US terrorist attacks overshadow US-Vietnam trade pact
In contrast to the glare of publicity surrounding China’s accession to the World Trade Organisation, the United States Senate last week quietly voted through the U.S.- Vietnam trade agreement.
The outcome of protracted negotiations, the agreement will give the small communist nation access to the world’s largest market. Vietnamese goods and services will be afforded the same low tariffs enjoyed by most nations, dropping from an average of 40% to about 4%. In return, Hanoi will carry out a far reaching programme of liberalisation, aimed at opening up its state-controlled markets to the U.S. In a wider context, by introducing an unprecedented level of financial openness, the agreement is widely seen as removing the last commercial vestige of the Vietnam War.
Inevitably, most minds are now focused on the economic consequences of the US terrorist attacks, and the outlook is far from optimistic. As recently as last year, the World Bank estimated that in its first year the pact could increase the country’s annual export revenues by $800 million. Now, in the wake of the attacks - and with the US economy showing no signs of backing away from recession – expectations have lowered.
Nevertheless, the agreement has been widely welcomed by the Vietnamese manufacturers. Speaking to the national press last week, Phan Dinh Do, chairman of the Vietnam Leather and Footwear Association, said he expects to see exports to the U.S. double within the first year. Currently, Vietnam only ships $120 million a year in shoes to the U.S.
