Vietnam buys Boeing as it inks U.S. trade deal


Vietnam Trade Minister Vu Khoan (l) shakes with U.S. counterpart Zoellick at Monday's ceremony in Washington

By staff and wire reports

HANOI, Vietnam -- Vietnam and the United States have finalized their groundbreaking trade agreement, which takes effect immediately.

In a related event that also shows how far relations between the former enemies have come, Vietnam Airlines has also agreed to buy four Boeing Co. 777 jets.

It is the first deal between an American company and Vietnam that takes advantage of their historic bilateral trade deal.

Vietnam and the United States swapped letters in Washington on Monday giving that the go-ahead, U.S. Trade Representative Robert Zoellick's office said in a statement.

A Vietnamese official told Reuters news agency that meant the deal kicked in as of Monday afternoon American time.

Boeing kicks off new trade rules

Boeing wasted no time, announcing its sale almost immediately.

According to Vietnam, the deal is worth $440 million. Boeing has agreed to sell the four planes for $110 million apiece, $60 million less than list price.

Though Boeing refused to comment on the price, airlines never normally pay list price. Airlines around the world are hurting, prompting them to cut back on plane orders.

Vietnam's Deputy Prime Minister H.E. Nguyen Tan Dung stood in for state-run Vietnam Airlines at the signing ceremony, at the U.S. Department of Commerce.

The first plane will be delivered in 2003. The airline is also expected to buy five Airbus Industrie planes from France.

Vietnam Airlines has been overhauling its fleet, in an effort to boost its safety record and bolster passenger confidence.

Vietnam's small economy is posting some outsize numbers. Its pace of growth ranks behind only neighbor China in Asia.

China and Vietnam are benefitting from the same trends of an emerging middle class, strong domestic demand for consumer goods and a "socialist market economy."

The trade deal marks a milestone in relations between Vietnam and the United States, bitter enemies in the Vietnam War that ended in 1975.

The agreement gives Vietnam normal trade status with the United States, like most countries in the world. It removes it from a small list of countries denied this, including North Korea, Afghanistan, Serbia and Cuba.

Vietnam can now ship goods to the United States at the lowest possible tariff rates, while U.S. firms will get gradually improved access to Vietnam.

Reuters contributed to this report.