) tariff requirements in 1996, with inte-gration into this free trade area to be completed in 2006.

Completion of the Framework Agreement on Economic Cooperation with the European Union in 1995, helping to expand Vietnamese exports (particularly garments and textiles, shoes, and agricultural products) to this large market.

Normalization of relations with the United States in1995, marking the virtual complete worldwide recognition of Vietnam and diplomatic relations with all major powers and other countries.

Membership in the Asia Pacific Economic Cooperation (APEC) forum in 1998.

Signing of the bilateral trade agreement (BTA) with the United States in July 2000 and ratification of the agreement by the United States and Vietnam in late 2001. The agreement provides Normal Trade Relations (NTR) status (formerly known as Most Favored Nation, or MFN) to both countries, helping to boost Vietnamese exports to the U.S. market.

Application for accession to the World Trade Organization (WTO) in 1994 and continued negotiations toward this end. It is hoped that the negotiations will result in Vietnam’s entry into the WTO within a few years, perhaps as early as 2005. After admission, Vietnam will have more opportunities to expand its exports to other countries; in return, Vietnam will have a higher capability to import goods and services from other countries.

2 Communist Party of Vietnam, "Political Report of the Central Committee (VIIth tenure) to the VIIIth National Congress," VIIIth National Congress Documents(Hanoi: The Gioi Publishers, 1996), p. 77.3 Communist Party of Vietnam, 9th Party Congress Documents (Hanoi: The Gioi Publishers, 2001), pp. 60-61.

Continuation of regional and international economic integration according to a roadmap defined by the Vietnamese Government.

New emphasis on “diplomacy serving economic development,” in which all diplomatic missions in foreign countries prioritizes the expansion of economic relations with those respective countries.

DDiipplloommaaccyy SSeerrvviinngg EEccoonnoommiicc DDeevveellooppmmeenntt

Peace and stability are the essential preconditions foreconomic development. That is why diplomatic activi-ties are always designed for the purposes of strengthen-ing peace and stability in Vietnam, and contributing topeace and stability in the region and throughout theworld. Immediately after the reunification of Vietnam,many Vietnamese delegations at different levels traveledto other countries, particularly countries within the Asia-Pacific region, to explain our long-term policy of peace,friendship, and mutually beneficial cooperation. Foreigndelegations visiting Vietnam have also stressed the sameideals. Foreign Ministry officials and Vietnamese diplo-mats abroad have done all they can to strengthen peaceand stability in Vietnam and in the region, creatingmore favorable environments for economic growth.

Vietnam came out of its wars at a low level of develop-ment. We needed a large amount of support and assis-tance in the reconstruction of the country and to helpdevelop the economy. Like diplomats from other coun-tries, Vietnamese diplomats are responsible for winningthe support and assistance of the international commu-nity. Diplomats and other officials have gone out oftheir way to project the goodwill, good intentions andthe justifiable goals of the people of Vietnam to the worldcommunity. The results are encouraging, as the worldcommunity has an increasingly better understanding ofVietnam, and renders greater support and assistance tothe Vietnamese people in their development efforts.High annual levels of ODA exemplify the internationalsupport that is being provided to Vietnam.

These tasks described above have been the diplomaticcommunity’s major focus over the past 25-30 years, andwill be carried with greater efforts in the years to come.However, there also are new areas of diplomacy neces-sary to further promote economic development. Today,the Ministry of Foreign Affairs and all representativemissions of Vietnam in foreign countries are allocatingmore time, effort, and resources to facilitate and expandeconomic relations between Vietnam and foreign coun-tries. In this connection, the Foreign Ministry anddiplomatic missions are required to analyze interna-tional economic relations, forecast global economictrends, and gather information on economic develop-ment experiences of other countries. The governmentuses this analysis and information when formulatingeconomic policies, especially those relating to foreigneconomic activities.

The Foreign Ministry and diplomatic missions are in aparticularly good position to collect economic and tech-nical information of various kinds and then forward thisinformation to economic ministries, provinces, and citiesin Vietnam. Ambassadors and other diplomats can helpthe country, an industry, a province, or even an individ-ual company, by lobbying certain groups or individualsin their host country with a view to facilitating theaccess of Vietnamese goods and services to that country.Diplomats are expanding their functions to include,among other tasks, facilitating the introduction ofcompanies to new markets and partners, assistance inarranging commercial trips, support for a company’smarketing activities, and defending the legitimateinterests of Vietnamese companies and business people.

As an example of these trends, two meetings were heldin November 2001, one in Hanoi and one in Ho ChiMinh City, between Vietnamese ambassadors and con-suls-general, on the one hand, and Vietnamese businesspeople from northern and southern Vietnam, on theother. The purpose of these meetings was to discusscooperation to expand Vietnamese exports and to attractgreater foreign direct investment to Vietnam. At thismeeting the heads of Vietnamese representative missions


in foreign countries gained the opportunity to learnmore about companies’ needs and to discuss issues ofimportance to the companies. For their part, businesspeople gained a better understanding of how Vietnameseembassies and consulates can promote their businessinterests in foreign countries. It was recommended thatthis type of meeting should be repeated in the future.This was the first time that ambassadors and consuls-general had met the directors of major companies, andthe result was encouraging. It was a good beginning, andit is hoped that this kind of meeting will continue andlead to concrete results.

In fact, however, the idea of diplomacy serving economicdevelopment is not entirely new. When the war wascoming to an end, in 1974, the Economic Departmentwas established in the Ministry of Foreign Affairs to helpdevelop economic relations between Vietnam and othercountries. The Economic Department has since grownwith a better understanding of and greater experiences ininternational economic affairs; it coordinates closelywith other departments within the ministry and assiststhe ministry in making greater contributions to the eco-nomic development of the country.

At the end of 1990s, the Department of MultilateralEconomic Cooperation also was established in theForeign Ministry in response to the increasing require-ments of regional and global integration. This depart-ment is assigned to study the WTO, APEC, and AFTA.The department helps the ministry, together with otherministries, make contributions to and conduct negotia-tions with these organizations. Also at the end of 1990s,the Economic Information Division was set up in theForeign Press Service Center (a unit of the ForeignMinistry) to help Vietnamese companies explore eco-nomic opportunities in foreign countries.

BBeetttteerr CCoooorrddiinnaattiioonn NNeeeeddeedd

With globalization increasing rapidly, the number ofministries, organizations, companies, and people inter-

acting with foreign countries is rising fast. As in othercountries, because so many people and organizations arebecoming involved in the external economic activities,the question of coordination is very important. Bearingthis in mind, the Foreign Ministry, together with otherministries, has made recommendations on how toimprove coordination among various ministries and gov-ernmental bodies — particularly the ministries of Trade,Foreign Affairs, Planning and Investment, and Finance,as well as the Office of the Government and theVietnam National Administration of Tourism.Coordination is improving steadily, and has contributedto achievements and results in the areas of ODA, FDI,imports, exports, and tourism.

Within the Foreign Ministry itself, coordination amongthe three economic units — the Economic Department,the Department of Multilateral Economic Cooperationand the Economic Information Division — has beenpositive. However, there is still room for improvement.The three economic units and regional departments inthe ministry have worked together with the aim of mak-ing greater contributions to the expansion and effective-ness of foreign economic relations. With increasingusage of the Internet, faxes, telephones, and other meansof communication, representative missions in foreigncountries now have more opportunities to establish closelinks with other ministries, cities, and provinces in aneffort to enhance the economic development of thecountry.

Improved coordination is important in light of the press-ing development needs of the country. To bridge thedevelopment gap between Vietnam and other regionalcountries and improve the living standards of theVietnamese people, Vietnam will need $60 billion overthe next five years, of which 40 percent is expected tocome from foreign countries in the form of ODA andFDI. In addition, Vietnam will need to have an annualtrade expansion of 15 percent. The total trade value ofVietnam in 2001 was about $30 billion, a small amountcompared to other countries. However, it is a significantfigure if compared with Vietnam’s GDP, constituting


nearly 100 percent of GDP and forming an importantsector of the economy. Apart from that, labor exportsand international tourism are expected to post double-digit annual increases.

As economic activities involving foreign countries andcompanies continues to expand rapidly, coordinationefforts among departments within Ministry of ForeignAffairs, among ministries, between ministries and local-ities, and between representative missions and compa-nies, will become increasingly vital and complex.Improvements in coordination will enhance efficiency,save resources, and make greater contributions to eco-nomic development. While coordination generally isgood, there is still room for improvement.



Vietnam’s diplomatic policy, dating back to the restora-tion of its independence in 1945, reflects theVietnamese government’s consistent attachment of eco-nomic and business interests to foreign relations. Thischapter highlights the role of economic and businessinterests in these relations by describing the historicalevolution of the country’s foreign economic policy, theestablishment of the Vietnam Chamber of Commerceand Industry (VCCI), and the initiation of economicrenovation. The chapter concludes with three case stud-ies that show how business interests have affected thedevelopment of Vietnam’s relations with South Korea,Taiwan, and Israel.

HHiissttoorriiccaall DDeevveellooppmmeenntt ooff VViieettnnaamm’’ss FFoorreeiiggnn EEccoonnoommiicc PPoolliiccyy

Although Vietnam’s independence was declared inSeptember 1945, formally establishing the DemocraticRepublic of Vietnam (DRV), French armed forcesreturned shortly thereafter to begin a nine-year war ofre-conquest. In January 1950, despite the war, the DRVexpressed its intention to establish diplomatic relationswith foreign countries, and received strong support fromthe Soviet Union, China, and other socialist countries.As early as 1952, it concluded its first trade agreementwith China, and then extended economic and commer-cial relations to members of the socialist bloc in Europe.These relations helped to create additional resources toserve the needs of the continuing war for independence.

When the war ended in 1954, Vietnam was temporarilydivided into two parts. The DRV (North Vietnam)embarked on reconstructing and developing an economy

that was very poor, backward, largely dependent on agri-culture, and with only a few industrial establishmentsleft by the French. Its very first diplomatic activitiesfocused on concluding several agreements on economiccooperation and exchange of commodities with socialistcountries in July 1955; and signing trade agreementswith France in late 1955, with India and Indonesia in1956 and 1957, and later, with the then United ArabRepublic (the temporary union of Egypt and Syria),Cambodia, and Iraq. Business relations were opened upwith companies in Japan and Hong Kong in 1955, andthen with many others, including Singapore, Sri Lanka,the former West Germany, Italy, Belgium, theNetherlands, Great Britain, Switzerland, and Sweden.Perhaps the most noticeable agreement was that withFrance, completed soon after the war’s end. With manyother Asian and Western countries, the DRV alsoattended to developing trade relations — or at least theexchange of goods — in the absence of official diplo-matic arrangements. The total number of economic andtrade partners of North Vietnam increased to 40 coun-tries in 1965, and 28 of them were non-socialist.

EEssttaabblliisshhmmeenntt ooff CChhaammbbeerr ooff CCoommmmeerrccee

In April 1963, the Chamber of Commerce (the forerun-ner of today’s Vietnam Chamber of Commerce andIndustry) was founded to serve and promote the busi-ness interests of North Vietnam, particularly in relationswith non-socialist partners. The Chamber soon devel-oped connections with relevant business associations andinstitutions abroad, as well as with foreign companieshaving an interest in doing business with the North. Theinterests of domestic firms were also taken into account,

BBuussiinneessss IInntteerreessttss iinn VViieettnnaammeessee FFoorreeiiggnn AAffffaaiirrssPham Chi Lan*Advisor to the Prime MinisterMember of the Prime Minister’s Research Commission

* Pham Chi Lan served as Vice President of the Vietnam Chamber of Commerce and Industry until May 2003, when she retired from a career at VCCI spanningseveral decades.

and Hong Kong and Singapore became the first placeswhere DRV trade representative offices were established.Commercial sections were attached to several embassiesor consulates-general in major business partner coun-tries, such as Japan and France, to look after and pro-mote the business interests of the government and localcompanies in relation with partners in these countriesand territories.

Between 1964 and 1975, trade and economic relationsbetween North Vietnam and the world were heavilyinfluenced by another war, this time with the UnitedStates and its allies. Relations with many countries andcompanies were interrupted, and the number of coun-tries that maintained commercial links with Hanoidecreased to 27 by 1975. The DRV’s diplomacy and for-eign affairs in this period concentrated on convincingvarious forces in foreign countries to support Vietnamesepeople and to demand that the U.S. government with-draw from the conflict. Further diplomatic measureswere aimed at easing the U.S.-led economic blockade,and marshaling international support against the U.S.bombing of roads and key economic centers in NorthVietnam and its prohibition of the entry of foreign mer-chant vessels into the port of Hai Phong.

The government and Chamber of Commerce maderepeated appeals to the DRV’s trading partners, seekingcontinued business ties and commodity exchanges. Inthe context of warfare and an economic blockade, themaintenance of commercial relations with the outsideworld was of great economic and political importancefor Hanoi.

When Vietnam formally reunified in 1976, the countrywas at a very low level of development with a poor andbackward economy heavily damaged by the war. Torebuild the national infrastructure, create jobs for thepopulation, and stabilize the socio-economic situation inthe southern part of Vietnam — which had strong linkswith and dependence on foreign markets — the govern-ment rapidly extended its diplomatic and commercialrelations with many countries in Southeast Asia, the

West, and other parts of the world. Realizing thatVietnam would badly need foreign investment, the gov-ernment also issued the Regulations on Foreign DirectInvestment in Vietnam in April 1977. Unfortunately,just as new relations and economic cooperation were justbeing opened up, another conflict in the region, thistime in Cambodia, arose and complicated Vietnam’s for-eign relations. Vietnam was forced into a position ofeconomic isolation and suffered a severe trade embargo.Under such circumstances, Vietnam decided to join theSoviet-led COMECON bloc in July 1978, and signed a10-year Economic Cooperation Agreement with theSoviet Union. Vietnam also entered into economiccooperation agreements with many Eastern Europeancountries. Much effort was made to promote the eco-nomic and commercial ties with other countries but theresults were modest. In the 10 years from 1976 to 1985,trade turnover grew slowly and 80 percent of the coun-try’s trade was conducted with COMECON countries.The economy was stagnant under its centrally plannedmechanism and prolonged external difficulties.

During that period, the Chamber of Commerce intensi-fied its efforts to help local enterprises overcome difficul-ties and isolation in foreign economic relations. In 1976,the Chamber merged with the Saigon Chamber ofCommerce in the south to become a national organiza-tion. The Chamber quickly established relations withmajor chambers of commerce and business associationsin Southeast Asia, Hong Kong, Japan, Australia, WestGermany, France, and Great Britain. Significantly, theChamber also established contacts with the AmericanChamber of Commerce (AmCham) in Hong Kong andits counterparts in Singapore, Thailand, and elsewhere in Asia.

In addition, the Chamber became actively involved indeveloping a new policy proposal to the government forsupporting the establishment of export-import compa-nies that would be attached to different industries andlocalities and allowed to conduct direct trade with for-eign partners. From 1981-1985, a number of newexport-import companies were established. Although all



of them were state-run companies operating under thesupervision of different ministries or local authorities,they broke the monopoly of the Ministry of ForeignTrade and its 25 trading companies and helped to diver-sify Vietnam’s export-import trade. While most of the“old” companies focused on traditional ties with socialistcountries under governmental arrangements, most of thenew companies quickly established business links withpartners in non-socialist countries. Vietnamese diploma-cy during this period duly took into account the effi-ciency and enthusiasm shown by these new players, andtried to help maintain and develop commercial tiesbetween Vietnam and various countries in the regionand other parts of the world in the context of the com-plicated political disputes and conflicts in the region.

TThhee BBeeggiinnnniinngg ooff Doi Moi aanndd EEccoonnoommiicc RReeffoorrmm

By the end of 1986, Vietnam announced the introduc-tion of its historic policy of doi moi, initiating a pro-found and comprehensive reform process with economicrenovation at its core. Vietnam’s foreign policy changedsignificantly in the direction of multilateralization anddiversification of external relations. In this new context,the role of foreign economic relations became especiallyimportant. The Sixth Congress of the Communist Partyof Vietnam affirmed: “Whether the task of stabilizingand developing the economy in the initial stage as wellas the cause of scientific and technological developmentand socialist industrialization in our country will be car-ried out rapidly or not depends to a large extent on theexpansion and heightening of the effectiveness of ourexternal economic relations.”1

The external economic policy for the initial phase ofrenovation was defined as:

Promotion of exports in order to meet the need for imports;

Expansion of economic, scientific, and technologicalcooperation with other countries;

Diversification of trade partnerships and trading activities in an open-door orientation;

Step-by-step integration of the national economy with the world economy to link the domestic mar-ket with the international market;

Reform of the export-import management mecha-nism;

Investment in economic, scientific, and technologi-cal infrastructure.

Bold reform measures were introduced in 1987-1988,and business and economic interests were stressed in alldomestic and external economic activities. Trade restric-tions were eased, more export-import companies wereset up, and all companies were given the right to widentheir scope of operations. At the end of 1987, the Lawon Foreign Direct Investment was promulgated and wasconsidered by foreign investors as one of the most liberalforeign investment laws in the region.

Doi moi, from its initial days, brought about very posi-tive results. In agriculture, the annual output of foodgrains increased from 18 million tons in 1985 to 21.5million tons in 1989. From the status of a net importerof food, Vietnam suddenly had a surplus in food supplyand became the third largest rice exporter in the world.The production of many important manufactured itemswitnessed significant growth — especially consumer goods,light industrial products, and crude oil (a new export itemof Vietnam). Macro-economic stabilization was graduallyachieved and inflation was put under control.

Encouraged by domestic economic performance as wellas new domestic requirements related to the marketmechanism and open door policy, the external economicrelations of Vietnam expanded and changed rapidly.From 1986-1990, total export value rose 28 percentannually, from which hard currency earnings increased33 percent per year. In 1990, exports from Vietnam tohard-currency markets yielded earnings of $1.352 billion

1 "Political Report," 6th National Congress of the Communist Party of Vietnam: Documents (Hanoi: Foreign Language Publishing House, 1987), pp. 94-95.

— more than four times the amount earned in 1985 —and surpassed the exports to ruble-denominated markets.As for foreign investment inflows, in the first two years(1988-1989) after the implementation of the Law onForeign Direct Investment, 107 projects were licensedwith total registered capital of over $900 million, and in1990, 111 projects were licensed with total registeredcapital of $803 million.

In the early 1990s, the Soviet Union and COMECONbloc collapsed, causing a sudden, sharp decline in exter-nal financial aid and an interruption of major tradetransactions with Vietnam’s traditional markets. Manypolicymakers worried whether Vietnam could providesubstitutes for resources formerly supplied by the social-ist bloc. However, the newly established economicmechanism was showing positive effects in Vietnam.Although the economy suffered from adverse effects fora short period, it did not collapse or fall into chaos. Theincreased demand for exports and imports spurredVietnam to quickly expand its commercial ties withother markets and partners, first with regional countries.Almost immediately, Japan, Singapore, South Korea,Hong Kong, Australia, Thailand, and Taiwan replacedthe former Soviet Union and East European countries asVietnam’s major trade partners. They supplied Vietnamwith all the important items for which Vietnam had pre-viously relied on COMECON sources, such as oil, fer-tilizer, cement, chemicals, and fibers. However, exportswere a more difficult problem: items that were previous-ly sold in the COMECON bloc now proved to be ofinsufficient quality and competitiveness to be sold in thebroader international markets. However, due to thegrowth in crude oil output and the increase in otherexports such as rice and other agricultural produce,seafood, and forest products, Vietnam still succeeded indeveloping export markets in the region.

It was the demand for economic development and pro-motion of business interests that forced Vietnam to seekways to escape from its economic isolation, diversify itstrade partnerships, improve its relations with foreigncountries and international institutions, and integrate

into regional and world markets. Starting in the autumnof 1993, relations between Vietnam and major interna-tional financial institutions were resumed. Some Westerncountries, particularly Japan and France, decided to pro-vide official development assistance (ODA) to Vietnam.Between October 1993 and the end of 1995, three inter-national meetings on ODA for Vietnam were convenedin Paris, where donors made commitments to extend atotal of $6 billion in ODA to support Vietnam’s eco-nomic reform and development. Foreign investmentflows to Vietnam grew. By the end of 1995, total regis-tered foreign investment in Vietnam reached $16.7 billion, of which $5.3 billion had been disbursed. Theforeign invested sector accounted for 6.3% of GDP in1995. Export-import activities were even more dynamic.In 1995 export revenue totaled $5.449 billion, whileimports were valued at $8.115 billion. Two-way tradewith Asia-Pacific nations accounted for 70 per cent ofthe total, while trade with European states accounted for20 per cent. FDI and exports became the two enginesfor economic growth in Vietnam.

The year 1995 also witnessed three important landmarksfor Vietnamese diplomacy: the admission of Vietnaminto the Association of South East Asian Nations(ASEAN), the conclusion of the Framework Agreementon Economic Cooperation with the European Union(EU), and the normalization of relations betweenVietnam and the United States. Following these impor-tant developments, Vietnam made various efforts in thelate-1990s to enhance bilateral economic and commercialcooperation with many foreign countries, particularlythose in Southeast Asia and East Asia. It also startednegotiations with the United States for a bilateral tradeagreement, and began expanding relations with Russiaand countries in Eastern Europe, West Asia, Africa, andNorth, Central and South America.

With regard to multilateral economic cooperation,Vietnam participated extensively and intensively in thecooperation mechanism and programs of ASEAN,joined the Asia Pacific Economic Cooperation (APEC)forum, took part in the Asia-Europe Economic Meeting


(ASEM), and applied and began negotiations for mem-bership in the World Trade Organization (WTO). Therelations with the community of foreign and interna-tional donors continued to be strengthened with anODA commitment of more than $2 billion each yearfrom 1996-2000. However, foreign investment showed asharp decline after 1997 due to the impact of the region-al financial crisis as well as problems in the domesticbusiness environment. Export-import performance con-tinued to grow but at a slower rate, except for 1999-2000 when export revenue rose sharply due to: (i) anincrease in the international prices of crude oil, coffee,and seafood; and (ii) the new liberalization of the trad-ing system in mid-1998 which allowed all enterprises,including private ones, to export freely.

In sum, historical features and developments of Vietnamin the 20th century — particularly 30 years of involve-ment in prolonged and costly wars, decades of economicisolation during the Cold War period, and the failure ofcentrally planned management systems — have left con-sequences that remain with us today. Many people there-fore do not realize how important the role of business isin foreign relations between Vietnam and other coun-tries. Alongside political interests, business interestspushed Vietnam to build, expand, and develop its rela-tions with other countries; to participate in regional andinternational organizations; and to integrate into theregional and world economy. The wisdom and flexibilityof Vietnam in developing diplomatic relations hashelped the country to avoid the negative impact ofmajor fluctuations in the world economy, and to over-come crises in order to survive and grow.

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In bilateral relations, business interests can be even moreimportant and decisive than other factors at some histor-ical points. Three examples of this are provided below,starting with Vietnam’s relations with South Korea.

South Korea. In 1982, when the world was still in theCold War period, Vietnam maintained close politicalrelations with the Democratic People’s Republic ofKorea (North Korea) since both countries were socialist.However, business interests prompted Vietnam toexplore and develop trade with the Republic of Korea(South Korea). The high economic growth and competi-tiveness of South Korea in supplying some products thatVietnam needed, as well as the potential of exportingVietnamese products to its large and prosperous market,drew the attention of Vietnamese enterprises. In theearly 1980s, Vietnam had to import large quantities offertilizer, agro-chemicals, textile fibers, pulp, and paperproducts to meet domestic demand. In addition tosourcing these items from the Soviet Union, Vietnamreceived some hard-currency loans from the SwedishGovernment to finance imports from non-socialist mar-kets through limited tenders.

At first, because of limits on direct relations betweenVietnam and foreign partners, only a few Japanese andEuropean firms could bid on the tenders — and in mostcases only Japanese firms could win. Then Vietnamesefirms realized that they could buy these products at acheaper price if South Korean suppliers could bid aswell. Also, direct exports of anthracite coal, timber, andsome agricultural products could be more beneficial iftraded among Vietnamese exporters and South Koreanbuyers instead of buying and selling through third coun-tries. The Vietnam Chamber of Commerce and Industrytook the initiative after thorough study and discussionswith major domestic trading companies such asAgrexport, Textimex, Coalimex, Imexco HCMC, andUnimex Hanoi. The Chamber submitted a proposal tothe Vietnamese Government seeking permission to openup direct trade with South Korean firms. With the sup-port of the Ministry of Foreign Affairs and the Ministryof Foreign Trade, the government approved VCCI, as anongovernmental organization, to contact certain SouthKorean firms.

On the South Korean side, the government in Seoulassigned Samsung Co. as the first direct trade counter-



part with Vietnam. In June 1982, the first Samsungbusiness mission visited Vietnam and signed the initialcontracts, worth a total of about $1 million, withVietnamese companies on the basis of counter trade.The performances of the first contracts were excellentand encouraged many other Vietnamese firms to becomeinvolved in direct transactions. The two-way tradeexpanded fast, and increased ten-fold within five years.

In addition, through arrangements between VCCI andSouth Korean universities and economic research insti-tutes and with the support of South Korean firms, a num-ber of key Vietnamese economists had an opportunity tostudy South Korea’s development experience. Ten yearsafter it began, as trade between the two nations reached$100 million, diplomatic relations between Vietnam andSouth Korea were officially established. Nowadays, SouthKorea is one of Vietnam’s leading trade and investmentpartners, and there are regular exchanges of high-rankingofficial delegations between the two countries.

Taiwan. Relations with China over the decades havemade Vietnam cautious in its stance toward Taiwan.However, the island is undoubtedly an Asian “economictiger” and its promising business and investment potentialproved to be attractive to Vietnam. Taking into accountthe high interest shown by local companies — particularlyin Ho Chi Minh City where there is a big and activeChinese-Vietnamese business community — VCCIsuggested that the government allow VCCI and localcompanies to start business contacts with the Taiwanese.

In 1988, the government signaled its approval andVCCI contacted the China External Trade DevelopmentCouncil (CETRA), Taiwan’s international trade promo-tion organization, and arranged business links betweenpartners on both sides. The relations were conductedcarefully and in a limited way through non-governmen-tal arrangements. However, ties grew rapidly thanks tothe dynamism and mutual interest shown by businesses.In the early 1990s, both sides reached agreements oninvestment guarantees, double-taxation avoidance, andthe establishment of representative offices for the protec-tion of each other’s interests.

Taiwan has been the largest investor in Vietnam formany years. Even now, Taiwanese investment inVietnam is much larger than the investment by main-land Chinese interests. Vietnam’s diplomacy in this caseproved to be very flexible and efficient in finding appro-priate channels and formulas to serve the country and itsbusiness interests.

Israel. Vietnam has long maintained official relationswith many Arab and Middle Eastern countries that havebeen in conflict with Israel. However, positive develop-ments in the Middle East in the early 1990s created anopportunity for Vietnam to access Israeli economic andtechnological development, and Vietnamese businessesspoke with VCCI about starting commercial contactsand exchanges with Israel. Recognizing the efficiency oftheir trade transactions with Israeli firms based inSingapore and Hong Kong, VCCI made a proposal tothe government on opening up direct trade betweenVietnam and Israel. Following a quick response from thegovernment, VCCI hosted the first Israeli business mis-sion to Vietnam in early 1992, and brought three dele-gates, including a Vietnamese diplomat, to Tel Aviv inDecember of the same year. One year later, officialdiplomatic relations were established between the twocountries. Nowadays, despite a relatively small volume oftrade and investment between the two sides, there havebeen many opportunities for cooperation in trade, sci-ence, and technology.

At present, Vietnam has diplomatic relations with manycountries throughout the world. Vietnam also maintainscommercial relations with 165 countries, among which80 have signed bilateral trade agreements with Vietnam,and 72 are committed to applying most favored nationstatus to Vietnam. With a steady course of renovationand with its motto of “being a friend to all countries inthe world,” Vietnam endeavors to promote mutuallybeneficial economic and commercial cooperation withother countries, proceed with international integration,and contribute to the development of peace, stability,and prosperity throughout the world.


It is useful to open with a negative: economic interestshave not been the dominant forces shaping U.S. traderelations with Vietnam over the past quarter-century.Those with stakes in the legacy of the war played thatrole, such as families who wanted closure on troopsreported as prisoners-of-war or missing-in-action(POW/MIAs) or veterans who pressed normalizationand mutual forgiveness. But organized U.S. business wasan important supplemental player in the liberalizingevents of the past decade, culminating in the signing andlegislative enactment of the Bilateral Trade Agreement(BTA). And as the POW/MIA issues continue to fade,U.S. economic interests are likely to play a growing rolein the years to come.

That impact will not always be positive from aVietnamese perspective. A senator from Louisiana can,and did, act to protect producers in her state by winningenactment of a law forbidding the use of the word “cat-fish” to label an important Vietnamese export. Thisaction was taken in 2001 over the objections of execu-tive branch and congressional trade policy leaders, andfurther entrenched through its inclusion in the 2002farm legislation. Other special interests will doubtlessintrude in the future — some supportive of expandedtrade relations between the two nations, others not.

For Americans seeking insight into their government’spolicymaking process toward Vietnam, therefore, andfor Vietnamese concerned with influencing that process,it is important to begin this analysis with discussion ofthe general rise of economic and business influenceover U.S. international economic policy during thepast half-century.

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The United States was by far the world’s largest econo-my throughout the 20th century. Hence economicdiplomacy has been an important instrument of U.S.influence, and business interests have always played arole in shaping that diplomacy. Important examples ofU.S. foreign economic policy in the wake of World WarII included the Bretton Woods monetary agreements,the negotiation of the General Agreement on Tariffs andTrade (GATT), and the launching of the Marshall Planto rescue and restore the economies of war-ravagedWestern Europe. Among recent cases are the granting ofPermanent Normal Trade Relations (PNTR) status toChina in 2000 upon conclusion of its agreement to jointhe World Trade Organization (WTO), and theNovember 2001 Doha agreement to launch a newround of global trade negotiations.

From 1945 through the 1960s, however, U.S. interna-tional economic policy was not driven primarily by U.S.economic interests. Rather, it was dominated by broadforeign policy and national security concerns, particular-ly the need to buttress Cold War alliances against theSoviet Union and China by strengthening the economiesof the North Atlantic Treaty Organization (NATO)nations and Japan. The lead agencies shaping policywere those driven by this agenda: the State Departmentand the National Security Council.1 This agenda hadoverriding national priority, of course, and a tragic mis-reading of the nature of the Cold War conflict wouldlead the United States into terrible conflict in Vietnam.But it was possible to subordinate foreign economic pol-icy to Cold War purposes because the U.S. economy was

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1 They were and are part of a broader grouping of agencies (including the Department of Defense and the Central Intelligence Agency) that I have labeled else-where the "security complex." See Destler, "A Government Divided: The Security Complex and the Economic Complex," in The New Politics of American ForeignPolicy, ed. David A Deese (New York: St. Martin’s Press, 1994), pp. 132-47.


not only dominant in the world but also well insulatedagainst the world. As late as 1960, the sum of U.S.exports and imports totaled only 9 percent of grossdomestic product (GDP).

But this priority did not go unchallenged. From theearly 1950s onward, the U.S. textile industry — one ofthe first hurt by global competition — insisted on stepsto limit imports from lower-wage countries. By the1960s, pressures from Congress and business, reflectingthe rising importance of international transactions to theU.S. economy, led to policy and organizational steps giv-ing domestic concerns and interests greater weight.

The Creation of the USTR. An important early step wasthe transfer of trade policy leadership from the StateDepartment to a new office designed to increase priorityto U.S. business concerns. Members of Congress hadlong complained that trade negotiations were led bydiplomats who know foreign nations better than theirown. When President John F. Kennedy sought legisla-tion in 1962 (parallel to today’s Trade PromotionAuthority, or “fast-track”) authorizing the ambitious newround of GATT trade negotiations that came to bear hisname, Congressman Wilbur Mills, a Democrat fromArkansas who was chair of the powerful Ways andMeans Committee, which had jurisdiction over tradelaw, insisted that the U.S. negotiating team be led notby State but a new entity based in the White House.Kennedy complied with this legislative command, creat-ing in 1963 a Special Representative for TradeNegotiations.

The initial role of this new trade office was to coordinateoverall U.S. policy, balancing foreign policy and domesticeconomic interests. Over time, it was to give increasing

attention to the latter. In the 1970s, Congress wouldstrengthen this office: in 1974 by making it a statutoryentity and giving its head Cabinet rank; in 1979 by forc-ing President Jimmy Carter to enhance its jurisdictionand rename it the Office of the United States TradeRepresentative (USTR), effective in January 1980.2

Other policy and organizational steps reflected the grow-ing weight of domestic interests affected by the globaleconomy. In 1971, President Richard M. Nixon ordereda halt to supporting the value of the dollar through thesale of gold, granting his administration greater flexibili-ty on domestic economic policy in the run-up to his1972 re-election campaign, but also bringing an end tothe Bretton Woods fixed-rate currency system. Nixonalso established White House coordinating institutionsfor international (and overall) economic policy parallelto the National Security Council, whose role in econom-ic matters declined. Every president thereafter replicatedthis practice, establishing an institutional advocate forconnecting U.S. foreign economic policy with overallU.S. economic interests.3

By this time, oil shocks and global food shortages wereunderscoring the increased integration of the U.S. andglobal economies. By 1980, the proportion of U.S. trade(exports plus imports) to GDP had risen to 20.5 per-cent, a more than doubling in 20 years.4 This meantgrowing international trade and investment opportunitiesfor U.S. businesses, particularly the multinational corpo-rations. Still, the business interests most likely to takethe political initiative during the 1970s and 1980s werethose hurt by trade — textiles, steel, autos, and semicon-ductors. Their activism in seeking protection fromimports was exacerbated by the sudden soaring of the

2 For a fuller account of the creation and evolution of USTR, see Destler, American Trade Politics, 3rd edition (Washington, D.C.: Institute for InternationalEconomics and the Twentieth Century Fund, 1995), pp. 19-21 and 107ff.3 The name and precise shape of the economic policy coordinating institution changed with virtually every administration, until President Bill Clinton estab-lished the National Economic Council in 1993. For detail on this, see Destler, The National Economic Council: A Work In Progress (Washington, D.C.: Institutefor International Economics, Policy Analysis No. 46, 1996), esp. pp. 1-8.4 This figure would reach 26 percent in 2000. These percentages are calculated from the figures for GDP and exports and imports of goods and services inTable B-1 of successive editions of Economic Report of the President, published annually in January or February by the President’s Council of EconomicAdvisers.


U.S. trade deficit in the mid-1980s, to 12-digit figuresunprecedented in global economic history. By contrast,businesses doing well internationally tended to stay outof politics unless the President or the USTR urged themto engage in order to right the political balance.

Things changed in the 1990s. Economic interestsbecame, for a time, the overriding forces in U.S. foreigneconomic policy. And internationally minded businessbegan to take greater initiative in pressing to keep mar-kets open and reduce existing trade barriers, particularlywhen the trading partner was China.

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Several forces converged as William Jefferson Clintonbegan his successful run for the presidency. The ColdWar ended rather abruptly, weakening the influence ofnational security concerns on U.S. trade and economicpolicy. At the same time, American elites were sufferinga crisis of economic confidence, reflecting sluggishgrowth since the early 1970s, recession, and concern thatother nations — Japan in particular — were surpassingthe United States.6 Charging then President GeorgeH.W. Bush with fecklessness in domestic economicmanagement and international economic competition,Clinton promised to “focus like a laser beam” on thenation’s economic problems. During his campaign, hemanaged to cut into the Republican Party’s normal busi-ness support by gaining the backing of high-technologyfirms wanting a strong response to foreign competition.Once in office, he announced a “rebalancing” of U.S.policy toward Japan with enhanced attention to theeconomic dimension. He created a new NationalEconomic Council (NEC) parallel to the NSC andcharged with development of policy to combat interna-tional economic competition.

Clinton cast himself as a centrist “new Democrat” andfree trader, unlike many of his party colleagues who hadfollowed organized labor’s move to a trade-restrictivestance. He won congressional approval of the NorthAmerican Free Trade Agreement (NAFTA), completedthe GATT negotiations establishing the WTO, andnegotiated commitments to achieve free trade within theWestern Hemisphere and among the Asia-PacificEconomic Cooperation (APEC) nations by early in the21st century. And in the sharp trade conflict with Japanfrom 1993-95, U.S. policy was focused not on closingAmerican markets but on getting Tokyo to openJapanese markets.

Internationalist business supported these initiatives and(for the most part) the tough approach to Japan.Ironically, however, what energized U.S. business leadersmost was the issue where Clinton did not seem to begiving priority to economics, the U.S. relationship withChina. Due to a law (known as “Jackson-Vanik”) enact-ed in 1974 with the Soviet Union in mind (and beingapplied today to trade with Vietnam), the president hadto decide every year to continue granting normal tariffrates to Chinese imports. Carter and Ronald Reagan haddone so without controversy. But the Tiananmen Squaremassacre of June 1989 transformed American attitudestoward Beijing, and thereafter George H.W. Bush hadfaced annual congressional opposition when he acted toextend normal trade relations. In his campaign, Clintonhad denounced Bush for “kowtowing” to “the butchersof Beijing,” and promised that he would link continua-tion of favorable tariff treatment to China’s humanrights performance.

Organized business was uncomfortable with this stance,fearing that Clinton might end up delivering on thistrade threat, and believing that curtailing Chinese tradewould lead to retaliation against U.S. companies withoutdoing anything positive for Chinese citizens. When, inearly 1994, it seemed that Beijing’s recalcitrance on

5 This was the wording of a famous sign posted at Clinton campaign headquarters, reminding workers there of their overriding issue.6 It was around this time that East Asia specialist Chalmers Johnson made his oft-quoted remark, "The Cold War is over; Japan won."


human rights might drive Clinton to impose some formof trade sanctions, business organizations mobilized tosever the trade-rights linkage. The economic agencies inthe executive branch — Commerce, USTR, Treasury,and others — did not conceal their sympathy for thisposition. This could only undercut whatever leverage onthe matter the United States might have had withChina, and then Secretary of State Warren Christopherwas in fact humiliated when he pursued the humanrights agenda in Beijing that spring. In May 1994,Clinton bowed to the inevitable and declared that link-age was no longer effective. Henceforth, the UnitedStates would maintain open trade relations with Chinafor their own intrinsic value, and pursue human rightsconcerns by other means.

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Clinton’s China decision marked a “coming of age” fororganized U.S. business as a force lobbying for opentrade. Through most of the post-World War II period,U.S. firms were divided on trade issues, and thosethreatened by global trade tended to be more activebecause they absorbed immediate losses from imports,and because protection — if attainable — would pro-vide them direct and tangible gains. Those who profitedfrom export or import trade tended, by contrast, tostand aside from the political arena. For them, businesswas good and tending to it could make it still better.They saw potential benefit if the USTR could negotiatereductions in foreign trade barriers, but it was unclearwhen such gains would come and which firms wouldpocket them. Hence there was a political imbalancewithin the business community — the protectionistscried louder, and were more often heard.

By the 1990s, however, this balance seemed to be chang-ing. Globalization meant that fewer large industries were

not in some way engaged in, and dependent on, interna-tional trade and investment. Even longstanding protec-tionists like textile makers began to see that trade rulescould help them take advantage of foreign opportunities— and that industry in fact supported the NAFTAagreement once its details were crafted in ways that gaveit advantage. And the mainstream internationalist compa-nies — such as Kodak, Motorola, and Caterpillar —became more dependent on, and committed to, an opentrading system. So, pro-trade organizations like theBusiness Roundtable and the National Association ofManufacturers became more active. One apparent resultwas that in the mid- to late-1990s, when the UnitedStates experienced trade deficits and import growthremarkably similar in magnitude to those of the mid-1980s, there was not the same broad protectionistresponse — the steel industry was vocal, but otherswere not.7 And the internationalist businesses weremore active.

They did not just lobby Congress, of course. At least asimportant was their influence on the executive branch inthe course of trade negotiations. Businesses frequentlyhad strong views about which foreign trade barriers wereimpeding their sales. And negotiators at USTR andother executive agencies wanted to know these views —because they wanted trade negotiations to be effective inknocking down other nations’ trade barriers, andbecause they wanted the support of internationallyminded industries. Indeed, during a major trade roundU.S. negotiators consciously work to build a broad coali-tion of business supporters, who can help with Congresswhen the final agreement is submitted for approval.8

Despite its enhanced activism, however, internationallyoriented U.S. business still did not tend to take the ini-tiative in support of broad new trade negotiation author-ity. When Clinton sought renewal of “fast-track” in1997, in fact, many held back for months fearing that

7 See I. M. Destler and Peter J. Balint, The New Politics of American Trade: Trade, Labor, and the Environment (Washington, D.C.: Institute for InternationalEconomics, Policy Analysis No. 58, 1999), p. 1.8 For an insightful discussion of how executive branch officials court and "use" business support, see Gilbert R. Winham, International Trade and the TokyoRound Negotiation (Princeton, N.J.: Princeton University Press, 1986), pp. 315-17.


the president would tilt too much toward groups seekingto bring labor and environmental standards onto thetrade-negotiating agenda. As a result, a new coalition ofanti-globalization activists — who did not hold back inpressing their opposition — succeeded in lining upenough votes in opposition that the president and thenHouse Speaker Newt Gingrich were forced to withdrawthe legislation without a House floor vote.

Foremost among the opponents of trade liberalizationwas organized labor. Ever since import competition hitmajor U.S. industries in the 1960s and 1970s, the AFL-CIO, the United Auto Workers, and other unions hadpressed to win protection for their products, to slowdown initiatives toward further trade liberalization, andto put labor rights on the international negotiating agenda.Through the mid-1990s, they were usually unsuccessfulin blocking trade-liberalizing legislation, though theywere able to woo many labor-dependent Democrats to their side of the issue.9 But in 1997, as earliernoted, they out-lobbied organized business, which waslate to engage.

Business did not make that mistake again in 2000,when the issue was granting permanent normal tradestatus to China. Impressed with the range of Beijing’scommitments to open its economy, and determinednot to be left behind in this huge and rapidly growingmarket, business groups worked assiduously and suc-cessfully to win enactment of legislation granting thePeople’s Republic of China PNTR status. Critical wasthe fact that China presented not only a trade opportu-nity of vast potential magnitude, but also an invest-ment opportunity. Companies operating inside Chinawanted to remain there and expand their operations.Companies not yet there wanted to be. Having aChina presence and a China strategy was viewed asessential to a firm’s global competitiveness in the 21st century.

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Also of interest to U.S. business was Vietnam. Thatnation was much smaller than China, of course, andseemingly less committed to economic reform. But itwas viewed as having substantial upside potential, withits large population and capable labor force. Americancompanies did not wish to be left behind there, but inthe late 1980s and early 1990s, that is exactly whathappened due to the U.S. economic embargo put inplace at the end of the long and bitter war.

The influence of organized business on Vietnam policywas more limited than on policy toward China. First ofall, their existing stakes were small or nonexistent due tothe embargo — hence it was hard for them to justifymajor lobbying. More important was the impact of non-economic issues: the legacy of bitterness and humiliationmany Americans felt from losing the war, and the deter-mination of activist families of soldiers missing-in-actionto block any steps toward economic rapprochementuntil the government in Hanoi had done all it possiblecould to help locate and identify soldiers’ remains. Thiswas a deeply emotional issue, and not the sort on whichbusiness could easily engage. What was necessary wasadvocacy of normalization by Americans who also hadclaims to having suffered from the wartime experience.

This came, of course, from Vietnam veterans.Increasingly, men who had served in combat during thewar made the decision that, as a personal matter, theywould support reconciliation with the former enemy.And as important as the rank-in-file was their leadership.Senator John McCain, a former prisoner of war inVietnam, lent his formidable name and energy to thecause. President Clinton believed personally that thetime had come to open up relations with Vietnam, buthis political standing on military issues was weak, owingin particular to his well-publicized avoidance of Vietnamservice. In military and political parlance, he needed

9 See Destler, "Trade Politics and Labor Issues: 1953-95," in Imports, Exports, and the American Worker, ed. Susan M. Collins (Washington, D.C.: BrookingsInstitution, 1998), pp. 389-408.


“cover.” This the U.S. Senate provided in January 1994when, following intensive bilateral work in Vietnam onPOW/MIA cases, it passed a resolution calling on thepresident to lift the economic embargo. Clinton did soalmost immediately.

Neither the Senate nor the administration saw thismainly as an economic issue. Of the 42 senators whovoted against lifting the embargo before all MIAs orPOWs were accounted for, 29 were Republicans.10 Hadthe matter been framed as a trade issue, the party bal-ance would surely have been the other way — as it wasconsistently on trade with China.

With Clinton’s action lifting the embargo, U.S. tradewith Vietnam could resume — and some did. But itlabored under a severe handicap, as Vietnamese productswere denied the MFN tariff rates granted to virtually allother U.S. trading partners. In fact, in the mid-1990sVietnam was one of just five countries denied such rates(in a group that included Libya and Taliban-ruledAfghanistan). And it was the only one of the five withwhich the U.S. did significant trade. This meant thatVietnamese goods faced not the typical 4 percent tariffpaid on imports from its competitors, but rates averag-ing around 40 percent.

After the embargo was lifted and diplomatic relationsresumed, however, the way was now clear for theUnited States to correct this anomaly by negotiating a bilateral trade agreement with Vietnam. As talks pro-gressed, Clinton employed a provision of the Jackson-Vanik legislation to provide an annual waiver, whichmade Vietnam eligible for certain U.S. governmentcredits, or investment or credit guarantee programs(e.g., of the Overseas Private Investment Corporationand the Export-Import Bank). Vietnam received NTRstatus when the BTA came into effect on December10, 2001.11

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By this time, the overall U.S. priority on foreign eco-nomic policy had receded from its 1993-95 peak. TheU.S. economy had rebounded spectacularly, entering aremarkable period of technology-generated growth.Economic rivals, and Japan in particular, were doingmuch worse. In addition, the post-Cold War world gen-erated its own set of international security challenges —tensions in the Taiwan Straits, for example, and civilconflict in the nations of the former Yugoslavia. Clinton,like his predecessors, found himself pulled into such crisisissues. The East Asian financial crisis of 1997-99 posed anew foreign economic challenge, and business lent itssupport to the provision of “rescue packages” to limit thedamage to the nations concerned — and to U.S. exports.Business was joined, in this instance, by organizedlabor, and legislation to enhance the resources of theInternational Monetary Fund was enacted in late 1998.

Throughout the decade of the 1990s, the U.S. economycontinued to internationalize. The sum of exports andimports rose to 26 percent of GDP by 2000. For themodest and declining share of economic actors engagedin goods production, the impact of trade was muchgreater. The nation entered the 2000 presidential electionseason enmeshed more deeply than ever in the globaleconomy, and seeming — at least in others’ eyes — todominate that economy. For much of the world, “global-ization” and “Americanization” were synonyms. Yet tradepolicy was stymied — not due to protectionist pressures,but rather due to the social issues-based oppositionexemplified by the protesters who disrupted the 1999ministerial meeting of the WTO in Seattle. And thedomestic stalemate was exacerbated by bitter partisanconflict that had begun to spill over into the trade policyrealm, particularly in the House of Representatives.

10 U.S. Senate. 103rd Congress, 2nd Session. S. Amdt. 1266. Congressional Record ONLINE 27 January 1994. Available at http://thomas.loc.gov.11 On the specific Jackson-Vanik votes, see the chapter in this volume by Mark Manyin. On negotiation of the Bilateral Trade Agreement, see the chapter byEdward Gresser.

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George W. Bush emerged from his wafer-thin electoralvictory with an agenda that included restoration of the“fast-track” negotiating authority that had lapsed underClinton, which the new President soon renamed TradePromotion Authority (TPA). He also inherited the bilat-eral agreement with Vietnam, which the Clinton admin-istration had completed but not sent to Congress for itsnecessary approval. For a time, this agreement wascaught up in the politics of the broader trade issue. Withbusiness support for the BTA solid and opposition wan-ing, Robert Zoellick, U.S. Trade Representative underBush, saw it as an attractive component in a comprehen-sive trade bill that would include the Jordan Free TradeAgreement, also completed by Clinton, and TPA. Butsenior trade Democrats objected, wanting — they said— to vote separately on those measures that had broadconsensus support. The Democrats prevailed. HouseJoint Resolution 51 approving the U.S.-Vietnam agree-ment was passed by voice vote, as a stand-alone measure,by the House in September 2001, and by an 88-12 votein the Senate a month later.

Like the resolution to end the embargo seven yearsbefore, these Vietnam trade votes did not reflect the nor-mal trade-political divisions. In the Senate, only twoDemocrats were opposed. On the House vote onVietnam trade that year, only 33 Democrats voted tooverturn President Bush’s extension of NTR, togetherwith 57 Republicans and the House’s two Independents.Democratic leader Richard Gephardt of Missouri, whohad consistently opposed normal trade with China,voted with the 172 Democrats to sustain the growingU.S.-Vietnam trade relationship. U.S. business stood, ofcourse, in favor of the agreement and NTR, and thiscertainly contributed to the overwhelming margins ofsupport. But at bottom, the House and Senate voteswere about Vietnam more than they were about trade.

In the meantime, the Bush administration pressedCongress on its larger priority, TPA legislation. HouseWays and Means Chairman Bill Thomas, a Republican

from California, both reflected and exacerbated partisandivisions by rebuffing senior Ways and MeansDemocrats and negotiating a “bipartisan” bill with agroup of moderate junior members of that party lead byRep. Calvin Dooley, Democrat of California. Thomasand Dooley reached constructive compromises on arange of issues, including how to address labor and envi-ronmental matters, but Dooley had little leverage withhis colleagues. Senior Ways and Means DemocratsCharles Rangel, Sander Levin, and Robert Matsuideclared the Thomas bill inadequate and proposed analternative; when the Republicans refused to negotiate acompromise, they were hardened in their opposition. Inthe end, just 21 Democrats voted in favor, and in a fre-netic House floor campaign in early December that ekedout a 215-214 victory, House Republican Whip TomDeLay of Texas won the deciding votes by grantingdemands from textile congressmen to restrict access ofapparel from Andean and Central American nations.

There were partisan tensions in the Senate as well, withthe central Democratic demand being a major expansionof the assistance program for trade-displaced workers tobroaden coverage and provide, for the first time, subsi-dized health insurance. But a compromise was reached,and the legislation was passed by a comfortable 68-30margin. After a summer conference between the twohouses to reconcile differences in their bills, TPA becamelaw in August 2002.

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By promising prompt congressional action on tradeagreements negotiated under its authority, TPA willstrengthen the administration’s hand in the WTO talksauthorized at the November 2001 Doha trade ministeri-al meeting. USTR Zoellick will also use the renewedauthority to move forward toward a Free Trade Area ofthe Americas, and in negotiations for bilateral free tradeagreements with a range of countries and regions.



Until Vietnam joins the WTO, it will not be a partnerin bilateral and regional FTA negotiations involving theUnited States. It will be a bystander in the global tradetalks as well. In addition, as a non-member of theWTO, it will be subject (like China before 2001) tounilateral U.S. trade sanctions under the so-calledSection 301 authority, and will not enjoy recourse to theWTO’s dispute settlement mechanism to review nationalanti-dumping rulings. Vietnam will also depend onannual presidential extensions of NTR tariff treatment.These extensions are likely to be forthcoming, but theywill offer an opportunity for members of Congress tohighlight concerns about Vietnam generally.

A further disadvantage that Vietnam faces is its smallshare of overall U.S. international commerce. ThoughU.S.-Vietnam trade has been expanding rapidly in per-centage terms, it remains, at $2.97 billion in 2002, lessthan two-tenths of one percent of U.S. global trade, andjust under two-thirds of one percent of U.S. trade withthe East Asia/Australia region.12 In addition, Vietnamranked forty-eighth among nations as a source of U.S.imports in 2002, and sixty-fourth as a destination forU.S. exports. For all of these reasons, Hanoi brings aweak hand to trade negotiations with the United States.How should it play this hand? Vietnamese officials needto think in both short-run and long-run terms.

In the short run, they must seek to make the most oftheir current situation. This means going beyond estab-lished negotiating channels and locating and cultivatingallies in the U.S. policymaking process: individuals orgroups who, for their own reasons, favor expanded tradeand interchange with Vietnam. They might begin withfour categories:

Individuals and groups committed, for non-economic reasons, to deepening the bilateral relationship13;

Business firms with important investments in Vietnam;

Business firms with important exports to Vietnam; and

Distributors and industrial users of imports from Vietnam.

As long as trade remains modest in U.S. terms, the firstof these categories will be the most important in influ-encing U.S. trade policy toward Vietnam, and the lastwill be the least important.

Over the long term, however, Vietnam can aspire tomuch greater influence on U.S. trade policy. It is anation of enormous economic potential, and it is begin-ning to realize that potential. A decade or more ofgrowth at rates achieved by reformist China — or byVietnam itself in the mid-1990s — would quickly ele-vate the economic importance of Vietnam to the UnitedStates, and to the broader Asia-Pacific region as well.

Whether this can be achieved will depend, in large part,on domestic Vietnamese economic policy. If there isrenewed commitment to opening up (again, China isthe proper example), then trade with the United States islikely to continue its rapid rate of increase, and U.S.firms will increasingly find Vietnam to be a hospitableplace to invest their funds and initiate or expand trade.U.S. business interests will then give increased politicalpriority to lobbying on issues affecting Vietnam becauseit will be in their interest to do so. And that, over thelong term, is the best way for Vietnam to build politicalsupport for its economic interests in the United States.

12 U.S. Census Bureau figures for exports plus imports: U.S. with Vietnam, $2.97 billion. U.S. International Trade Commission figures for exports plus imports:U.S. with East Asia/Australia: $458 billion; U.S. global: $1,856 billion. Available at http://www.dataweb.usitc.gov.13 Included here are certain veterans’ organizations and individuals like Senator John McCain, who unsuccessfully fought to revoke the prohibition on labelingVietnamese imports as "catfish."

Case Study: Negotiating & Ratifying the Bilateral Trade Agreement


In Washington and Hanoi alike, the ratification of theU.S.-Vietnam Bilateral Trade Agreement (BTA) placedthe final stone in the arch of postwar reconciliation. Assuch, the BTA marked the end of one era and the begin-ning of a new one. And certainly for Americans, it was astep with historic meaning and emotional significance.

From another angle, though, the BTA was simply oneamong a number of major Clinton administration tradeinitiatives. Its negotiation and ratification took place at amoment — perhaps, in the wake of the September 11,2001 terrorist attacks, a moment that has passed — inwhich trade policy became central not only to foreignpolicy and economic strategy, but domestic politics. Andin this sense, it raised technical issues and domesticpolitical challenges similar to those raised by the othermajor trade debates of the late 20th century.

Its unique character, as the final page in the process ofreconciliation, allowed it to conclude with a degree ofconsensus the other trade agreements — the NorthAmerican Free Trade Agreement (NAFTA), the creationof the World Trade Organization, normalization withChina and even the free trade agreement with Jordan —could not achieve. The following paper reviews thedecisions that successive U.S. administrations made asthe BTA progressed in an effort to understand why thismight be.

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The BTA, to begin with, was one among 306 interna-tional trade agreements concluded during the Clintonadministration. Most of these were narrow affairs affectingonly very specific companies or industries — agreements

to set textile quotas for Ecuador, settle metal dumpingcases with Russia, or ease sales of cherries to Japan. But afew were far more ambitious, leading to substantialchanges in the American trade regime — and the BTAshould be placed in this latter group.

In substantive terms, while trade flows between the U.S.and Vietnam are small, no American agreement in the1990s made greater market access concessions to a for-eign partner than did the BTA with Vietnam. And inpolitical terms, the BTA was matched in complexity byperhaps only four other agreements — NAFTA, theUruguay Round talks that created the World TradeOrganization, the integration of China into the tradingsystem, and the free trade agreement with Jordan.

The technical challenge. Before reviewing the decisionsleading to conclusion of the BTA, it may be worth look-ing at its nature.

In technical terms, the American side of the BTA inessence compressed sixty years of postwar trade policyinto a single commitment. This, of course, was the grantto Vietnam of “Normal Trade Relations” (NTR, formerlytermed “Most Favored Nation” status, or the tariff levelsapplied to goods from the vast majority of Americantrading partners).

Owing to a law passed in 1974 (the so-called “Jackson-Vanik Amendment,” named for its sponsors CharlesVanik and Henry Jackson, which barred non-marketeconomies from receiving NTR status), Vietnam hadremained ineligible for any of the eight rounds of tariffcuts the U.S. had made in the decades since the SecondWorld War. By the 1990s, this led to a remarkable disad-vantage. Vietnam’s goods faced tariffs averaging about 40

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percent, while most of the world faced a tariff of about2.5 percent.

The end of the Cold War, together with Vietnam’sdomestic reform process and ASEAN membership, hadmade this policy seem peculiar and anomalous by themid-1990s. But the anomaly was the result of a lawpassed by Congress, and thus could not be removed byexecutive action alone. The Jackson-Vanik law requiredtwo things in turn for a grant of NTR: first, a certifica-tion by the U.S. government of freedom of emigrationrights (stemming from the law’s original purpose, whichwas to encourage free emigration for Jews from theSoviet Union)1; and second, conclusion and congres-sional approval of a bilateral trade agreement.

The political challenge. In earlier years, the second stepmight have been routine, and this was in fact the casewhen Congress ratified the bilateral trade agreementwith China in 1980. But by the mid-1990s, when seri-ous work toward the BTA began, approval of any tradeagreement was far from routine.

In an era of peace and sustained growth, trade policyhad become more ambitious, covering services indus-tries, intellectual property, and other topics as well astariff policy. It had become more central to U.S. eco-nomic strategy and foreign policy as well. And itbecame, particularly with respect to developing coun-tries, more controversial; those who had feared Japanesecompetition in the 1980s now wondered whether devel-oping countries would be able to use low wages to drawinvestment and jobs away from the United States.

As a result, the major agreements of the 1990s made upsome of the most difficult debates of the Clinton era.Such agreements were time-consuming — all five of themajor agreements noted above spanned two or moreadministrations — and raised more intense social andpolitical debates than similar agreements had in the past.

Some of these debates were common to all the majoragreements. To oversimplify slightly, the major agree-ments passed in the 1990s aroused opposition on eco-nomic or other grounds from labor unions, textileindustries, some agricultural groups (southern catfishfarmers in the case of Vietnam), and some environmen-tal associations. This posed an especially difficult dilem-ma for the Democratic Party, as its base constituencieswere among the groups most critical of the agreements.On the other hand, the agreements won support on eco-nomic and strategic grounds from large multinationalbusinesses, the country’s foreign policy elites, and mostof the press.

Each agreement also raised some unique issues anddebates. In the case of the BTA there were three:

First, the BTA brought to the debate a wider set of participants than earlier trade agreements. The familiar business, labor and foreign policy groups were joined by a set of groups for whom trade policywas new and unfamiliar: Vietnamese-American community associations, military veterans of the Vietnam War and national veterans organizations like the Veterans of Foreign Wars and American Legion, and family members of soldiers still listed asmissing-in-action (MIA) in Vietnam and Laos.

Second, the Vietnam War had been a formative experience for many of the administration’s senior political and foreign policy officials. For these people,normalization with Vietnam had an emotional significance that earlier trade agreements lacked.

Third, for the White House political staff in the Clinton administration, the president’s opposition to the Vietnam War during the 1960s and early 1970s raised political concern about potential exploitation of the BTA by the Republican Party.

The resulting political dynamics were at times quitedifficult for the Clinton administration to manage. Asit moved toward completion of the BTA, the adminis-

1 A former member of Senator Jackson’s staff once privately told the author of this paper that China, and by implication other countries, had been included inthe Jackson-Vanik Amendment by mistake.


tration had to choose its trade policy priorities careful-ly, recognizing that support within the DemocraticParty might erode as the number of trade bills grew. Itlikewise had to balance its support for trade liberaliza-tion generally against a need — very strong, as the2000 elections approached — for party solidarity. Andit had to consider the public’s reaction to a trade nor-malization project overseen by a president who hadopposed the Vietnam War.

The political process leading to approval of the BTA,therefore, was slow and at all times affected by othertrade policy and political needs. In retrospect, it hadthree phases: an initial one, controlled largely by theadministration and lasting from 1993-1995, which laidthe foundations for trade normalization through aseries of smaller economic steps; a second of negotia-tions, whose pace was in large part decided by theVietnamese government and which lasted from 1996-2000; and a third from 2000-2001 of ratification,which Congress controlled.

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To begin with, the administration was faced with politicaldecisions: whether to proceed with trade normalizationat all, and if so, at what pace.

These initial decisions were made relatively early in theClinton administration’s first term. It inherited from theprevious Bush administration two positive trends. First,the major American foreign policy dispute with Vietnamhad been resolved with the peace agreement in Cambodia.Second, the most powerful domestic issue — the fateof the Americans listed as missing-in-action during thewar — seemed well-handled, as the Defense Departmentreported in the course of 1993 that Vietnam was workingin good faith to address the American concerns aboutthese men.

Outside these two issues, the administration had fewconstraints in setting Vietnam policy. Progress onaccounting for the MIAs was the main concern of thegeneral public, and of the veterans’ groups most directlyinterested in relations with Vietnam. These in turn werethe top concerns of the administration’s political andforeign policy decisionmakers. The Vietnamese-American community, in contrast to the Cuban-American community in debates on trade with Cuba,was divided — some favored economic engagement as amatter of principle, others hoped to do business withVietnam, and still other groups hoped to maintainpolitical distance. And at this juncture, the businessconstituencies typically most concerned with trade policy, though favorable in concept to normalization,were more concerned with China policy, NAFTA, andother issues.

During 1993, therefore, the administration decided thata larger process of normalization, involving both diplo-matic and economic issues, was feasible in concept anddesirable in practice.2 Some of its senior officials mayhave felt that it would have valuable strategic benefits.But in contrast to normalization with China twentyyears earlier, which had emerged from Cold War strate-gic calculation, most administration officials simplyseem to have felt that given the passage of time, andprogress on the issues of most concern to the U.S.,diplomatic and economic estrangement from Vietnamhad become an anachronism. Furthermore, many of theClinton administration’s senior officials appear to haveseen in normalization with Vietnam a chance to heal awound remaining open since their youth. This seemsclearly to have been the case for the president himself.

In deciding to proceed, the administration also decidedto accept such domestic risks as normalization mightraise at home. Such risks are common to all major tradeagreements, as failure in any major policy initiative dam-ages an administration. They are perhaps especially highfor a contemporary Democratic administration, given

2 The author thanks Joe Damond and Ambassador Charlene Barshefsky in particular for their recollections of these decisions.

the emotional opposition to trade liberalization amongsome of the Democratic Party’s key elements. In theVietnam case, these risks were amplified — in retrospect,overstated — by White House staffers concerned thatnormalization might bring a broader political backlash.

Nonetheless, the administration moved ahead. And asprogress on MIA case investigations continued, initiativesin other areas began to match it. Those steps the admin-istration could take toward economic normalization, asopposed to those which required negotiation with Hanoi,or congressional ratification, proceeded with the formalend of the postwar trade embargo in 1994, and supportfor multilateral loans in 1995. Preparatory work for theBTA itself began in December 1995, when the firstAmerican negotiating team visited Hanoi.

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A year later, the administration was ready to move tonegotiate the trade agreement itself, and the secondphase began.

This was the most complex of all the tasks involved infull normalization. It was the only one for which theadministration required formal congressional assent, andit thus required substantial domestic consensus building.It also involved a great deal of technical work, both todevelop an accurate picture of the Vietnamese trade pol-icy regime and to set specific negotiating objectives.And, of course, its conclusion required the approval ofthe Vietnamese government.

As a result, this second phase was time-consuming.From the first negotiating mission in 1995 through thesignature in July 2000, the negotiations took nearlytwice as long as those for NAFTA, and included perhapsthree basic decisions.

Setting negotiating goals. First, the administration set ageneral goal for the shape of the agreement and specificgoals for specific chapters within it.

The crucial step in this process was the decision toapproach the BTA not only as the end-point of tradenormalization, but as the first step in Vietnam’s eventualWTO membership and participation in any futureAPEC free trade initiative. This required a muchbroader agreement, touching most of the major issuesthat the Uruguay Round of GATT negotiations hadconcluded a year earlier — e.g. services trade, intellec-tual property, and investment.

The administration thus set broader goals than it hadin previous Jackson-Vanik agreements. It sought sub-stantial market access, both through reducing formaltrade barriers and through addressing underlying legalproblems (contradictory laws, high degrees of discre-tion for different ministries, or mandatory discrimina-tion in some areas between domestic and foreign pro-ducers) that could effectively nullify market accesscommitments. And perhaps looking back to the lostopportunity of trade normalization with China in1980, which was followed by nearly 15 years of negoti-ations on WTO membership, it sought a comprehensiveagreement from which Vietnam could move on toWTO accession talks with comparative ease.

As the talks proceeded, the administration carried out aseries of lower-level debates on particular elements of it.Some of these revolved around the relationship of theBTA to other priorities. Some in the government arguedthat including an investment chapter might reduce lever-age for the Bilateral Investment Treaty (BIT) program.Others raised the possibility of withholding MFN treat-ment in services sectors to maintain leverage for futurenegotiations and concessions from Vietnam on WTOaccession. These ideas were ultimately not adopted.Others reflected the advice of private-sector groups oper-ating in or hoping to export to Vietnam.

Negotiating with Vietnam. The negotiation of theagreement is not the principal subject of this paper.However, in passing, the Vietnam agreement followed ageneral pattern of successful trade policy. While mostpress coverage of negotiations and agreements stresses

69 | Case Study


confrontation and pressure, the most effective tactic isthe ability to make the case that the agreement is in theinterest of the negotiating partner. In this case, the U.S.was able to stress a very large and simple benefit, in thegrant of NTR that would follow ratification; and alsomake a dispassionate case about the disadvantages thatwould follow — lost investment, marginalization withinthe larger Asia-Pacific economy — if Vietnam remainedstatic as China entered the WTO.

The talks moved slowly but reasonably steadily. TheU.S. and Vietnam exchanged market access proposals in1997, with Vietnam presenting its first comprehensiveoffer in April 1998. A further year passed untilAmbassador Richard Fisher and the Vietnamese reacheda comprehensive “agreement in principle” in the summerof 1999. After this there was a hiatus. Talks on theagreement’s conclusion broke down at the Auckland AsiaPacific Economic Cooperation (APEC) meeting inSeptember, and did not reach their conclusion until thesignature in Washington in July 2000.

The perception within the U.S. government was that theVietnamese government might not have grasped the fullscope of the commitments it had undertaken, andbalked at making an uncomfortable and unfamiliarseries of decisions. But while negotiators found thebreakdown frustrating, some White House officials —who hoped to avoid controversy in the immediateaftermath of the presidential impeachment debate andthe Kosovo conflict in the spring of 1999 — weremore relieved than upset.

Domestic consensus-building. In parallel with its inter-nal deliberations and the negotiations with Vietnam, thegovernment began preparing for the third phase of theagreement — that of ratification — through consulta-tions with groups interested in trade policy, relationswith Vietnam, or both. These included both groupsalways interested in trade agreements (Congress, busi-

ness, organized labor and foreign policy professionals),and groups with particular interest in Vietnam, includ-ing MIA families, veterans’ organizations, andVietnamese-American community groups.

These consultations seem to have been fairly effective.Labor unions, which campaigned strongly and emotion-ally against trade normalization with China, alsoopposed the BTA, but devoted little or no time andresources to the issue. Businesses and foreign policyspecialists endorsed it enthusiastically. Vietnamese-American groups and veterans’ organizations, initiallysuspicious on anti-communist grounds, became moreamenable (although not always favorable) when briefedon provisions of the talks dealing with transparency,trading rights, distribution, and other measures whichhave socially liberalizing or rule-of-law effects.

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The first two phases of the process, while prolonged,seemed well managed by the administration. The lastphase, ratification in Congress, was not.

The BTA, in retrospect, had uniquely strong supportwithin Congress. A group of Vietnam War veterans —Senators John McCain and John Kerry, AmbassadorDouglas “Pete” Peterson — who enjoyed great credibili-ty with other members of Congress on Southeast Asianaffairs — had overseen and supported it from the begin-ning. And it had the advantage of a legislative proce-dure, built into the Jackson-Vanik Amendment, whichguaranteed a rapid vote.3

Both the Clinton administration and the succeedingBush administration, however, having announced fullsupport for the agreement, then chose to withhold itfrom Congress to address concerns arising from othertrade priorities. Viewed from Hanoi, their behavior may

3 The Jackson-Vanik Amendment authorizes administrations to grant NTR status to "non-market" economies when two conditions are met: certification that thecountry in question allows free emigration, and Congressional passage of a Bilateral Commercial Agreement. It also creates a special procedure for passage of such agreements: after administrations submit these agreements to Congress, Congress must vote on them within 90 days and is unable toamend them.

71 | Case Study

appear baffling, comic or even sinister. In the context ofAmerican politics, it may still appear baffling or comic.Both administrations seem to have badly misjudged thepolitical situation in Congress and made a simple taskmuch more difficult. But neither was acting in a sinisterfashion; rather, each was simply attempting to reconciledifferent priorities and manage the politics of trade.

Clinton administration decisions. The Clinton admin-istration certainly viewed the Vietnam trade agreementas a major achievement and an important element of itstrade legacy. But its top trade policy priorities in the year2000 were elsewhere. It hoped first to pass PermanentNormal Trade Relations (PNTR) for China, consistentwith U.S. commitments to the Chinese government onsignature of China’s WTO accession agreement; second,to minimize splits over trade policy within DemocraticParty during a presidential election; and third, to avoidcreating new problems for Democrats as a Republicanadministration took office.

The debate over China, which reached its climax duringa debate in the House of Representatives in May 2000,had badly fractured the Democratic Party. The party’spolitical base by and large viewed PNTR with anger andfear. Barely more than a third of the Democratic Housemembers supported the administration when the ques-tion came to a vote in late May, on what all agreed wasthe most important trade and foreign policy debate ofthe 106th Congress. As the negotiations on the agree-ment with Vietnam reached their conclusion in the sum-mer of 2000, the White House feared that another tradedebate might compound the damage, and decided notto seek a vote in the fall.

The administration had a second opportunity to submitthe agreement after a newly elected Congress convenedin January of 2001. Here it again decided not to do so,based reportedly on the advice from Democrats in theHouse of Representatives. While not opposed to the

BTA, they were looking ahead to the trade agenda underGeorge W. Bush, and hoped to secure a first vote on thefree trade agreement with Jordan to reassure theDemocratic base about the possibility of including laborand environmental provisions in future trade agree-ments. Thus, just as the previous Bush administrationhad signed NAFTA but delayed submission, so theClinton administration left the initiative with the newBush administration.

Bush administration decisions. The Bush administra-tion had a different but in some ways similar problem.Its top trade priority was Congressional approval of TradePromotion Authority (“TPA,” a legislative procedure pre-viously called “fast track,” is meant to facilitate passageof future agreements).4 Entering office, it viewedDemocrats as strongly supportive of the BTA as well asthe free trade agreement with Jordan, but as generallyunwilling to support TPA. So it held both agreementsback, hoping to trade endorsement of these agreementsfor Democratic support of TPA.

Ambassador Bob Zoellick, the newly appointed U.S.Trade Representative, memorably characterized thisapproach as one designed to force Democrats to make a“binary decision” on who is for trade and who is againstit. His hopes proved unrealistic, however; congressionalDemocrats largely scoffed at the threat, believing thatthe administration would not be willing to jeopardizerelations with Vietnam (or Jordan) and would have toproduce the two agreements sooner or later.

This led to a reversal of the typical pattern of congres-sional trade debates, in which administrations are enthu-siastic about passing them and Congress is reluctant totake them up. In this case, the opposite happened —Congress pressed and pushed an administration to sub-mit an agreement, with Senate supporters of the agree-ment finally using their power to block administrationtrade policy nominees to force its submission.

4 See "Administration Offers its 2001 International Trade Agenda: Expanding Trade, Expanding Freedom, Expanding Prosperity," at http://www.ustr.gov/releas-es/2001/05/01-27.pdf.

Passage. In the end, the concerns of the Clintonadministration were misguided and the hopes of theBush administration misplaced. The BTA did not splitthe Democratic Party, as the Clinton administration hadfeared; it was in fact the first trade agreement since the1980s to draw more Democratic than Republican sup-port. Neither, contrary to Bush administration hopes,did the BTA prove of any value as a bargaining chip.

Instead, just as the Clinton administration had initiallydecided trade normalization with Vietnam was the rightpolicy on its own merits and irrespective of other con-cerns, Congress refused to link the BTA to other admin-istration priorities.


To sum up, the story of the BTA was in many ways typi-cal for trade policy in the 20th century. It brought famil-iar actors and constituencies into the field, to strike posesfamiliar from previous debates. And it followed a patternof political decisionmaking, technical negotiation andthen debate in the legislature common to all of the mostambitious trade agreements of the 1990s.

But it is also, of course, a unique story, with subplotsranging from party politics, through debates within theVietnamese-American community and the memories ofmilitary veterans and anti-war protesters. Most striking,perhaps, is the sharp contrast the conclusion of debateon the BTA offers to the other major contemporarytrade agreements.

Despite the best efforts of business communities, news-paper editors and foreign policy elites, the domesticAmerican controversies over NAFTA, the WTO, China,and Jordan seem likely to persist for years to come.Debate on the BTA, by contrast, seems to have ended ina firm and broadly shared consensus for normal relationswith Vietnam. And this in turn may reflect a fact ofgreat interest.

The BTA is a normalization of trade relations with aparticular country, rather than a decision to changeAmerican trade regime in a fundamental way. So as amatter of trade policy, the debate’s quiet conclusion isunsurprising. However, as the conclusion to theAmerican debate over relations with postwar Vietnam, itis somewhat startling; and it is a sign that this final stonein the arch of reconciliation is firmly set.


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Since 1986, Vietnam has been aware of the demand forinternational economic integration and has put forwardappropriate policies to realize this process under a gener-al foreign policy of independence, sovereignty, openness,diversification, and multilateralization. To this end, thenegotiation and signing of the Vietnam-U.S. BilateralTrade Agreement (BTA) represents a significant recentevent in Vietnam’s integration process — one whichincluded joining the Association of Southeast AsianNations (ASEAN) in 1995, participating in the ASEANFree Trade Area (AFTA), and becoming a member ofthe Asia Pacific Economic Cooperation (APEC) forumin 1998.

After nine rounds of negotiation, occurring betweenSeptember 1996 and July 2000, the two sides reached an agreement and signed the BTA on July 13, 2000. The BTA is remarkable in that it includes provisions covering not only trade in goods, but also trade in services, investment, and intellectual property rights. In addition, it represents the first trade agreement thatVietnam has negotiated on the basis of World TradeOrganization (WTO) principles, an important consid-eration as Vietnam applied to join the WTO inDecember 1994 and is in negotiations to facilitate itseventual WTO accession.

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The Ministry of Trade (MoT) of Vietnam is the func-tional agency that manages Vietnam’s trade activities ininternational economic relations, and thus it played thekey role of negotiating and signing the BTA. Due to thebroad scope of the BTA, Vietnam is obliged to make

considerable adjustments to its legal and policy frame-work. Therefore, other ministries also participated in thedevelopment and negotiation of the BTA — includingPlanning and Investment; Finance; Industry; Agricultureand Rural Development; Science, Technology andEnvironment; Justice; Culture and Information;Fisheries; and Foreign Affairs. The MoT undertook therole of coordinating these ministries and other agenciesin the process of creating guidelines and carrying outnegotiations on the BTA.

At the same time, because of the importance and impli-cations of the commitments stipulated in the BTA forVietnam’s economy, the MoT consulted enterprises onthe content of the agreement. The MoT carried outconsultations with state-owned enterprises (SOEs) andprivate companies regarding detailed commitmentsrelating to the goods and services that these enterprisesand companies produce.

During the process of negotiating the BTA, the twosides reached an in principle agreement in the summerof 1999. However, both countries conducted morenegotiations after this time and agreed to further amendsome articles. The delay in signing from the summer of1999 to July 2000 was needed in part to give Vietnamadequate time to ensure the agreement served its nationalinterests, and also took into proper consideration its lowlevel of development and its status as a country in thethroes of integration into the world economy. Comparedto the 1999 version of the agreement, Vietnam securedadditional preferential conditions in the final 2000agreement, e.g.:

Provisions on telecommunication services were adjusted as follows: for services that involve value added, U.S. companies can contribute up to 50

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percent of joint venture capital within two years (three years in the case of internet services); for basic telecommunications (i.e., mobile phones), U.S. companies can contribute up to 49 percent of the capital within four years; and for fixed-line telephone service, the maximum joint venture capital for U.S. companies is 49 percent within six years.

The deadline for abolishing the regulation specifyingthat the general director (or first deputy general director) of a joint venture company be a Vietnamese citizen was extended to three years.

An article on the legislative level of investment was replaced by the stipulation that SOEs are obligated to fulfill commitments in this respect if they are entrusted by the government to undertake a state management function.

National treatment of deposit-taking activities of U.S. banks will be phased in after eight years.

An article on government procurement transparencywas removed.

An article on concession balance was removed.

In return, Vietnam agreed with the U.S. request toreduce the limitation period by one or two years forU.S. companies providing services to foreign-investedenterprises in such fields as auditing, architectural services,and computer and construction design services.

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In the agreement, Vietnam made many importantcommitments that will affect Vietnam’s socio-economicstatus as the BTA is implemented. Therefore, it may behelpful to provide a brief overview of the commitmentsbefore assessing the effects.

Trade in goods. The content of the commitments per-taining to trade in goods was relatively comprehensive inscope. In the agreement, Vietnam committed thatNormal Trade Relations (NTR) will be granted to com-modities imported from the United States with certain

exceptions. American companies have immediate tradingrights in Vietnam, or will receive such rights as they arephased in based on a maximum phase-in schedule of sixyears. Vietnam also agreed to remove and reduce tariffsby 20-50 percent on a wide range of industrial and agri-cultural products which the U.S. has strong potential toexport, such as air-conditioners and refrigerators, electricmotors, ceramic sanitary wares, photographic and film-related products, mobile phones, milk and dairy products,processed meat and fish, fruit and vegetables, vegetableoil, and other goods. These tariff cuts will be phased infrom three to six years after the agreement comes intoeffect. In terms of non-tariff barriers, Vietnam agreedgradually to remove quantitative restrictions, such as thenumber and type of licenses, and apply technical, customs,and sanitary standards under WTO rules and principles.Furthermore, Vietnam agreed to extend trading rights(the right to import and export) to U.S. persons andfirms in most sectors, subject to specific “transition peri-ods” which were set on a product by product basis.

Intellectual property rights. Chapter II of the agree-ment covers the commitments of the two parties regard-ing the establishment, use, exploitation, and protectionof intellectual property rights. Apart from the require-ments of each side to provide the other with treatmentno less favorable than it accords to its own nationalsregarding intellectual property rights, Vietnam also com-plies with provisions of the Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS) and theWTO in the short-term schedule with respect to allfields of protection.

Trade in services. Vietnam committed that within twoto seven years after the agreement comes into effect, itwill provide U.S. companies and individuals with marketaccess to a wide range of sectors and sub-sectors such asbusiness services, communication and information serv-ices, construction and related integrated technical services,education, financial services, healthcare, and tourism.

Investment. Vietnam committed to extend NTR to theUnited States with respect to the establishment, expan-


sion, acquisition, management, operation, sale, or otherdisposition of covered investments by the United States.In addition, Vietnam committed to the gradual removalof trade-related investment measures (TRIMs) that arenot consistent with the TRIMs Agreement, e.g. therequirement to develop domestic raw material resourcesafter five years, the requirement on export after sevenyears, and the requirement on investment capital afterseven years. Vietnam shall not nationalize investmentprojects and will create favorable conditions with respectto overall investment policy, such as ensuring that investorscan use land as collateral and have land transfer rights.

Transparency provisions. Vietnam committed to imple-ment an open and transparent policymaking process inall areas covered by the agreement.

The preceding paragraphs constitute a brief outline ofVietnam’s commitments in the BTA. Through studyingand considering these commitments, we can offer somecomments on the possible effects of implementation ofthe agreement on Vietnam’s economy.

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U.S. Implementation of the BTA. BTA implementa-tion already has led to considerable growth in Vietnameseexports to the United States. Since the United Statesimplemented the BTA by extending NTR to Vietnam inDecember 2001, Vietnamese exports to the UnitedStates have grown from approximately $1.05 billion in2001 to nearly $2.4 billion in 2002. Export growth hasbeen especially rapid in seafood, clothing, furniture, andleather products. However, BTA implementation on theU.S. side has also raised a dispute over new barriersplaced on imports of Vietnamese catfish.

FDI and Industrial Development. The United Statesranks about tenth among all foreign investors in Vietnam,with 182 investment projects and total registered capitalof $1.6 billion during the 1988-2002 period. U.S.-invested projects mainly focus on the fields of industry and

infrastructure construction. The implementation of BTAcommitments on developing the investment relationshipbetween Vietnam and the United States raises severalissues, of which two are of particular interest. First is theadjustment of the legal system and policies on invest-ment, and second is the construction of an appropriateindustrial development policy when the commitmentson investment of the agreement are implemented.

Vietnamese commitments in the BTA are highest in thearea of investment, as compared to other bilateral andmultilateral conventions on investment that Vietnam hassigned and implemented so far. In accordance with theprinciple of “most favored nation” treatment, these com-mitments will be applied to investors from all countrieswith which Vietnam has signed agreements on encour-aging and protecting investment. This requires Vietnamto adjust some current regulations to create a uniformlegal framework on investment.

Over the past few years, while implementing the policyon opening the economy to attract foreign investment,the current system of Vietnamese laws and policies oninvestment has been built and adjusted toward removingdiscrimination and establishing a uniform legal founda-tion among foreign investors, as well as between foreignand domestic investors. The adjustment of investmentlaws and policies aims not only at realizing individualcommitments to one or more particular agreements, butalso at improving the Vietnamese investment environ-ment and enhancing FDI attraction in general.Consequently, many investment-related commitmentscontained in the BTA are consistent with current lawson investment. However, work that needs to be imple-mented in the near future includes:

Formulating an enterprise law applicable to both foreign and domestic investors;

Perfecting the policy system aimed at improving thebusiness environment for foreign-invested companies,focusing especially on policies related to land, finance, foreign exchange management, labor, technology, and the environment;

75 | Case Study

Quickly implementing multilateral conventions on investment such as the Washington Convention of 1965 on the settlement of investment-related disputes between the state and citizens of other states, and the WTO’s agreement on trade-related investment measures.

Vietnam is a country in economic transition and thusthe development of its industrial sector through theattraction of foreign direct investment plays an impor-tant role in the national development strategy. For thisreason, undertaking commitments related to investmentin the BTA (corresponding to TRIMs and WTO terms)will require the Vietnamese government to change itsprotectionist policy for infant industries, and formulateappropriate new policies for developing its industrial sec-tor. For example, the BTA stipulates that five years afterit comes into effect, requirements on localization pro-portions (i.e., the percentage of local vs. imported con-tent of mechanical, electronic, motorbike, automobile,and other goods) as well as preferential import dutiesshould be eliminated. These provisions may result inVietnamese industries operating only in the assemblyprocess or manufacturing of spare parts with low valueadded. This example shows that in order to develop itsinfant industries, Vietnam will need to make adjust-ments and promulgate new policies aimed at fosteringdomestic industries.

Services Sector. Vietnam’s services sector has maderemarkable progress over the past few years, both interms of productivity growth and in percentage contri-bution to GDP. In the early 1990s, the growth rate of this sector reached more than 10 percent annually;after 1996, it slowed with the overall economy and inresponse to the Asian financial crisis. Along withVietnam’s integration into the international economyand participation in ASEAN, APEC, and the Asia-Europe Meeting (ASEM), Vietnam has made commit-ments that have begun to open up the services sector.External service suppliers are permitted to operate inmost sectors, and Vietnam’s own service industries are expanding.

U.S. service suppliers have gradually entered the servicesmarket in Vietnam, mainly in the areas of auditing,banking, and insurance. It can be said that implementa-tion of the BTA — in which commitments regardingtrade in services compromise a significant portion of theAgreement — will facilitate further market access forU.S. service suppliers. Furthermore, Vietnam’s commit-ments under the BTA related to services will enhancethe competitiveness of its own service sector, as well asreduce input costs and improve quality. At the sametime, Vietnam’s commitments to open the services sectorlikely will create new competitive pressures. Vietnamesefirms will find it difficult to compete with U.S. compa-nies, particularly in fields in which the U.S. is traditionallystrong, such as legal consulting, telecommunications,banking, and finance. It will be a serious challenge forVietnamese firms to compete in the coming 5-10 years,as the phase-in schedule for various service sectors beginsjust two years after implementation for such sub-sectorsas accounting, design, consulting, and architecture.

Labor, Employment, and Other Social Issues. Althoughemployment issues are not directly mentioned in theBTA, the fulfillment of related commitments is likely toraise a lot of issues relating to labor, employment, andother social issues. Vietnam’s Labor Code was enacted inJune 1994 and subsequently amended in April 2002.Such issues as labor standards have been clearly andcomprehensively stipulated in the code. In recent years,however, it has become apparent that the awareness ofthese labor standards among both employees andemployers is still limited. The current situation requiresa rapid improvement of labor standards in order to beconsistent with the integration process of Vietnam’seconomy in general, and implementation of the BTA inparticular. Labor standards have particular significancefor enterprises exporting goods and services to the U.S.market.

In general terms, implementation of the BTA will bringabout equality for both U.S. and other foreign businessesin the Vietnamese market. It will therefore present chal-lenges for Vietnamese enterprises to cope with rapidly


transforming production structures toward specializationand internationalization as well as increasing competi-tiveness. During this process, the possibility of manyVietnamese businesses having to face difficulties, con-traction, and even bankruptcy must also be taken intoaccount. Many laborers have already become unem-ployed during the reform process and the number ofredundancies will inevitably increase. Such redundancieswill become a burden on both society and the statebudget and must be addressed and resolved by theVietnamese government.

Finally, the BTA stipulates that investors of both partiescan transfer and recruit foreign managers as well asemployees for their investment and business activities inVietnam. Realization of this stipulation will requireprompt revisions and adjustments to existing regulationsand the promulgation of new ones as well.

CCoonncclluussiioonn:: TThhee SSiiggnniiffiiccaannccee ooff tthhee BBTTAA FFoorr VViieettnnaamm’’ssIInntteeggrraattiioonn PPrroocceessss

The BTA marks a significant step in the normalizationprocess between Vietnam and the United States, and creates positive conditions for increasing trade relationsbetween the two countries. Furthermore, because theBTA was formed on the basis of existing WTO princi-ples, it also marks a positive step toward Vietnam’sintegration into the world economy. In 2001, Vietnambegan negotiations on market opening provisions relatedto its application for accession to the WTO. The com-mitments made in the BTA lay the foundation forVietnam’s initial offers in these negotiations. Accordingto some experts, Vietnam’s BTA commitments are not ascomprehensive as those likely to be carried out in nego-tiations for WTO membership. Successful implementa-tion of the BTA is thus a prerequisite for Vietnam togain a favorable position in international trade relationsand to be well prepared in terms of capacity and experi-ence for joining the WTO.

The BTA presents a great opportunity for trade andinvestment growth between the two countries. At thesame time, implementation of the agreement will resultin tremendous challenges for Vietnamese governmentagencies as well as businesses. In the first place, adjust-ments and improvements must be made to the legalsystem and economic policies with a view to ensuringserious implementation of requirements stipulated inthe BTA. It also is imperative to spur administrativereform, as well as investment structure reform, in orderto enhance the development and competitiveness ofVietnamese goods and services under new circumstancesin which tariffs, non-tariff barriers, and other protec-tionist measures are removed.

77 | Case Study


VViieettnnaammeessee PPrreesseenntteerrss aanndd DDiissccuussssaannttss::

BBuuii TThhee GGiiaannggDirector GeneralPeople-to-People Relations DepartmentCommission for External RelationsCentral Committee, Communist Party of Vietnam

DDiinnhh CCoonngg CChhiinnhhExpertAmericas DepartmentMinistry of Foreign Affairs

LLee DDiinnhh TTiinnhhResearcherEuro-American Studies CenterInstitute of International Relations

NNgguuyyeenn LLaann AAnnhhLecturerInstitute of International Relations

NNgguuyyeenn PPhhuuoonngg BBiinnhhDeputy Director GeneralInstitute of International Relations

NNgguuyyeenn VVaann HHuuyynnhhDirectorNorth America DepartmentVietnam Union of Friendship Organizations

NNgguuyyeenn VVaann LLoonnggDirector GeneralOffice of National Committee for InternationalEconomic CooperationMinistry of Trade

NNgguuyyeenn VVuu TTuuHeadGeneral Information DivisionMinistry of Foreign Affairs, Ho Chi Minh City Branch

PPhhaamm QQuuoocc BBaaooDirectorForeign Affairs DepartmentOffice of the National Assembly

PPhhaamm CChhii LLaannVice PresidentVietnam Chamber of Commerce and Industry

PPhhaann DDooaann NNaammFormer Assistant Foreign MinisterAdvisor, Institute of International Relations

VVuu XXuuaann TTrruuoonnggDeputy Director GeneralEconomic DepartmentMinistry of Foreign Affairs

AAmmeerriiccaann PPrreesseenntteerrss aanndd DDiissccuussssaannttss::

FFrreeddeerriicckk ZZ.. BBrroowwnnAssociate Director, Southeast Asia StudiesPaul H. Nitze School of Advanced International StudiesJohns Hopkins University

JJoosseepphh DDaammoonnddVice President for AsiaPhRMA

II..MM.. DDeessttlleerrProfessor; Director, Ph.D. Program & Director, Program on International Security andEconomic Policy School of Public AffairsUniversity of Maryland

DDaavviidd WW..PP.. EElllliioottttProfessor of International Relations and PoliticsPomona College

AAppppeennddiixx II:: FFoorreeiiggnn PPoolliiccyymmaakkiinngg iinn tthhee UU..SS.. aanndd VViieettnnaamm:: DDoommeessttiicc DDiimmeennssiioonnssRiggs Library, Georgetown UniversityNovember 29-30, 2001

79 | Appendix I

BBrraadd FFiiggeellDirectorGovernment Affairs and International Trade CounselNike

AAmmbbaassssaaddoorr RRoobbeerrtt GGaalllluucccciiDeanSchool of Foreign ServiceGeorgetown University

EEddwwaarrdd GGrreesssseerrDirectorProject on Trade and Global MarketsProgressive Policy Institute

MMaarrkk MMaannyyiinnForeign Affairs AnalystCongressional Research Service

SSccootttt MMiilllleerrDirector National Government RelationsProcter and Gamble

AAmmbbaassssaaddoorr MMiicchhaaeell SSaammuueellssPresidentSamuels International Associates

MMaarrkk SSiiddeellAssociate Professor College of LawUniversity of Iowa

NNaannccyy SStteettssoonnProfessional Staff MemberCommittee on Foreign RelationsUnited States Senate

JJoonnaatthhaann RR.. SSttrroommsseetthhVietnam RepresentativeThe Asia Foundation

CCaassiimmiirr YYoossttDirectorInstitute for the Study of DiplomacyGeorgetown University

FFrraanncceess ZZwweenniiggSr. Director, Vietnam, Thailand, Cambodia, Laos, andMyanmar AffairsU.S.-ASEAN Business Council

CCoonnffeerreennccee PPaarrttiicciippaannttss::

AAlleexx AAcckkeerrWashington InternThe Asia Foundation

CCoolloonneell SStteepphheenn CC.. BBaallllInstitute for the Study of DiplomacyGeorgetown University

CChhaaddwwiicckk BBoolliicckkVietnam Program OfficerThe Asia Foundation

JJoohhnn BBrraannddoonnAssistant Director, Washington, D.C.The Asia Foundation

MMaatttthheeww DDaalleeyyDeputy Assistant SecretaryBureau of East Asian and Pacific AffairsU.S. Department of State

AAnnddrreeww GG.. DDuurraannttManaging DirectorSamuels International Associates

KKaammddeenn HHooffffmmaannMasters Candidate in International Affairs & PublicHealthThe George Washington University

MMiikkee JJeennddrrzzeejjcczzyykkWashington DirectorHuman Rights Watch-Asia

RRoobbeerrtt GGrriiffffiitthhssDeputy DirectorBureau of East Asia and Pacific AffairsU.S. Department of State

HHuuyyeenn TT.. LLeeMasters Candidate in Foreign Service ProgramGeorgetown University

LLee XXuuaann KKhhooaaExecutive DirectorSoutheast Asia Resource Action CenterAAllllaann LLaannggllaannddVietnam Desk OfficerBureau of East Asia and Pacific AffairsU.S. Department of State

NNgguuyyeenn AAnn DDuuyyResident AssociateInstitute for the Study of DiplomacyGeorgetown University

NNgguuyyeenn HHaaii YYeennMasters Candidate in EconomicsAmerican University

PPhhoo BBaa LLoonnggConsultantVietnam Foundation

SShhaawwnn MMccHHaalleeAssociate Professor of History & International AffairsGeorge Washington University

DDoouuggllaass PPaaaallPresidentAsia Pacific Policy Center

AAnnddrreeww PPiieerrrreeAdjunct Professor Georgetown University

JJoocceeyyllnn SSoonnggccooMasters Candidate in International Affairs and BusinessAdministrationColumbia University

MMiicchhaaeell SScchhiiffffeerrLegislative AssistantOffice of Senator Dianne FeinsteinUnited States Senate

JJiimm SStteeeelleeEconomic BureauU.S. Department of State

DDaavviidd II.. SStteeiinnbbeerrggDirector of Asian StudiesGeorgetown University

HHooppee SStteewwaarrttProgram AssistantThe Asia Foundation

LLeewwiiss SStteerrnnVisiting ScholarSchool of Advanced International StudiesJohns Hopkins University

PPeetteerr TThhoorriinnVietnam Desk OfficerBureau of East Asia and Pacific AffairsU.S. Department of State

DDaanniieell UUnnggeerrAssociate Professor of Political ScienceNorthern Illinois University

NNaannccyy YYuuaannVice President and Director, Washington, D.C. The Asia Foundation


81 | Appendix II

FFeebbrruuaarryy 33,, 11999944

President Clinton lifts the trade embargo againstVietnam, in effect since 1975.

JJaannuuaarryy 2288,, 11999955

United States and Vietnam sign agreements settlingproperty claims and establishing liaison offices inWashington, D.C. and Hanoi.

MMaayy 1155,, 11999955

Vietnam provides presidential delegation with docu-ments on missing Americans, later hailed by thePentagon as the most detailed and informative of theirkind.

JJuullyy 1111,, 11999955

President Clinton announces the “Normalization ofRelations” with Vietnam.

AAuugguusstt 66,, 11999955

Secretary of State Warren Christopher visits Hanoi andofficially opens U.S. Embassy.

MMaayy 11999966

United States presents Vietnam with a blueprint for atrade agreement.

AApprriill 1100,, 11999977

U.S. Senate confirms Douglas “Pete” Peterson, Vietnamwar veteran and former prisoner of war, as U.S.Ambassador to Vietnam.

MMaayy 99,, 11999977

Ambassador Peterson assumes post in Hanoi;Vietnamese Ambassador to the U.S. Le Van Bang goesto Washington.

AAuugguusstt 11999977

U.S. government, under the United States Agency forInternational Development (USAID), begins a commer-cial law program.

MMaarrcchh 1111,, 11999988

President Clinton issues a waiver of the Jackson-VanikAmendment for Vietnam, paving the way for OPIC, Ex-Im Bank, USDA, and MARAD activities in Vietnam.

MMaarrcchh 2266,, 11999988

Minister of Planning and Investment Tran Xuan Gia andAmbassador Pete Peterson finalize signing of the OPICbilateral for Vietnam.

JJuullyy 2255,, 11999999

United States Trade Representative Ambassador RichardFisher and Vietnam Trade Minister Tuyen agree to abilateral trade agreement in principle.


The Jackson-Vanik waiver passes the House by a vote of297-130.

DDeecceemmbbeerr 99,, 11999999

Ex-Im and the State Bank of Vietnam complete theframework agreements which allow Ex-Im to beginoperations in Vietnam.

AAppppeennddiixx IIII:: CChhrroonnoollooggyy ooff UU..SS..--VViieettnnaamm RReellaattiioonnss

MMaarrcchh 1133,, 22000000

Secretary of State William Cohen becomes the firstSecretary of Defense to visit Vietnam since the end ofthe war.

MMaayy 33,, 22000000

U.S. House passes House Concurrent Resolution 295,which urged Hanoi to repeal all laws restricting freedomof expression. It is referred to Senate Committee onForeign Relations.

JJuullyy 1133,, 22000000

Vietnam Minister of Trade Vu Khoan and USTRAmbassador Charlene Barshefsky sign an agreement ontrade relations at USTR. President Clinton announcesthe conclusion of a bilateral trade agreement from theWhite House.

JJuullyy 2266,, 22000000


NNoovveemmbbeerr 1166--2200,, 22000000

President Clinton visits Vietnam with CommerceSecretary Norman Mineta, USTR Ambassador CharleneBarshefsky, Senator John Kerry, First Lady HillaryRodham Clinton, and daughter Chelsea.

JJaannuuaarryy 22000011

The Vietnam Education Foundation Act of 2000 estab-lished by an Act of Congress, which will provide annualfunding of $5 million until 2019 for Vietnamese stu-dents to study in the United States.

AApprriill 22000011

Vietnam holds 9th Party Congress and confirmsNational Assembly Chairman Nong Duc Manh as newSecretary General of the Communist Party.

JJuunnee 11,, 22000011

President Bush renews the Jackson-Vanik waiver forVietnam.

JJuunnee 88,, 22000011

President Bush transmits the request for Normal TradeRelations (NTR) for Vietnam and implementation ofthe trade agreement to Congress.

JJuullyy 2266,, 22000011


SSeepptteemmbbeerr 66,, 22000011

BTA passes by voice vote in the U.S. House ofRepresentatives. U.S. House passes the VietnamHuman Rights Act (H.R. 2833) by a vote of 410-1.

OOccttoobbeerr 33,, 22000011

BTA passes without amendment by 88-12 vote in theU.S. Senate.


Ambassador Nguyen Tam Chien presents Letter ofCredence to President George W. Bush at the White House.


President Bush signs the BTA into law.

NNoovveemmbbeerr 2288,, 22000011

BTA ratified by Vietnam National Assembly, 278-85.


Ambassador Raymond Burghardt sworn in as U.S.Ambassador to Vietnam.



BTA signed into law by Vietnamese President Tran Duc Luong.


U.S.-Vietnam Bilateral Trade Agreement signed intoforce at a Blair House ceremony with Deputy PrimeMinister Dung, Trade Minister Vu Khoan, and USTRAmbassador Robert Zoellick.

MMaarrcchh 33--66,, 22000022

The first Vietnamese-U.S. scientific conference on AgentOrange opened in Hanoi, with the participation of hun-dreds of U.S. and Vietnamese researchers.

AApprriill 88,, 22000022

Ministry of Justice reports that after an initial review ofall laws issued by ministries and central bodies, approxi-mately 150 laws were found to have inconsistencies inrelation to the provisions of the BTA.

MMaayy 66--77,, 22000022

Deputy USTR Ambassador Jonathan Huntsman inHanoi to open BTA Joint Committee.

MMaayy 1133,, 22000022

Farm bill including a catfish provision requiringVietnam to rename its catfish product signed byPresident Bush.

JJuunnee 11--88,, 22000022

Minister of Justice Nguyen Dinh Loc visits the U.S. onBTA implementation.

JJuunnee 33,, 22000022

Jackson-Vanik waiver signed by President Bush.

JJuunnee 1122--2222,, 22000022

Deputy Prime Minister Nguyen Manh Cam visits Texas,New York, Massachusetts, and Washington, D.C.

JJuunnee 2288,, 22000022

Catfish Farmers of America file an anti-dumping peti-tion against Vietnam.

JJuullyy 1188,, 22000022

Ways and Means Committee hearings on Jackson-Vanikrenewal.

JJuullyy 2233,, 22000022



U.S. International Trade Commission determines thatthere is a reasonable indication that U.S. industry isthreatened with material injury by reason of imports ofcertain frozen fish fillets from Vietnam.

NNoovveemmbbeerr 88,, 22000022

Department of Commerce determines that Vietnam is anon-market economy for the purposes of anti-dumpingand countervailing duty proceedings.

AApprriill 33,, 22000033

Congressman Chris Smith reintroduces the VietnamHuman Rights Act (H.R. 1587) into the U.S. House ofRepresentatives.

JJuunnee 1177,, 22000033

U.S. Department of Commerce issues its final determi-nation in the catfish investigation, concluding thatVietnamese producers have sold frozen catfish fillets atless than fair value, with margins ranging from 36.84 to63.88 percent.

83 | Appendix II

JJuullyy 1155,, 22000033

Vietnam Human Rights Act is added as an amendmentto the House Foreign Relations Authorization Act (HR1950). The authorization bill passes in the House onJuly 15 and is sent to the Senate.

JJuullyy 1177,, 22000033

Vietnam-U.S. Garment and Textile Agreement signed inHanoi by Vietnamese Minister of Trade Truong DinhTuyen and U.S. Ambassador Raymond Burghardt.

JJuullyy 2233,, 22000033

U.S. International Trade Commission (ITC) issues itsfinal determination concluding that catfish importsfrom Vietnam have materially injured the U.S. catfishindustry. The ITC’s affirmative determination enablesthe Department of Commerce to issue an antidumpingorder imposing duties in the range of 36.84 - 63.88percent.

*Information drawn from website of the U.S.-Vietnam Trade Council(www.usvtc.org) and news sources.


85 | Appendix III

UU..SS..--VViieettnnaamm BBiillaatteerraall TTrraaddee AAggrreeeemmeenntt

Trading rights for U.S. firms will be liberalized in three to six years.

Tariff rates on a limited range of industrial and agricultural items (about 250) will be reduced by 30 to 50 percent over three years.

Quantitative restrictions on most products will be removed in three to seven years. Restrictions on steel and cement will be removed after six years and those on petroleum products after seven years.

In the services sector, Vietnam will provide more market access than low and middle income countriesunder the Uruguay round, and only slightly less than the larger transition economies.

Majority U.S. ownership of banks will be allowed after three years. National treatment will be granted in the possible equitization of state-owned commer-cial banks. National treatment of deposit-taking activities will be phased in after eight years.

One-hundred percent U.S. equity in financial leasingand in other leasing activities will be allowed after three years.

Majority U.S. ownership of insurance firms will be allowed after three years. Restrictions on the opera-tion of joint ventures will be eliminated after three years (and for wholly U.S.-owned companies, after six years). Wholly U.S.-owned firms, will be permit-ted after five years.

Immediate introduction of one-hundred percent U.S. equity in a range of technical services, includingin legal, accounting, engineering, computer-related, and construction areas.

All WTO-inconsistent measures regarding investment(e.g., local content requirements) will be phased outwithin five years.

WTO-consistent protection of intellectual property rights is to be introduced in 12-18 months.

All laws and decisions governing issues in the agree-ment will be published. Administrative or judicial tribunals for review will be established, as will the right of appeal.

AASSEEAANN FFrreeee TTrraaddee AArreeaa ((AAFFTTAA))

Tariffs on the vast majority of tariff lines (95 percent,according to preliminary estimates) on ASEAN imports will be reduced to at most 20 percent by the start of 2003, and to 0-5 percent by beginning of 2006.

Average tariffs on manufactures from ASEAN coun-tries will be cut by 50 percent by early 2004.

Average tariffs on ASEAN imports of textiles, leather, wood products, non-metallic mineral prod-ucts (e.g. glass and ceramic products) and food products will fall by more than 60 percent by early 2004.

WWTTOO

Vietnam made its initial offer on specific commit -ments in services in January 2002.

The fifth meeting of the Working Party on accessionof Vietnam, held in April 2002, reviewed the status of Vietnam’s bilateral access negotiations and action plans for implementation of a number of WTO agreements, including those related to investment and intellectual property rights.

The sixth meeting, held in December 2002, markedthe beginning of negotiations.

AAppppeennddiixx IIIIII:: BBTTAA IImmpplleemmeennttaattiioonn SScchheedduullee,, AAFFTTAA,, aanndd WWTTOO

Source: The World Bank, Vietnam: Delivering on Its Promise, Development Report 2003 (Hanoi: December 2002), p. 19.


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AAppppeennddiixx IIVV:: SSeelleecctteedd BBiibblliiooggrraapphhyy

Jonathan R. Stromseth is currently the Representative of The Asia Foundation in Vietnam. Prior to joining TheAsia Foundation in 1998, he worked for the United Nations in Cambodia and taught courses on Southeast Asia atthe School of International and Public Affairs at Columbia University in New York City. He holds a Ph.D. inpolitical science from Columbia, where his research focused on political and economic reforms in Vietnam sincethe mid-1980s.