Vietnam approves U.S. trade pact

U.S. tariffs on Vietnamese-made products will drop as a result of the trade pact

HANOI, Vietnam -- Vietnam's National Assembly has ratified a landmark trade agreement with the United States, paving the way for the normalization of ties between the wartime enemies.

However, Vietnam warned that any U.S. interference in the country's internal affairs could jeopardize the implementation of the trade pact.

Under the trade deal, Vietnamese goods and services will gain access to the world's largest market with the same low tariffs enjoyed by most nations.

In return, Vietnam must open its state-controlled markets to foreign competition and international standards.

The pact was approved 278-85 by the National Assembly with 17 abstentions on Wednesday.

Vietnamese President Tran Duc Luong is expected to sign the document next week.

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Once the two countries exchange diplomatic notes in early December, an official start date for the agreement's implementation will be decided, which could come as early as January 1.

In passing the trade agreement, the National Assembly said it "opens a new stage in the economic and trade relations between the two countries."

"There is a huge sigh of relief that U.S.-Vietnam relations will be normalized," Susan Adams, chief representative of the International Monetary Fund in Vietnam told the Associated Press news agency.

"After the war, and all the deep feelings, we've finally buried the hatchet and moved on."

The United States and Vietnam had limited contact in two decades following the end of the Vietnam War in 1975.

Ramifications

The consequences of the trade pact are far-reaching for Vietnam.

First, it pact requires that trade barriers be lowered, state industries compete with foreign companies, and copyright and investment guarantees be raised to international levels.

In response to Hanoi's fears that American companies will overwhelm domestic industries, U.S. companies will initially have restricted access to Vietnam's banking, insurance, telecommunications, tourism and technical services markets.

But that will be slowly lifted over a seven-year period.

However, U.S. tariffs on Vietnamese-made products will drop from as high as 40 percent to about 4 percent.

That is expected to give an immediate boost to Vietnamese exporters of garments and textiles, footwear, and seafood.

The World Bank has estimated that Vietnam's exports to the United States could double from the current $800 million a year.

No interference

Vietnam warned that the United States would not be allowed to meddle into their affairs.

Already, Vietnam's Communist government has bitterly complained over the U.S. House passage of the Vietnam Human Rights Act that would tie future U.S. non-humanitarian aid to improvements in Vietnam's human rights record.

Vietnamese lawmakers also expressed fear that the U.S. Senate will also pass the act.

They noted that any American interference in Vietnam's internal affairs, such as passage of the human rights act, "may do harm to bilateral economic and trade relations including the implementation of the trade agreement."