Vietnamese and American businesses are applauding passage of an historic trade agreement by the U.S. Senate, saying it will provide a much-needed boost for investment and trade between the two former enemies.
The symbolic value of the bilateral trade agreement is obvious: Two countries whose soldiers once fought in a bloody war finally setting up normal trade relations. But it is the economic value of the pact that has business people excited in Hanoi.
The trade bill passed Wednesday by the U.S. Senate is expected to give a much-needed boost to Vietnamese exports and also to American companies doing business in Vietnam. After President Bush signs the bill, Vietnamese goods can come to the United States with the lowest possible tariff rates.
That is welcome news to Vietnamese business that have seen their exports to the United States decline since the September 11 terrorist attacks on New York and Washington. When the new tariffs go into effect, those businesses will be able to increase their profit margin to make up for lost sales, and it is hoped that eventually lower prices will increase demand for Vietnamese goods. The trade agreement is also expected to attract more foreign investment in Vietnam.
Hanoi and Washington normalized diplomatic relations in 1995, one year after the United States lifted an economic embargo on its former enemy. The two countries reached an agreement on trade in July last year, after years of negotiations.
Wednesday's Senate passage represents one of the final hurdles. President Bush has promised to sign the measure quickly, and a Vietnamese government spokeswoman says the country's National Assembly will "soon consider" ratification of the agreement.
Economists say the first industries to feel the benefits should be textile and garment manufacturers and packaged seafood exporters. Vietnam's low wages have made it a popular place for garment factories in past years, but the crushing tariffs have often kept those products off American shelves. Soon, the label "Made in Vietnam" is likely to be seen more often in the United States.