Vietnam: US Firms Seek SE Asian Market

Publisher Name: 
Associated Press

WASHINGTON -- American business is hungry for a share of the
Vietnam market, seeking to meet its demand for soft drinks,
consumer products and high-tech telecommunications services and to
gain a foothold in the massive rebuilding of a country heavily
damaged by U.S. warplanes a quarter-century ago.

More than 50 U.S. corporations are sending executives to Vietnam
during President Clinton's three-day visit. The list reads like a
who's who of multinational concerns including Boeing, Citigroup,
Coca-Cola, General Electric, General Motors, Cisco Systems, Nike
and Proctor & Gamble.

The companies either already have operations in Vietnam or want
to get involved in a country they see as a vast untapped market of
78 million people, about the size of the population of Germany.

''This trip looks to the future as part of building a lasting
relationship with an important country with vast potential,'' said
Lionel Johnson, an executive of Citigroup. The giant banking
corporation wants to expand its foothold in Vietnam -- two branch
banks limited to offering services to foreign companies in Hanoi
and Ho Chi Minh City.

The business leaders, who are paying their own way, will hear
from Clinton and other Cabinet officials during a business forum
scheduled for Ho Chi Minh City. The president also plans to tour a
container loading facility to emphasize the potential for trade
between the two nations if Congress next year approves the trade
deal his administration signed with Vietnam in July.

That agreement will grant Vietnam the same low U.S. tariffs
enjoyed by virtually all other nations, although Vietnam's trade
privileges will be subject to annual review by Congress. That was
the same status China had for the past two decades before Congress
this year granted it permanent normal trade relations.

The normal trade tariffs average around 3 percent, a sharp
reduction from the 40 percent average border duty Vietnamese goods
now face.

In exchange for access to the world's largest market, Vietnam
agreed to sharply lower its trade barriers to American goods,
including cutting tariffs on a large number of farm products and
manufactured goods, easing current barriers that keep U.S. banks
and telecommunications firms out of the country and providing
increased protection for U.S. investment and intellectual property
rights.

It took a full year after negotiators had reached an agreement
in principle to get the trade deal signed. Economic reformers in
Hanoi had to overcome stiff resistance from communist hard-liners
who wanted to protect the country's inefficient state-run
companies.

Just as in China, the administration is hoping a U.S. policy of
economic engagement will allow free-market capitalism and democracy
to take hold.

But even the strongest boosters of increased economic ties with
Vietnam concede that U.S. companies have faced numerous obstacles
in the six years since Clinton lifted the U.S. trade embargo.

Frances Zwenig, a senior director at the US-ASEAN (Association
of Southeast Asian Nations) Business Council, said Vietnam's
decision to sign the trade deal showed that ''they want to join the
global economy. ... Now businesses are willing to look at Vietnam
again.''

Through July, U.S. imports from Vietnam totaled $448 million, a
gain of nearly 60 percent from the same period a year ago, while
U.S. exports to Vietnam totaled $223 million, also up by nearly 60
percent.

Major U.S. exports to Vietnam are industrial and office
machinery, fertilizer, leather and other parts for shoes and
telecommunications equipment.

Among the leading imports from Vietnam are coffee, fish and
crude oil. But once the tariffs are lowered, the World Bank
predicts that Vietnamese clothing shipments to the United States
could jump 10-fold in just the first year.

It is that forecast that has U.S. labor unions worried,
believing that the real reason American companies are interested in
closer economic ties with Vietnam is to tap into that nation's
low-wage work force to export back to the United States.

Nike, the U.S. shoe manufacturer, already produces around 10
percent of its total world output in Vietnam. Those shoes end up
mainly in Europe because of the high U.S. tariffs.

Thea Lee, a trade economist with the AFL-CIO, which opposed
permanent normal trade relations with China, said unions will fight
the Vietnam deal because it does not include safeguards for worker
rights and the environment. However, the agreement should face less
trouble in Congress than the China deal because the Vietnamese
economy is much smaller.

Analysts caution that businesses should not get carried away in
their expectations, at least for the immediate future.

''American companies want to get on the ground floor so they
don't lose out to competitors, but Vietnam still has a way to go
economically,'' said Franklin Vargo, vice president for trade at
the National Association of Manufacturers.

AMP Section Name:CorpWatch