[Reuters] Delayed trade pact sparks Hanoi integration debate

[Alexander H L Vu <vuh000@mail.Uni-Mainz.DE>]

Delayed trade pact sparks Hanoi integration debate
By Dean Yates

HANOI, Oct 21 (Reuters) - Vietnam has hesitated signing a landmark trade deal 
with the United States because the pact's conditions have triggered an intense 
internal debate about the merits of joining the world economy.

Ruling Communist Party and other sources said a series of discussions had been 
held since Hanoi reached agreement in principle on the pact with former foe 
Washington last July.

While the outcome and duration of the debate was uncertain, it could have the 
most far-reaching consequences for Vietnam since the adoption of economic 
reforms in 1986, analysts said.

Ratification of the trade agreement would open Vietnam's economy and liberalise

its investment rules, requirements that have forced the country's communist 
elite to ask themselves if they are ready to embrace economic integration.

``This debate is not about the trade pact. It is about whether Vietnam's 
leaders are prepared to take the big steps into the world economy or not,'' 
said one financial source.

``It extends into every facet of the system and to the cultural identity of the 
country and is causing a great deal of angst in the eyes, minds and hearts of 
the leaders. Ultimately the trade pact will be the signal of success or failure 
(of that debate).''

At stake was Vietnam's place in the world economy, work for 1.3 million new job

seekers each year and investor interest in a nation where many foreign 
businessmen have packed up because of slow economic reforms, red tape and 
graft, analysts said.

Vietnam's reasonable macroeconomic data -- expected growth of four percent this

year -- did not hide the fact that the country should be growing at twice that 
rate, they added.

``The debate in Vietnam is probably as crucial as the pre-Doi Moi debate,'' 
said Carlyle Thayer, a Vietnam expert at the Asia-Pacific Center for Security 
Studies in Hawaii, referring to discussions in 1985 that led to the 1986 Doi 
Moi reforms that steered the country away from near bankruptcy.

Thayer said elite opposition to embracing the world economy began to appear 
during the recent Asian economic crisis, when countries such as Vietnam and 
China escaped the full brunt because of closed financial systems and fixed 
currencies.

But now that Asian growth forecasts had shot up, Thayer said proponents of 
economic integration were arguing the country would experience the danger it 
had sought all decade to avoid -- falling further behind its richer neighbours.

Vietnam's 79 million people have annual per capita incomes just above $300, 
among the world's lowest.

Analysts also say that conservative elements oppose quicker integration because 
it would gradually erode the party's political and economic control over the 
country.

U.S. TRADE PACT JUST BELOW THE SURFACE

The debate over economic integration is expected to be on the agenda of a 10-
day plenum of the 170-member party central committee, which should get under 
way on November 2.

Whether the trade pact with the United States will be on the table is unclear, 
and U.S. officials say they have little idea when the government might be ready 
to sign.

One financial source has said the Vietnamese might seek to renegotiate certain, 
unidentified parts of the pact.

The problem for Vietnam is that the current provisional document -- which 
itself took more than three years to hammer out -- might be overtaken by events.

Unless it is signed soon, the agreement might miss the chance of U.S. 
Congressional approval next year because of the American presidential election, 
which will dominate the country's political calendar.

That would delay Congressional approval until 2001, by which time tougher 
trading rules might begin to emerge from a new round of global trade talks that 
commence at a World Trade Organisation ministerial meeting in Seattle on 
November 30.

That might prompt Washington itself to back off on signing the trade agreement 
if it was not broadly in line with those new rules, sources close to the pact 
have said.

Nevertheless, diplomats and donors welcomed the tussle over economic 
integration.

``The trade pact...is precipitating something that needs to happen in this 
country, which is the confrontation of very important questions,'' the head of

one donor organisation said.