[VN-US Econ] Trade Pact Dead?!

[Toàn <toan@usa.net>]

Viet-U.S. trade pact appears to be dead
Officials are mystified by Hanoi's about-face
BY MARK MCDONALD
Mercury News Vietnam Bureau

HANOI -- The landmark trade agreement between Vietnam and the United States
is dead in the water, the Mercury News has learned, and nobody on the
American side is precisely sure why.

``We simply have no idea what's going on,'' said a source close to the
negotiations. ``We all thought it was a `go.' Everybody is mystified, and
frustrated. Now, who knows when it will be signed? Or even if it will be
signed.''

One U.S. official said American negotiators will ``absolutely not'' go back
to the table if the Vietnamese want to reopen talks or ask for new
concessions.

Vietnamese officials declined to comment on the treaty.

After three years of torturous negotiations, the two sides finally came to
terms in July in Hanoi, and a formal signing was expected at last month's
Asia Pacific Economic Cooperation summit in Auckland, New Zealand. A U.S.
diplomat who attended the summit said a signing ceremony was quietly
arranged
for Sept. 13, the final evening of APEC. President Clinton himself was going
to sign for the U.S. side.

But sometime Sept. 11 -- the 11th hour as these things go -- the Vietnamese
called and said that they weren't ready to go ahead, that they needed more
time to study the provisions of the deal they had already initialed. The
move
was all the more curious because Clinton and Vietnamese Prime Minister Phan
Van Khai apparently had hit it off during the summit.

Two-way trade between the countries is only about $1 billion a year,
although
U.S. Ambassador Pete Peterson has called the agreement ``incredibly
important.''

``It will set the tone for the relationship between our two countries for
the
next 50 years,'' he said.

That tone is becoming increasingly difficult to fathom. Even veteran
diplomats in Vietnam are confused about Hanoi's hesitation, although the
idea
that there is a pitched philosophical battle being waged within the ruling
Politburo is gaining more and more currency in the capital.

``The Politburo is absolutely at loggerheads,'' said Zachary Abuza, a
Vietnam
expert and professor of political science at Simmons College in Boston.
``They have not been able to make a decision on any substantive issue in two
years. They're being left behind again because no one can get anything by a
few really entrenched conservatives.

``Clearly the tilt is in the conservatives' favor. Even though there are a
few reformers, they're young and don't have too much political capital.''

U.S. lobbyists, diplomats and the business community are afraid the
agreement
could languish for another two years or more if it's not signed and sent to
Congress within the next month. They believe once the 2000 U.S. campaign
season begins in earnest, the trade deal will slip off the congressional
radar.

``It sure looks like they're going to miss the window,'' said one source.

The trade agreement principally calls for both sides to open their markets
fully to the other's goods and services. It also paves the way for Vietnam
to
receive so-called most-favored-nation trade status from the United States,
and it calls for major reforms of Vietnam's highly protected economy and
opaque financial system.

The agreement is the longest and most complex trade deal the U.S. has
negotiated with any country, and Vietnam remains one of just six nations
without a bilateral pact. The others are Cuba, North Korea, Afghanistan,
Laos
and Yugoslavia.

Meanwhile, the economic fault lines in Vietnam are continuing to show.
Foreign investment, in particular, has slowed to a trickle. U.S. investment
is expected to be down 80 percent from two years ago, and only six new U.S.
projects have been licensed this year.

The investment decline is not just from Western countries. Capital
commitments from Japan, for example, were off 67.3 percent in the first six
months of this year compared with the first half of 1998.

At a recent trade conference, Japanese government and business officials
cited the same problems that frustrate U.S. investors: no financial
transparency, customs hassles, extortionate licensing fees,
institutionalized
corruption, and a two-tiered pricing system that discriminates against
foreigners in housing, airline tickets, salaries and costs for water, power
and telecommunications.

``Think of the way the situation was three or four years ago -- there was so
much enthusiasm with many investors believing the problems they saw were
just
temporary,'' said commercial lawyer Sesto Vecchi, a longtime Vietnam
resident
and a partner in the Ho Chi Minh City firm Russin & Vecchi. ``But the more
people stay, the more they realize the situation is not going to change
dramatically.''