Peace dividend: Pact with U.S. boosts trade

The former enemies forged a trade deal despite political differences.
HANOI, Vietnam (AP) -- Garment Company Number 10 once made military uniforms for communist soldiers fighting the United States in the Vietnam War. Now, its clients include the Gap, J.C. Penney and Kmart.
A year after a landmark trade pact with the United States took effect, the clothing maker and others like it have seen orders from the United States spike. It is one of one of hundreds of Vietnamese companies that are reaping the benefits from their former enemy.
"It was an immediate impact. The buyers saw this coming, so we had more orders immediately -- much more orders. We had to open new assembly lines and expanded production by 25 percent," said Nguyen Huy Quang, manager of planning for the state-owned company.
Trade figures
Exports to the United States have more than doubled, from about $750 million to $1.6 billion in the first nine months of this year since the Bilateral Trade Agreement was signed.
Fish and seafood exports jumped by half. Footwear sales have increased tenfold; garment and textile sales have risen 20-fold.
Meanwhile, U.S. exports to Vietnam rose by about 30 percent. The top products were cotton, fertilizer and industrial air pumps.
The deal put Vietnam on equal standing with most other nations in accessing the world's largest market. U.S. tariffs immediately dropped from an average of 40 percent to 3 percent.
The past year's global economic downturn, which saw stagnant or decreasing trade with Vietnam's other trading partners, only highlighted the boom in trade between America and Vietnam, which is expected to reach more than $2 billion for the full year in 2002.
"For Vietnam as a latecomer to the American market, the initial success is quite encouraging," said Le Dang Doanh, a leading Vietnamese economist who advocated the trade pact's passage.
Background of deal
The agreement completed a lengthy, sometimes rocky reconciliation process that began in 1994 with the lifting of the U.S. trade embargo against Vietnam.
Strong resistance to the trade deal by Communist Party members fearful of opening up Vietnam's markets to global competition delayed the pact's passage for more than a year.
"There's been a political legacy to the war that both sides have had to work through," said Virginia Foote, head of the U.S.-Vietnam Trade Council. "Though negotiations were hard-fought, I think both sides agree it was a good footing for building a solid trade relationship."
As part of the deal, Vietnam was required to introduce an unprecedented level of economic reform, foreign competition and financial openness into its system.
The strict international standards are expected to boost Vietnam's chances to enter the World Trade Organization.
However, the first year hasn't been without obstacles, said Deputy Minister of Trade Luong Van Tu.
Implementation has been somewhat uneven, and a trade dispute over charges that Vietnam is dumping catfish at below-market prices in the United States has increased tensions, he said.
Still, Vietnam's chief export industries, especially garment and textile companies, are thriving amid the competition.