[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
PRESIDENT'S WAIVER FOR VIETNAM FROM
THE JACKSON-VANIK FREEDOM OF
EMIGRATION REQUIREMENTS IN TITLE IV OF
THE TRADE ACT OF 1974
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
JULY 18, 2002
__________
Serial No. 107-79
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
82-265 WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Trade
PHILIP M. CRANE, Illinois, Chairman
E. CLAY SHAW, Jr., Florida SANDER M. LEVIN, Michigan
AMO HOUGHTON, New York CHARLES B. RANGEL, New York
DAVE CAMP, Michigan RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington XAVIER BECERRA, California
WALLY HERGER, California JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania
JIM NUSSLE, Iowa
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisories announcing the hearing................................ 2, 4
WITNESSES
Office of the U.S. Trade Representative, Ralph F. Ives, III,
Assistant U.S. Trade Representative, Southeast Asia, the
Pacific and APEC............................................... 8
U.S. Department of State, Christopher LaFleur, Acting Assistant
Secretary, East Asian and Pacific Affairs...................... 11
______
General Electric Company in Vietnam, Andre Sauvageot............. 44
New York Life International, and New York Life Insurance Company,
Gary Benanav................................................... 28
Oklahoma Department of Commerce, Vietnam Trade Office, and
Pacific Ventures, Incorporated, Barry L. Clark................. 41
U.S.-Vietnam Trade Council, Virginia B. Foote.................... 31
SUBMISSIONS FOR THE RECORD
American Chamber of Commerce in Vietnam, Hanoi, Vietnam, Chris S.
Tragakis, letter............................................... 55
Boeing Company, Arlington, VA, statement......................... 55
PRESIDENT'S WAIVER FOR VIETNAM FROM THE JACKSON-VANIK FREEDOM OF
EMIGRATION REQUIREMENTS IN TITLE IV OF THE TRADE ACT OF 1974
----------
THURSDAY, JULY 18, 2002
House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:04 a.m., in
room 1100 Longworth House Office Building, Hon. Philip M. Crane
(Chairman of the Subcommittee) presiding.
[The advisory and the revised and revised #2 advisories
announcing the hearing follow:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 8, 2002
No. TR-10
Crane Announces Hearing on the President's
Waiver for Vietnam from the Jackson-Vanik
Freedom of Emigration Requirements
Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade
of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on the President's waiver for Vietnam
from the Jackson-Vanik freedom of emigration requirements in Title IV
of the Trade Act of 1974. The hearing will take place on Thursday, July
18, 2002, in the main Committee hearing room, 1100 Longworth House
Office Building, beginning at 10:00 a.m.
Oral testimony at this hearing will be from both invited and public
witnesses. Invited witnesses will include officials from the U.S.
Department of State and the Office of the United States Trade
Representative. Also, any individual or organization not scheduled for
an oral appearance may submit a written statement for consideration by
the Committee or for inclusion in the printed record of the hearing.
BACKGROUND:
Vietnam's trade status is subject to the ``Jackson-Vanik''
provisions in Title IV of the Trade Act of 1974. Title IV sets forth
requirements relating to freedom of emigration which must be met or
waived by the President in order for a nonmarket economy country to
gain access to U.S. Government credits, or credit or investment
guarantees, and be granted Normal Trade Relations (NTR) status. On June
4, 2002, the President issued an extension of the waiver from the
Jackson-Vanik freedom of emigration requirements for Vietnam (H. Doc.
107-221).
The President's waiver of the freedom of emigration requirements
for Vietnam grants NTR status to products imported from Vietnam and
gives U.S. exporters doing business in Vietnam access to U.S.
Government credits, or credit or investment guarantees, such as those
administered by the Overseas Private Investment Corporation, the
Export-Import Bank, and the U.S. Department of Agriculture, provided
that Vietnam meets the relevant program criteria. The President's
waiver authority expires at midnight on July 2 of each year and may be
extended on an annual basis upon a Presidential determination and
report to Congress that such extension will substantially promote the
freedom of emigration objectives in the Act. The waiver authority
continues in effect unless disapproved by the Congress, either
generally or with respect to a specific country, within 60 calendar
days after the expiration of the existing authority.
H.J. Res. 101 was introduced by Representative Rohrabacher (R-CA)
on June 25, 2002, and states that Congress does not approve the
extension of the authority contained in section 402(c) of the Trade Act
of 1974 as recommended by the President to Congress on June 4, 2002,
with respect to Vietnam. The effect of this Resolution would be to
withdraw the President's Jackson-Vanik waiver for Vietnam.
In announcing the hearing, Chairman Crane stated: ``U.S.-Vietnam
bilateral relations have significantly improved over the last 10 years.
Normal Trade Relations is an important component of our bilateral
relationship, and I am pleased that the Congress approved the U.S.-
Vietnam Bilateral Trade Agreement last December. We should not
undermine the important progress that has been made by withdrawing
Normal Trade Relations status for Vietnam.''
FOCUS OF THE HEARING:
The focus of the hearing will be the President's waiver for Vietnam
from the Jackson-Vanik freedom of emigration requirements in Title IV
of the Trade Act of 1974 and H.J. Res. 101, a resolution to disapprove
the waiver.
DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:
Requests to be heard at the hearing must be made by telephone to
Traci Altman or Bill Covey at (202) 225-1721 no later than the close of
business, Thursday, July 11, 2002. The telephone request should be
followed by a formal written request faxed to Allison Giles, Chief of
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102
Longworth House Office Building, Washington, D.C. 20515, at (202) 225-
2610. The staff of the Subcommittee on Trade will notify by telephone
those scheduled to appear as soon as possible after the filing
deadline. Any questions concerning a scheduled appearance should be
directed to the Subcommittee on Trade staff at (202) 225-6649.
In view of the limited time available to hear witnesses, the
Subcommittee may not be able to accommodate all requests to be heard.
Those persons and organizations not scheduled for an oral appearance
are encouraged to submit written statements for the record of the
hearing. All persons requesting to be heard, whether they are scheduled
for oral testimony or not, will be notified as soon as possible after
the filing deadline.
Witnesses scheduled to present oral testimony are required to
summarize briefly their written statements in no more than five
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full
written statement of each witness will be included in the printed
record, in accordance with House Rules.
In order to assure the most productive use of the limited amount of
time available to question witnesses, all witnesses scheduled to appear
before the Committee are required to submit 200 copies, along with an
IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, of
their prepared statement for review by Members prior to the hearing.
Testimony should arrive at the Subcommittee on Trade office, room 1104
Longworth House Office Building, no later than the close of business on
Monday, July 15, 2002, in an open and searchable package. The U.S.
Capitol Police will refuse sealed-packaged deliveries to all House
Office Buildings. Failure to do so may result in the witness being
denied the opportunity to testify in person.
WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:
Please Note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business on Monday, July 22, 2002.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Trade in room 1104
Longworth House Office Building, in an open and searchable package 48
hours before the hearing. The U.S. Capitol Police will refuse sealed-
packaged deliveries to all House Office Buildings.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. Due to the change in House mail policy, all statements and any
accompanying exhibits for printing must be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. Any statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event
(four business days notice is requested). Questions with regard to
special accommodation needs in general (including availability of
Committee materials in alternative formats) may be directed to the
Committee as noted above.
* * * NOTICE--CHANGE IN TIME * * *
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 15, 2002
No. TR-10-Revised
Change in Time for Hearing on the President's
Waiver for Vietnam from the Jackson-Vanik
Freedom of Emigration Requirements
Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade
of the Committee on Ways and Means, today announced that the
Subcommittee hearing on the President's waiver for Vietnam from the
Jackson-Vanik freedom of emigration requirements in Title IV of the
Trade Act of 1974 scheduled for Thursday, July 18, 2002, at 10:00 a.m.,
in the main Committee hearing room, 1100 Longworth Office Building,
will now be held at 9:30 a.m.
All other details for the hearing remain the same. (See
Subcommittee Advisory No. TR-10, dated July 8, 2002.)
* * * NOTICE--CHANGE IN TIME * * *
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 17, 2002
No. TR-10-Revised #2
Change in Time for Hearing on the President's
Waiver for Vietnam from the Jackson-Vanik
Freedom of Emigration Requirements
Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade
of the Committee on Ways and Means, today announced that the
Subcommittee hearing on the President's waiver for Vietnam from the
Jackson-Vanik freedom of emigration requirements in Title IV of the
Trade Act of 1974 scheduled for Thursday, July 18, 2002, at 9:30 a.m.,
in the main Committee hearing room, 1100 Longworth Office Building,
will now be held at 10:00 a.m.
All other details for the hearing remain the same. (See
Subcommittee Advisory No. TR-10, dated July 8, 2002, and No. TR-10-
Revised, dated July 15, 2002.)
Chairman CRANE. The United States and Vietnam celebrated an
important milestone last December when the long-negotiated and
long-awaited bilateral trade agreement finally entered into
force. That was a significant achievement, and I am personally
satisfied to finally see normal trade relations between our two
countries. The Bilateral Trade Agreement (BTA) was the fruit of
a process of gradual engagement that began back in February
1994 when President Clinton ended the 19-year-old U.S. trade
embargo with Vietnam.
Over the past 8 years, the United States has gradually
expanded its economic engagement with Vietnam. Since 1998 when
the President first granted a Jackson-Vanik waiver to Vietnam
to allow the Overseas Private Investment Corporation and the
Export-Import Bank to support U.S. business activities in
Vietnam, two-way trade with Vietnam has nearly doubled.
Our engagement with the Vietnamese Government has already
borne tangible results in promoting important U.S. policy
objectives, such as encouraging political and economic reform,
promoting Asian regional stability, the fullest possible
accounting for prisoners of war (POWs) and U.S. servicemen
still missing in action (MIA), and resolving the remaining
immigration cases of concern to the United States.
On the issue of immigration, which is the only issue that
is directly related to the renewal of Vietnam's Jackson-Vanik
waiver, Vietnam has a solid record of cooperation with the
United States to permit Vietnamese emigration. Over 500,000
Vietnamese have emigrated as refugees or immigrants to the
United States under the orderly departure program. Only a small
number of refugee applicants remain to be processed under both
the orderly departure and the resettlement for Vietnamese
returnee programs.
It is clear that the United States should and will continue
to address serious concerns with Vietnam. However, the most
effective way for the United States to seek progress on
political and economic reform, human rights, labor rights, and
environmental standards is through continued engagement. To
that end, the Jackson-Vanik waiver provides an opportunity for
dialog to address issues of concern with the Vietnamese and to
pressure them for change.
I support the renewal of Vietnam's Jackson-Vanik waiver and
urge my colleagues to oppose H.J. Res. 101. With that, I would
like to yield to our distinguished colleague from
Massachusetts, Mr. Neal.
[The opening statement of Chairman Crane follows:]
Opening Statement of the Hon. Philip M. Crane, a Representative in
Congress from the State of Illinois, and Chairman, Subcommittee on
Trade
The United States and Vietnam celebrated an important milestone
last December when the long-negotiated and long-awaited Bilateral Trade
Agreement finally entered into force. That was a significant
achievement, and I am personally satisfied to finally see normal trade
relations between our two countries. The BTA was the fruit of a process
of gradual engagement that began back in February 1994 when President
Clinton ended the 19-year old U.S. trade embargo with Vietnam.
Over the past 8 years, the United States has gradually expanded its
economic engagement with Vietnam. Since 1998, when the President first
granted a Jackson-Vanik waiver to Vietnam to allow the Overseas Private
Investment Corporation and the Export-Import Bank to support U.S.
business activities in Vietnam, two-way trade with Vietnam has nearly
doubled. Our engagement with the Vietnamese Government has already
borne tangible results in promoting important U.S. policy objectives
such as encouraging political and economic reform, promoting Asian
regional stability, the fullest possible accounting for prisoners of
war and U.S. servicemen still missing in action, and resolving the
remaining emigration cases of concern to the United States.
On the issue of emigration, which is the only issue that is
directly related to the renewal of Vietnam's Jackson-Vanik waiver,
Vietnam has a solid record of cooperation with the United States to
permit Vietnamese emigration. Over 500,000 Vietnamese have emigrated as
refugees or immigrants to the United States under the Orderly Departure
Program. Only a small number of refugee applicants remain to be
processed under both the Orderly Departure and the Resettlement for
Vietnamese Returnees programs.
It is clear that the United States should--and will--continue to
address serious concerns with Vietnam. However, the most effective way
for the United States to seek progress on political and economic
reform, human rights, labor rights, and environmental standards is
through continued engagement. To that end, the Jackson-Vanik waiver
provides an opportunity for dialogue to address issues of concern with
the Vietnamese and to pressure them for change. I support the renewal
of Vietnam's Jackson-Vanik waiver and urge my colleagues to oppose H.J.
Res. 101.
Mr. NEAL. Thank you, Mr. Chairman. I would like to ask your
permission to enter Mr. Levin's opening statement into the
record.
Chairman CRANE. Without objection, so ordered.
[The opening statement of Mr. Levin follows:]
Opening Statement of the Hon. Sander M. Levin, a Representative in
Congress from the State of Michigan
Thank you, Mr. Chairman. I am glad we are here today to evaluate
the President's decision to waive applicability of the so-called
Jackson-Vanik amendment to Vietnam.
Yesterday I met with the Vietnamese Ambassador to the United
States, who emphasized the importance of the Jackson-Vanik waiver to
his country.
The waiver that is the subject of the resolution at issue today is
a continuation in the process of engaging with Vietnam. Expanding upon
prior year's Jackson-Vanik waivers, the waiver this year will not only
continue the availability of export-related financing from OPIC, Ex-Im
Bank, and the Department of Agriculture for Vietnam, but will also
continue NTR status for Vietnam.
Although the Jackson-Vanik criteria are focused on emigration
issues, the annual review process is an opportunity to examine various
aspects of our relationship with Vietnam, including emigration, human
rights, MIA recovery efforts, and trade issues, including labor market
standards.
I am glad that Mr. LaFleur from the State Department will be
addressing emigration and human rights issues in his comments, but I am
a bit surprised that at this hearing today we do not have any witnesses
from the human rights community.
Our relationship with Vietnam is a complicated one, still very much
impacted by the war that left a deep and lasting impact on both
nations. Despite years of bitter relationships and conflict, U.S.
relations with Vietnam have improved over the last decade.
In 1994, we lifted the comprehensive trade embargo that had been in
place for nearly 20 years.
In 1995, we opened a U.S. embassy in Hanoi.
In 1998, President Clinton first waived the Jackson-Vanik
prohibitions, and every year since, this body has supported his
decision with decisive margins.
Just last year, Congress approved the U.S.-Vietnam bilateral trade
agreement, granting Vietnam normal trade relations.
Each of these steps was a long time in evolving. Each responded to
positive developments in Vietnam. Notably, the Government of Vietnam
has continued to cooperate in helping to locate U.S. servicemen and
women missing in Vietnam. Just last year, nine Vietnamese died helping
in the search for U.S. MIAs.
Further, there has been improvement by the Government of Vietnam in
emigration and increased cooperation with U.S. refugee programs.
Indicating the seriousness with which it has taken its obligations,
Vietnam has made progress in implementing the bilateral trade agreement
that entered into force last year. I look forward to hearing testimony
from the witnesses detailing some of Vietnam's implementation efforts.
Unfortunately, the Government of Vietnam has not made a similar
commitment to improving its human rights record. The most recent State
Department human rights report indicates that Vietnam's already poor
human rights record has deteriorated. This is very troubling and I hope
that some of our witnesses will discuss that issue and discuss how they
think it should play into our analysis of this and future Jackson-Vanik
waivers.
Additionally, Vietnam still needs to make major progress in
respecting and enforcing core, internationally-recognized labor rights.
The Clinton Administration signed a Memorandum of Understanding
regarding labor rights with Vietnam, and programs have been operating
under this MOU for the past few years.
Nevertheless, Vietnam continues to deny its workers the fundamental
right to associate freely. The recent State Department Human Rights
Report contains some good news on labor rights, but also indicates that
child labor and prison labor continue to be widespread in Vietnam and
that Vietnam has not adequately enforced its own laws regarding minimum
wages and workplace safety.
I stated last year when we approved the bilateral trade agreement
with Vietnam that I would watch closely the eventual negotiations of
the textiles and apparel agreement, and that any such agreement must
include labor provisions similar to the positive incentives included in
the Cambodia textiles and apparel agreement.
I understand that negotiations on a textiles and apparel agreement
have begun, but there still has not been a firm commitment by the
Administration to include positive incentive labor provisions. Although
the issue is not yet ripe for this year's vote, I want to convey to the
Administration and the Government of Vietnam that if the labor issue is
ignored in the textile and apparel agreement, it will have
repercussions for future Jackson-Vanik NTR waivers.
In the mean time, there is still much to be done to fully normalize
our relationship with Vietnam. The resolution at issue would be a step
back today. It would hurt our relations with Vietnam and it would hurt
important reform efforts there. We must preserve the forward momentum
that has developed over the past several years and continue working
together to build a meaningful and enduring relationship.
I look forward to hearing the testimony of the witnesses today.
Mr. NEAL. Thank you, Mr. Chairman.
I think that we are in agreement that continuing normal
trade relations with Vietnam is a very important issue. I also
think that today's hearing highlights the need, however, to
focus on some additional issues as they relate not only to this
trade relationship, but well beyond.
Included in that area of concern obviously is the whole
issue of human rights and labor issues. I think that I can say
collectively for the Members of the U.S. House of
Representatives, where we can ascertain what has happened,
still, to those POWs who have never been accounted for, I think
that always has to be part of a steady dialog here in the
Congress, to demonstrate that we have not lost interest in that
issue.
Just as importantly, we hope to bring that matter to
closure, perhaps a long time down the road, but hopefully
sooner. So, I look forward to the testimony today.
I think that you are to be commended, Mr. Chairman. I
think, by and large, the Trade Subcommittee has demonstrated a
pretty good approach toward normal trade relationships with
nations across the globe.
Chairman CRANE. Thank you.
With that, I would like to introduce our two witnesses in
the first panel. We have Ralph Ives, the Assistant U.S. Trade
Representative for Asia and the Pacific, and Chris LaFleur,
Acting Assistant Secretary for East Asian and Pacific Affairs
with the U.S. Department of State. I would suggest, gentlemen,
if you can keep your statements to--in the neighborhood of 5
minutes, all of your statements will be part of the official
record.
With that, proceed in order.
STATEMENT OF RALPH F. IVES, III, ASSISTANT U.S. TRADE
REPRESENTATIVE, SOUTHEAST ASIA, THE PACIFIC AND APEC, OFFICE OF
THE U.S. TRADE REPRESENTATIVE
Mr. IVES. I would like to keep my remarks brief and submit
my full statement for the record.
Thank you, Chairman Crane, Mr. Levin, and the other Members
of the Subcommittee, for this opportunity to testify in support
of continuation of the President's waiver for Vietnam of the
so-called Jackson-Vanik amendment to Title IV of the Trade Act
of 1974.
Congress, particularly this Committee, has a strong record
of endorsing normalized trade relations with Vietnam.
Continuing the Jackson-Vanik waiver, which former President
Clinton first invoked in 1998, is required to maintain normal
trade relations (NTR) status for Vietnam. Retaining NTR status
is necessary to fully implement the U.S.-Vietnam Bilateral
Trade Agreement, the BTA.
Today, I will focus on our trade relationship about
Vietnam. Mr. LaFleur plans to discuss U.S. efforts to work with
Vietnam on human rights, including religious freedom and labor
rights.
The BTA, which entered into force on December 10, 2001,
represents the culmination of a decade-long bipartisan effort
to heal the wounds of the Vietnam era and to restore our
relations with this country of 80 million people. The path to
normalization of our bilateral relations was formulated by
former President Bush in a ``road map'' in 1991, and passed
important milestones under the Clinton Administration,
particularly lifting of the trade embargo in 1994 and
conclusion of BTA negotiations.
Under the BTA, Vietnam has made extensive commitments to
reform its economy, including revision of its legal system as
it relates to trade, finance, and other related areas. The BTA
is probably the most significant economic reform measure
Vietnam has adopted since the eighties when it began embracing
a market-based economy.
The BTA is the most comprehensive agreement the United
States has ever negotiated with a country subject to Jackson-
Vanik amendment. This agreement requires Vietnam to provide
access to its market for a wide range of U.S. goods, services,
and investment and to apply the rule of law to its trade
regime, thereby laying the foundation for more extensive
reforms in its World Trade Organization (WTO) accession.
Of course, conclusion of an agreement must be followed by
implementation. The USTR, working with other key agencies like
the State Department and the U.S. Agency for International
Development (USAID), is monitoring Vietnam's progress. So far,
Vietnam's political commitment to fully implement the BTA is
resulting in substantial progress and increasingly being
translated into new laws, rules, and regulations.
We are working intensively with the Vietnam Government to
assist in this. With the strong support of Congress, USAID has
undertaken a unique and substantial program to assist Vietnam,
committing nearly $8 million over 3 years. This is the first
USAID program aimed exclusively toward implementation of a
trade agreement.
Efforts to ensure BTA implementation are also occurring at
high levels. In May, Deputy USTR Huntsman and Vietnam's Vice
Minister Tu convened in Hanoi the first meeting of the Joint
Committee established under the BTA. The status of
implementation was a principal element of this meeting and will
continue to be a major focus of our work.
In conclusion, maintaining NTR status is not only good for
our bilateral relationship, but helps encourage regional
stability and prosperity. As Vietnam gains economically, it
integrates itself further into the regional and global market.
Prosperous countries with close economic ties to each other
make better neighbors. Continuing NTR status advances the
fundamental U.S. interest we have in expanding opportunity and
freedoms in Vietnam and the Asian region.
We urge Congress' continued support for the Jackson-Vanik
waiver for Vietnam.
I would be pleased to respond to any questions you may
have. Thank you, Mr. Chairman.
[The prepared statement of Mr. Ives follows:]
Statement of Ralph F. Ives, III, Assistant U.S. Trade Representative,
Southeast Asia, the Pacific and APEC, Office of the U.S. Trade
Representative
Thank you, Chairman Crane, Mr. Levin and Members of the
Subcommittee, for this opportunity to testify today in support of
continuation of the President's waiver for Vietnam of the freedom of
emigration provisions of Title IV of the Trade Act of 1974, the so-
called Jackson-Vanik amendment. Congress and this Committee in
particular has a strong record of endorsing a normalized trade
relationship with Vietnam.
Continuing the Jackson-Vanik waiver, which former President Clinton
first invoked in 1998, is required to maintain Normal Trade Relations
(NTR) status for Vietnam. Retaining NTR status is necessary to continue
full implementation of the U.S.-Vietnam bilateral trade agreement
(BTA). Congress passed legislation approving extension of NTR to
Vietnam on October 3, 2001, which the President signed into law on
October 16, 2001.
I will focus my comments today on the trade aspects of our
relationship with Vietnam. Mr. LaFleur plans to discuss the U.S.
efforts to work with Vietnam on human rights, including issues such as
religious freedom and labor rights.
On December 10, 2001, with firm bipartisan support from the
Congress, and this Committee in particular, NTR was extended to Vietnam
and the U.S.--Vietnam BTA entered into force. Entry into force of this
Agreement was a critical step in the process of normalizing our trade
relations with Vietnam, furthering U.S. economic and strategic
objectives and opening a growing market to U.S. exports and investment.
The BTA represents the culmination of a decade-long, bipartisan
effort to heal the wounds of the Vietnam era and to restore our
relations with this country of 80 million people--the fourth most
populous country in East Asia, and one with tremendous potential; half
of its population is under the age of 25. The path to normalization of
our bilateral relations was formulated by former President Bush in a
``road map'' in 1991. With substantial work by the Clinton
Administration--and bipartisan leadership by key Members of Congress in
both houses--we have passed important milestones, including securing
Vietnam's cooperation in accounting for MIAs and POWs, lifting of the
trade embargo in 1994, establishing diplomatic relations in 1995, and
the entry into force of the BTA last year.
Under the BTA, Vietnam has made extensive commitments to reform its
economy, including revision of its legal system as it relates to trade,
finance and other related areas. The BTA provides Vietnam the incentive
it needs to open its economy, introduce competition--both internally
and internationally--and make its entire economic regime more
transparent. Indeed, the BTA is probably the most significant economic
reform measure Vietnam has adopted since the mid-1980s, when it
abandoned central planning and moved toward adoption of market
mechanisms.
The BTA is the most comprehensive agreement we have ever negotiated
with a country subject to Jackson-Vanik amendment. This Agreement
requires Vietnam to provide access to its market for a wide range of
U.S. goods, services and investment--some sectors immediately, others
over several years--and to apply the rule of law to its trade and
investment policy. The BTA represents a significant step in Vietnam's
movement toward WTO and other international norms, as well as its
integration into the regional and global economy. Vietnam's adoption of
the BTA's provisions laid the groundwork for even more extensive reform
efforts as it proceeds with its accession to the WTO.
Vietnam's commitments under the BTA provide a number of commercial
benefits to the United States. A wide range of U.S. products can enter
Vietnam at substantially reduced tariff rates--including avoiding a 50%
surcharge Vietnam levies on countries with which it does not have
normal trade relations. Such U.S. goods will be valued according to WTO
rules, and be free of quotas. Also, many U.S. suppliers in key sectors
can sell their services either from the United States or by investing
in Vietnam. Intellectual property rights are to be subjected to WTO-
levels of protection. Vietnam must use WTO disciplines for its trade-
related technical standards and sanitary and phytosanitary measures.
And the BTA's transparency requirements reduce the cost of doing
business and provide fairness and openness in administration of
Vietnam's trade laws and regulations.
Implementation of all of these BTA provisions can, over time,
greatly increase U.S. exports to Vietnam. In the first four months of
this year, we have seen U.S. exports grow by 27.5% compared to the same
period last year--at a time when our overall exports to Asia are off by
nearly 15%.
Of course, conclusion of an agreement must be followed by
implementation. USTR, working with other key agencies like State,
Commerce, and USAID, is monitoring Vietnam's progress. So far, we have
seen that the political commitment of the leadership of Vietnam to make
the changes necessary to fully implement the BTA is solid and is
increasingly being translated into new laws, rules and regulations.
We are working intensively with the Vietnamese Government to assist
it in this effort. During the negotiation of the BTA, we understood
that Vietnam would require substantial capacity building assistance to
fulfill its commitments. With the strong support of Congress, USAID has
undertaken a unique and substantial program to assist Vietnam,
committing nearly $8 million over three years. This is the first USAID
program aimed exclusively toward implementation of a trade agreement.
The USAID STAR (Support for Trade Acceleration) program, located in
Hanoi, has been assisting Vietnam in its efforts to understand and
implement changes to its legal and regulatory framework since late last
year. In addition, for the last few years USAID has given financial
support to the U.S.-Vietnam Trade Council, which provided technical
assistance during the negotiation of the BTA and now through the
implementation phase.
Efforts to ensure BTA implementation is also occurring at high
levels. In May, Deputy USTR Jon Huntsman and Vietnam's Vice Minister of
Trade Luong Van Tu convened in Hanoi the first meeting of the Joint
Committee established by the BTA. A principal element of this meeting
was a review of the status of implementation.
At this meeting, it was evident that Vietnam has made substantial
progress in fulfilling its obligations under the BTA and great strides
in developing a cadre of officials that understand the rules and
regulations of the international trading system. It was equally evident
to us that our technical assistance programs are having a very positive
effect on Vietnam's efforts. Of course, we will need to continue to
work closely with Vietnam to ensure that it fulfills all of its BTA
commitments. For example, we continue to be concerned about the level
of enforcement of intellectual property rights in Vietnam, particularly
in light of other similar problems in the region.
Concluding the BTA with Vietnam and obtaining congressional
approval of that Agreement was a necessary step in granting Vietnam NTR
tariff treatment to the products of Vietnam. Maintaining NTR status for
Vietnam is not only good for our bilateral relationship but helps
encourage regional stability and prosperity. As Vietnam gains
economically from its trade with us and reforms its economy, it
integrates itself further into the regional and global market.
Prosperous countries with close economic ties to each other tend to
make better, more dependable neighbors. Providing NTR status and
maintaining the BTA thus advances the fundamental interest that we have
in expanding opportunity and freedoms in Vietnam, the Asian region and
the world.
Through its implementation of the BTA, Vietnam is demonstrating
that it is willing to play by the same rules as our other trading
partners, and be a member in good standing of the international
economic community. The Administration remains confident that the
continuation of NTR treatment furthers our economic objectives in
Vietnam, and our overall national interest. We urge the continued
support of the Congress for the Vietnam's Jackson-Vanik waiver.
I would be pleased to respond to any questions Members may have.
Chairman CRANE. Thank you Mr. Ives, and now, Mr. LaFleur.
STATEMENT OF CHRISTOPHER LAFLEUR, ACTING ASSISTANT SECRETARY,
EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. LaFLEUR. Thank you, Mr. Chairman.
Chairman Crane, other distinguished Representatives on the
Subcommittee, it is an honor to be here before you today. This
morning I look forward to consulting with you about the
President's decision to waive the provisions of the Jackson-
Vanik amendment again this year.
Since the waiver was first granted in March 1998, it has
been an essential component of our policy of engagement with
Vietnam. I am confident that this extension of the waiver will
continue to advance U.S. national interests in Vietnam.
The common theme that you will hear in my testimony today
is that engagement works. This month marks the seventh year
since we normalized our diplomatic relations with Vietnam, and
we have seen substantial progress in a number of areas
important to the United States. From increased trade and
investments, to greater cooperation on POW/MIA recovery
efforts, our relationship has advanced dramatically. I must say
that much of the credit is due to the Members of this
Subcommittee and the Members of the House and their continuing
contributions to the development of U.S.-Vietnamese relations.
Much of the progress on our most important bilateral issues
would not have been possible without the direct assistance of
Members of Congress and their excellent staffs.
Vietnam's cooperation on immigration policy, the test issue
for the Jackson-Vanik waiver, is continuing. We have completed
nearly all immigration processing under our refugee programs.
Less than 100 applicants remain to be interviewed. We hope to
finish processing of eligible applicants under the former
Orderly Departure Program and the Resettlement Opportunity for
Vietnamese Returnees program by the end of this calendar year.
I want to emphasize that we will not consider our refugee
programs to be completed, however, until the last eligible
applicant has had an opportunity to be interviewed, or we have
an acceptable accounting in each case.
Our relations with Vietnam were tested last year when over
1,000 Montagnards fled to Cambodia following large-scale
Montagnard protests in February 2001. The Vietnamese Government
initially objected to third-country resettlement of the
Montagnards in Cambodia and indeed tried to repatriate them
directly back to Vietnam. After discussions between the United
States, Vietnam, Cambodia, and the United Nations High
Commissioner for Refugees, Vietnam tacitly acquiesced and
dropped its opposition to arrangements to resettle those
Montagnards from Cambodia to the United States. Hundreds of
those Montagnards have already arrived here and nearly all
should be in the United States by the end of the summer.
We would like to work with Vietnam to help develop the
Central Highlands and encourage greater respect for human
rights so that this kind of exodus is no longer necessary.
We have established an impressive spirit of cooperation
with the Vietnamese in the search for our servicemen and women
still missing in action from the Vietnam War. There is
certainly still work ahead, much of it dangerous.
In April last year, seven Americans and nine Vietnamese
lost their lives in a helicopter crash on a mission to recover
the remains of missing Americans. Nevertheless, our operations
continue unabated, and young volunteer American servicemen and
women and their Vietnamese counterparts continue to brave these
severe and, in some cases, dangerous conditions to locate the
remain of our MIAs.
We are also continuing to resolve cases. Of the 196
Americans who were on the last ``known alive'' list, we have
determined the fate for all but 39 men.
Vietnam's cooperation in our efforts to account for missing
Americans from the Vietnam War remain full and in good faith.
Without such cooperation, closure for many of the families of
our missing warriors would not occur. Let me assure you, the
quest for fullest possible accounting of our POW/MIAs remains
one of our top priorities with Vietnam.
Since we reestablished relations with Vietnam, we have seen
human rights improvements in that country. It is far from a
satisfactory situation, and we see a long road ahead in
encouraging Vietnam to make further improvements in this
critical area.
We share with the Congress and the people of the United
States a deep concern for the human rights situation in
Vietnam. We take a particular interest in religious freedom in
that country. We have established what we hope is a serious
dialog with the Vietnamese on human rights issues, and this
fall we will hold the next of our annual high-level human
rights discussions with Vietnam.
Secretary Powell has raised human rights issues with the
Vietnamese senior leadership in his meetings, and our staff at
our embassy in Hanoi constantly work to keep this a key issue
in our bilateral relationship.
Our cooperation with Vietnam on labor issues is improving
and conditions for workers in Vietnam are improving along with
it. Under a memorandum of understanding (MOU) on labor, signed
in November 2000, the U.S. Department of Labor has developed
five technical assistance projects with Vietnam and has a sixth
on the drawing board. We also held the first-labor dialog
between the United States and Vietnam in March of this year. We
were pleased, after long years of negotiation, to see the U.S.-
Vietnam Bilateral Trade Agreement finally enter into force last
December.
The BTA is comprehensive, binding Vietnam to an
unprecedented array of reform commitments, including tariff
reductions, protection for intellectual property rights (IPR),
market access for American service industries, and protections
for American investors.
The results of the BTA are already there to see. In the
first 4 months of this year, U.S. exports to Vietnam increased
by over 25 percent, compared with the same period last year.
This increase came even as our exports to most other countries
in Asia were not doing nearly as well. Extension of the
Jackson-Vanik waiver is required in our view to keep the BTA in
effect and vital to keeping our momentum on trade.
We have been working closely with the Vietnamese on
implementation of the BTA, funding technical assistance to
review Vietnam's legal and regulatory framework, and help draft
new laws to meet its commitments. As we work to put in place
these changes, the business climate in Vietnam for U.S.
business and Vietnamese business should continue to improve.
The Jackson-Vanik waiver remains a prime example of
executive-legislative cooperation on foreign policy and an
essential element of our engagement with Vietnam. We have seen
greater Vietnamese cooperation on the total range of bilateral
issues, and its successes are visible and plentiful.
Congressional approval of the waiver sends a vital message to
Vietnam's leadership and people that the United States wants a
cooperative, constructive relationship with Vietnam. I am
confident that this extension of Jackson-Vanik will further
advance the national interest of the United States in Vietnam.
Thank you, Mr. Chairman.
[The prepared statement of Mr. LaFleur follows:]
Statement of Christopher LaFleur, Acting Assistant Secretary, East
Asian and Pacific Affairs, U.S. Department of State
Chairman Crane, Mr. Levin, I would like to thank you for inviting
me to consult with you about the President's decision to waive Jackson-
Vanik again this year. Since the waiver was first granted in March
1998, it has been an essential component of our policy of engagement
with Vietnam. I am confident this extension of the waiver will continue
to advance U.S. national interests in Vietnam.
The last seven years have seen substantial progress in our
relationship with Vietnam, and much of the credit must be given to the
vigorous and productive executive/legislative cooperation that has been
developed relative to Vietnam policy. I would like to take this
opportunity to thank the Members of this Subcommittee and the Members
of the House for their continuing contributions to the development of
U.S.-Vietnam relations. Your visits to Vietnam, meetings with
Vietnamese leaders visiting Washington, and other congressional
interventions on a wide range of issues have reinforced our policy of
engagement. The House and its Members have made clear, both privately
and publicly, to Vietnam's leaders and its people that the United
States remains committed to enhanced U.S.-Vietnam relations. Progress
on some bilateral issues would not have occurred without direct
assistance rendered by Members of Congress. In that regard, I would
like specifically to thank Chairman Crane and the Members of this
Committee for your direct support and counsel.
One common theme runs through the development of every facet of our
relationship with Vietnam--engagement works. We have made progress on
every issue in which we have been able to demonstrate mutual interests
and in which both sides have been convinced of each other's commitment
to build a relationship. Each side has made gestures over the years to
advance this process--the United States lifted its trade embargo and
Vietnam agreed to assume long-term debt and settle property claims.
Vietnam, by joining the ASEAN Regional Forum and the Asia Pacific
Economic Cooperation Forum, signaled its desire to play a constructive
role on regional security, trade issues, and economic development. In
the past two years we have signed agreements with Vietnam to expand
cooperation in labor and in the science and technology fields. Both
sides worked together for many years to bring into force finally last
year a bilateral trade agreement.
Bilaterally, engagement at all levels is building a spirit of
cooperation between our two peoples and producing results in those
areas that are most important to us--POW/MIAs, emigration, human
rights, and economic reform. Vietnam's cooperation on emigration
policy, the test issue for the Jackson-Vanik waiver, is continuing. We
have completed nearly all immigration processing under the former
Orderly Departure Program, the Resettlement Opportunity for Vietnamese
Returnees (ROVR) sub-program, the Former Re-education Camp Detainees
(``HO'') program, and the Montagnard programs. Less than 100 applicants
remain to be interviewed under all of our various refugee programs.
We still hope to finish processing of eligible applicants under the
former ODP and ROVR programs by the end of this calendar year. We
recently completed interviewing applicants under the U-11 program for
former USG employees. I want to emphasize that we will not consider our
refugee programs to be completed until the last eligible applicant has
had the opportunity to be interviewed, or we have an acceptable
accounting of each case. Vietnamese officials have continued
cooperation over this past year and we will continue to build on this
strong foundation to interview all those who wish to be interviewed for
resettlement in the United States under all refugee and related
programs. We hope this cooperation will extend to accepting the
deportations of Vietnamese imprisoned in the U.S.
Our relations with Vietnam were tested last year when over one
thousand Montagnards fled to Cambodia following large-scale Montagnard
protests in the Central Highlands in February 2001. The Vietnamese
Government initially objected to third-country resettlement of the
Montagnards in Cambodia, and unsuccessfully attempted to repatriate the
Montagnards directly from the refugee camps. After intensive
discussions between the U.S., Vietnam, Cambodia and UNHCR, Vietnam
tacitly acquiesced and accepted arrangements to resettle these
Montagnards from Cambodia to the United States. Hundreds have already
arrived and nearly all should be in the U.S. by the end of this summer.
We would like to work with Vietnam to help develop the Central
Highlands and encourage greater respect for human rights so that this
kind of exodus is not necessary.
We have established an impressive spirit of cooperation with the
Vietnamese in the search for our servicemen and women still missing in
action from the Vietnam War. Slowly, we are making progress in building
the people-to-people relationships that are replacing suspicion with
trust and understanding. This is vitally important at this juncture
because we have finished the easy work; the tasks ahead are becoming
progressively more arduous. We are now searching in some of the most
difficult and dangerous terrain possible and our recovery teams face
greater dangers. In April last year, seven Americans and nine
Vietnamese lost their lives in a helicopter crash on a mission to
recover the remains of missing Americans. Nonetheless, our operations
continue unabated and young volunteer American servicemen and women and
their Vietnamese counterparts continue to brave these severe and highly
dangerous conditions to locate the remains of our MIAs.
Since 1988 when joint recovery operations began with the
Vietnamese, we have conducted sixty-eight joint field activities in
Vietnam, five of those since the previous Jackson-Vanik waiver was
extended last year. Since 1973 the remains of 481 individuals have been
identified and repatriated. This would not have been possible without
bilateral cooperation between the U.S. and Vietnam. Of the 196
Americans that were on the Last Known Alive list, the fate of all but
39 men has been determined. Many of the American losses occurred in
Laos and Cambodia. To date, Vietnam has provided 44 witnesses for
investigation of possible loss sites along the border and within Laos
and Cambodia. The Vietnamese continue to provide documents and films to
investigation teams. Approximately 28,000 items have been reviewed for
possible information that would lead to an accounting for our fallen
comrades. We are still encouraging Vietnam to provide additional
documentation and to conduct more unilateral activities. As presented
here, Vietnam is fully cooperating in our efforts to account for
missing Americans from the Vietnam War; without such cooperation,
closure for the many families of our missing warriors would not occur.
Let me assure you, the quest for fullest possible accounting of POW/
MIAs remains one of our top foreign policy priorities with Vietnam.
Since we reestablished relations with Vietnam, we have seen some
human rights improvements there. It is far from a perfect situation and
we see a long road ahead in encouraging Vietnam to make further
improvements in this critical area. We share with the Congress and the
people of the United States a deep concern for the human rights
situation in Vietnam. We have established what we hope is a serious
dialogue with the Vietnamese on human rights issues, and, this fall we
will hold the ninth annual high-level human rights discussions.
Secretary Powell raised human rights issues with Vietnamese senior
leadership during his visit last summer. In addition, our staff in the
Embassy in Hanoi constantly work with Vietnamese officials to keep this
issue a key issue of the bilateral relationship.
Progress in past years notwithstanding, there were some troubling
setbacks on human rights and religious freedom this year, and not much
good news. Two recent amnesties did not include any political or
religious prisoners that we knew of. Father Nguyen Van Ly, a high-
profile case for us, was sentenced to fifteen years imprisonment for
activities that the authorities deemed anti-government. Two Buddhist
monks, Thich Quang Do and Thich Huyen Quang remain under house arrest
for their work with the United Buddhist Church of Vietnam. Two other
dissidents, Pham Hong Son and Lam Chi Quang were arrested for
circulating documents on the Internet promoting democracy in one case
and criticizing a border agreement with China in another.
However, the picture on religious freedom brightened a bit for
officially recognized religious organizations. Those not recognized
continue to face difficulties, as the imprisonment of religious leaders
highlights. The Vatican and Vietnam have regular dialogue. We are also
encouraging Vietnam to recognize more than one group of Hoa Hao
adherents. Ambassador at Large for International Religious Freedom John
Hanford plans to visit Vietnam next month to continue discussions with
the Vietnamese. Much remains to be done, but there has been progress
and we want to encourage further progress.
Conditions for workers have also improved. The U.S. Department of
Labor has developed technical assistance projects with Vietnam in the
areas of employment services, social insurance and safety nets,
employment of people with disabilities, industrial relations, and
prevention of child labor. A sixth project on HIV/AIDS education and
prevention is in the works. And the first Labor Dialogue between the
U.S. and Vietnam took place in March this year.
You should also know that there were 72 private and public strikes
during the year, many against foreign-owned or joint venture companies,
but others that involved state-owned and private firms. The government
tolerated these strikes, even though most were spontaneous and
supported by organized labor after the fact. In some cases, the
government disciplined employers for illegal practices that led to
strikes.
The brightest spot in our engagement with Vietnam has been on the
economic side. Last December saw the capstone on long years of
negotiation when the U.S.-Vietnam Bilateral Trade Agreement (BTA)
finally entered into force. The BTA is comprehensive, binding Vietnam
to an unprecedented array of reform commitments, including tariff
reductions for key U.S. exports, elimination of non-tariff barriers on
most products, adoption of WTO-consistent protection for intellectual
property rights (IPR), market access for American service industries,
and protections for American investors. Many of these reforms were due
on entry into force; others will be phased in over the next one to nine
years.
The results of the BTA are already there to see. In the first four
months of this year, U.S. exports to Vietnam increased by over 25
percent compared with the same period last year. This increase came
even as our exports to most other countries in Asia were falling. As
Vietnam phases in further reforms over the coming years the trade and
investment picture for U.S. business should steadily improve. Extension
of the Jackson-Vanik waiver is required to keep the BTA in effect and
vital to keeping our momentum on trade.
In the seven months since the BTA entered into force, Vietnam has
made substantial progress in assessing and planning for legal reforms
that are necessary to meet its BTA commitments. Their government is
progressively drafting and enacting new laws and reforming its
regulatory structure. A new ordinance that opened up opportunities for
foreign business in advertising came into force this year, and legal
amendments that will expand operations for foreign law firms are
expected soon. The National Assembly is to discuss additional laws on
business bankruptcy and commercial law this month; new laws on MFN and
national treatment are under draft. This has been no simple task. The
work to change this large number of laws, regulations and rules would
swamp the law-drafting capacity of most countries.
That said, Vietnam's current trade and investment regime still
falls significantly short of its commitments in the BTA, including many
that were due on entry into force. We recognized early on that Vietnam
would need technical assistance to meet its BTA commitments, and USAID
has funded assistance in this area.
One of our most vexing long-term problems is the protection of
intellectual property rights. Vietnam is again on the Special 301 Watch
List for IPR, as IPR enforcement generally remains weak and violations
are rampant. Piracy rates are extraordinarily high on some types of
products such as computer software, music and video CDs, VCDs and DVDs.
On the positive side, the BTA contains important commitments in the IPR
arena, and Vietnam is making progress in strengthening its legal
regime. Vietnam has recently extended legal protection to new areas not
previously covered such as trade secrets and new plant varieties. This
year Vietnam issued guidelines on resolving copyright disputes and is
drafting a new Civil Procedure law. Vietnamese officials are well aware
of the enforcement difficulties and are prepared in principle to
address them, but IPR enforcement responsibilities are divided among a
number of agencies, often with coordination and resources lacking.
As certain as these ongoing reforms will help the U.S. to expand
exports to and investment in Vietnam, they will surely also bring
change for the better in Vietnam. The Vietnamese economy appears today
to be in recovery, thanks to relatively low inflation, a favorable
trade balance and the prospect of increased exports and investment from
the BTA. Many of the same commitments that are opening up markets and
improving the business climate for U.S. business in Vietnam should be
opening the way for Vietnamese business at home as well. Vietnam's
commitments to make its process for drafting and enacting laws more
transparent will give Vietnamese and international business a chance to
comment on laws before they are passed, improving the process for all.
Tariff reductions are opening up new markets on both sides of the
Pacific; indeed, Vietnamese exports to the U.S. have grown this year as
well.
Vietnam's outlook toward private enterprise has taken a radical
departure. The economy today bears little resemblance to the days of
communal farms and ration cards in the 70's and 80's. With
approximately 1.3 million annual entrants into the job market, Vietnam
needs a vibrant private sector to keep growth at high rates and provide
the necessary jobs. The Enterprise Law in effect for the last two years
made it substantially easier to begin a new business and is given
credit for the registration of 35,000 new businesses since that time.
The Communist Party even changed its rules this year to allow members
to own private businesses.
The Jackson-Vanik waiver remains a prime example of executive/
legislative cooperation on foreign policy and an essential element of
our engagement with Vietnam. It has promoted greater Vietnamese
cooperation on the total range of bilateral issues and its successes
are visible and plentiful. Congressional approval of the waiver sends a
vital message to Vietnam's leadership and people that the United States
wants a cooperative, constructive relationship with Vietnam. The policy
tools the Jackson-Vanik waiver makes available build the people-to-
people relationships that will strengthen trust between our societies.
I am confident that this extension of Jackson-Vanik will further
advance the national interests of the United States in Vietnam. I urge
Members of the Committee to support the President's waiver.
Chairman CRANE. Thank you, Mr. LaFleur.
I would like to put a question to both of you, and that is,
I understand that the Communist Party in Vietnam has changed
its rules this year to allow its members to own private
businesses.
Has the Vietnamese military made any progress toward free
enterprise as well?
Mr. LaFLEUR. I believe that the Vietnamese military has
been engaged in some private business, or what we would define
as private business activity. I am not sure whether this
represents a reform initiative as much as it represents an
effort on their part to further strengthen their own financial
situation and meet their operational requirements. I believe
that is the general situation at this time.
I don't think we have seen a dramatic change in that
situation yet.
Chairman CRANE. I see.
Why do you think that our exports to Vietnam have increased
while our exports to many other countries in the region have
declined?
Mr. IVES. Thank you, Chairman. I think partly due to the
BTA, since Vietnam committed to and implemented a wide range of
tariff reductions. Also, Vietnam is a relatively new market for
the United States and many other countries have had long-term,
established relationships with that country, Japan, and the
European Union in particular. So, we are just beginning to
develop our market in Vietnam.
Chairman CRANE. Have you both seen a decrease in the extent
of corruption of the Vietnamese Government?
Mr. LaFLEUR. Mr. Chairman, I think the situation on
corruption in Vietnam continues to be a major concern for
American businesses operating there and for the U.S. Government
in general. I believe there are private nongovernmental
organization studies of corruption in Vietnam that indicate
that Vietnam ranks somewhere around 75 on the list of 99
countries, zero being best, and 100, I guess, being worst,
which puts it certainly in the lower tier and in an area of
concern, although there are other countries on there with whom
we have fairly vigorous and extensive trading relations as
well. It is a problem and the problem needs to be worked on.
I think there is recognition in Vietnam on the part of the
leadership there that they do have a serious problem, and it is
impeding their economic development. They have established a
campaign to combat it among their own officials with, in some
cases, quite draconian penalties for violators at the worst end
of the spectrum.
It certainly remains an issue of concern that we encourage
them to address. In our view, one of the most effective ways
for addressing it will be the establishment of a more
transparent legal and regulatory environment. This is exactly
one of the areas that we are working with them on pursuant to
implementation of the BTA and providing them with technical
assistance.
Chairman CRANE. Can you please describe in more detail the
progress made in the labor dialogue taking place between the
United States and Vietnam?
Mr. LaFLEUR. Mr. Chairman, on the books, Vietnam has a
quite impressive set of regulations governing labor law
relations. In reality, of course, there are severe limitations
on the rights and abilities of Vietnamese workers to organize
and effectively carry out labor activities.
There has been some identifiable progress in recent years.
We have seen, for example, in 2000, approximately 72--I believe
it was--labor actions of various kinds conducted by workers
against various factories, companies, and institutions in
Vietnam. These were not--these were not perhaps organized in
the classic way along our lines, but certainly the fact that
they were allowed to be undertaken and received the support of
the labor organization in Vietnam is an indication of
recognition on the part of the authorities that labor has a
role to play in industry relations in Vietnam, and certainly we
hope to see further evolution along those lines.
In addition, Vietnam--we and the Vietnamese have signed, as
I indicated, a MOU pursuant to which our U.S. Department of
Labor is providing technical assistance to Vietnam in a number
of areas, including social services, dealing with workers with
disabilities, efforts to prevent exploitation of child labor,
industrial relations. As I indicated, we are also working on a
possible project to deal with HIV in the workplace. So, we do
have cooperative efforts under way with Vietnam.
Last, I think I would point to the role of American
business investing in Vietnam as providing an important example
and demonstration to other companies in Vietnam about how to
effectively manage labor relations. We know that major U.S.
companies there are making a real effort to provide independent
monitoring of labor conditions, working conditions in their
factories. So, we think that as U.S. business presence expands
in Vietnam, this can have a beneficial effect on the labor area
as well.
Chairman CRANE. Thank you. Did you want to add anything to
that Mr. Ives?
Mr. IVES. No, Mr. Chairman, I think he did a very good job
of responding to the question. Thank you.
Chairman CRANE. Very good. Mr. Neal.
Mr. NEAL. Thank you very much, Mr. Chairman.
Mr. LaFleur, thank you for your testimony. Which of the
following two statements would be accurate? If neither is
accurate, please fill in the blanks: that modern Vietnam is
half-Communist and half-capitalist when suited, or half-
socialist and half-capitalist when suited?
Mr. LaFLEUR. Well, I think we are really--we have a system
here that certainly is at least half-Communist and as we have
seen in the case of China, for example, Communist Parties have
recognized that in order to have a chance of maintaining their
hold on power, it is essential in this day and age that the
countries be moving forward and that they be able to respond to
the demands of their populations for better living standards,
better conditions, as well as improving the strength of the
nation as a whole.
So we have seen an effort, certainly, pioneered in Asia, if
you will, by the Chinese, but very carefully watched now and in
many cases imitated by the Vietnamese as they attempt to
maintain a one-party state, while at the same time introducing
the market mechanisms and some of the operational practices
that are essential to a free-market economy.
How these two systems are going to meld together for the
long term, of course, is something we are all very much
watching. I think a lot of us expect that over time it will be
natural for the requirements of a market economy to have a
substantial impact on the way politics works in all of these
countries and certainly in Vietnam. I think we see some
indications, as I indicated earlier, with respect to the labor
relations area in which, already, we are seeing some impact
from this market economy on the--what is a classical Communist
system.
Mr. NEAL. Thank you, Mr. LaFleur. One other question.
Did you mention you thought there had been satisfactory
progress on MIA issues, or POW issues? Could you speak on that
specifically for us.
Mr. LaFLEUR. Certainly.
We have been conducting, as you know, a series of joint
operations that require very extensive Vietnamese participation
and support in Vietnam, since the late 1980s. Since that time,
we have conducted numerous, what we call, ``joint field
investigations'' in that our teams go off with Vietnamese
counterparts to excavate areas where we believe losses have
taken place in order to try to find remains and any other
indications of the fate of our missing. Those operations can
only be effective if the right amount of staff and support work
precedes them and if the teams get the kind of support in the
field they need.
As I indicated, a number of locations where these
operations take place, particularly these days, are in remote
areas, hard to support and hard to live in. So, we really do
have to have pretty full cooperation to make these possible,
and we have seen that from the Vietnamese.
We have also had a series of turnovers by the Vietnamese of
documents, hundreds of pages of documents, that help give us
some pointers to what happened during the war and shed some
light on the fate of the missing, again. The Vietnamese have
provided, as well, a number of living witnesses of events that
occurred, in some cases, in quite remote areas so that we can
try to get as firsthand as possible accounts of incidents in
which we believe some of our missing were lost. That effort
continues; we have interviewed quite a number, and we have more
being made available by the Vietnamese.
So, it is a package that--there are a number of important
elements that go into making that total package and making the
judgment about Vietnamese cooperation, but the work continues,
the accounting continues; and so we feel that it is justified
to make that judgment.
Mr. NEAL. Thank you, Mr. LaFleur.
Thank you, Mr. Chairman.
Chairman CRANE. Thank you. Ms. Dunn.
Ms. DUNN. Thank you very much, Mr. Chairman.
It is good to have you here today, gentlemen. Thank you for
coming.
As part of the BTA, Vietnam has pledged to phase in over 18
months the trips agreement under the WTO. I am wondering if you
could please--maybe, Mr. Ives, this is an appropriate question
for you. Could you bring us up to date on how they were moving
along with the implementation, particularly with the
enforcement of the laws that would provide the trips
qualification, please?
Mr. IVES. Certainly. Thank you very much for that question.
Vietnam, as you indicated, has 18 months to comply with the
TRIPS obligation as part of the bilateral trade agreement.
Overall, Vietnam is making substantial progress in implementing
its commitments under the BTA, which, as I indicated, are among
the most comprehensive we have ever negotiated with any
country. In terms of the IPR provisions, in particular, we have
had a team in Vietnam working with Vietnam overall in
implementation. The IPR provisions are part of that effort to
work with Vietnam in implementing its commitments.
The enforcement remains a serious concern with the
Vietnamese on intellectual property protection. It is a serious
concern throughout the region. Piracy is widespread. We have
been working with all the countries in the region to bring
piracy under control, but we have a long way to go in terms of
Vietnam and indeed most of the other countries in the region to
reduce the rate of piracy. So, we still have a great deal of
work to do on that.
Ms. DUNN. I can imagine. I think that is very typical in
some of the nations that we are doing BTAs with.
What about the progress toward their membership in the WTO?
I know that they have applied, but I am not sure what the
outstanding issues are and where that stands. Would you care to
comment on that.
Mr. IVES. Certainly.
Vietnam applied for membership in 1995. There have been, I
believe, five meetings of what we call the ``working party,''
which is the committee--basically, Committee of the Whole--of
all WTO members working with Vietnam in its accession process.
The most recent meeting of this working party was earlier this
year.
The USTR and other countries are actually using the
bilateral trade agreement as the foundation for Vietnam's
accession to the WTO, again highlighting the importance of the
BTA not only in the bilateral relationship with Vietnam, but
also in terms of its accession process.
That said, Vietnam still has a way to go, primarily in its
market access commitments, not only to us but to other WTO
members. So, it is making good progress. We have indicated to
Vietnam that--Ambassador Zoellick has indicated to Trade
Minister Vu Khuan and at lower levels that we are pleased to
work with Vietnam in the accession process. We want Vietnam to
accede to the WTO, but it has to be on terms that other members
have acceded to the WTO.
Ms. DUNN. Thank you, Mr. Ives.
Thank you, Mr. Chairman.
Chairman CRANE. Mr. Levin.
Mr. LEVIN. Thank you, Mr. Chairman.
Welcome. Let me just ask a couple questions about our
commercial relationships.
There is a reference in the testimony to the increase in
exports, but say a word also about the import side of it, just
so we can get a balanced picture here. There has been an
increase, right, of imports? Just say a word about that so the
record is complete.
Mr. IVES. Thank you, Mr. Levin. In terms of U.S. imports in
2001, which the most recent year, we have complete data,
Vietnam's--U.S. imports from Vietnam increased approximately 21
percent to $1 billion. During the first 4 months of this year,
we don't have a complete record for 2002. During the first 4
months of this year, Vietnam's imports were valued at a little
over $400 million, and that represents approximately a 67-
percent increase over the same period in the previous year.
Mr. LEVIN. As I understand, a substantial portion of that,
a growing portion, is in textiles, apparel.
Mr. IVES. Textiles and apparel during the full year 2001
represent a little under $50 million of U.S. imports. For the
first 4 months of this year, textiles and apparel imports
represent about $65 million.
Mr. LEVIN. I mention it in part because I think
negotiations have begun on a textile agreement, right? There
have been some early discussions about a textile agreement with
Vietnam?
Mr. IVES. We have had some consultations with Vietnam on
textiles. We have had teams in Vietnam discussing this with
them.
Mr. LEVIN. I think it has been productive for the Chairman
and others to raise and for to you discuss the labor picture in
Vietnam. When we talk about movement toward a free market, a
free-labor market is an important piece of free market, and
that is reflected in the MOU.
I think that in terms of Mr. Neal's question about the
balance between Communist control and non-Communist control,
socialism and the free-capital market, capitalist market,
movement toward a free-labor market is a critical element--so
critical that it is likely to be resistant.
As mentioned by one of you, there were some worker actions
allowed, and that is a step forward. Still there is control,
there can only be, in essence, one labor union controlled by
the party that controls the government. I think it is important
that as we discuss the textile agreement with Vietnam that this
issue be raised, as it was with Cambodia.
I think the textile agreement with Cambodia was a very
significant step forward, and Cambodia is moving, with the help
of technical assistance from the United States, including the
labor movement of the United States, toward a more free-labor
market. When our staff was in Cambodia, one of the concerns was
that their neighbors did not have the same, and we were moving
in the same direction and, therefore, in terms of competition
could have an economic advantage.
So, I hope very much that--and we have made this clear, a
number of us for a number of years, going back to the previous
Administration--as we talk over with the Vietnamese a textile
agreement that that be very much--not the only, by any means,
but an important ingredient. I mentioned that to the Ambassador
when we had a discussion, the distinguished Vietnamese
Ambassador, yesterday.
So, I don't know if you want to react to that, but I wanted
that to be very clear on the record. We have made it clear to
Mr. Zoellick and, I think, to Mr. Evans. I am not sure if we
made it clear to Mr. Paul.
Any comment?
Mr. IVES. It is very clear, sir. I mean, we understand.
Mr. LEVIN. Thank you.
Chairman CRANE. Mr. Houghton.
Mr. HOUGHTON. Thank you, Mr. Chairman. Thank you,
gentlemen, for being here this morning. It always is
fascinating to me, having lived a lot longer than an awful lot
of other people around here, to think of our enemies being our
friends. I mean, I think of it in terms--I happened to be in
World War II--of Germany, Japan, Italy, Korea, and now Vietnam,
and how powerful the urgings of peace and the cementing of that
peace through economic activity are. I just hope we can
continue that.
I have got just a couple of questions. One, we do have, as
a counterbalance to Mr. Levin, a question on imports: We have
been rather successful in terms of our exports, haven't we, to
Vietnam? Maybe you want to elaborate on that a little bit.
Then the other thing is, as you move forward and get a
solid and a much more meaningful relationship, you have to have
sort of a rule of law at play. One of the things that bothers
me is this whole concept of intellectual property rights, which
are so important here, particularly since the United States, if
it is to export all it has to export, on--with an advantage, it
can't be low labor rates, it has got to be some sort of
technical input.
So you might be able to comment on both those issues.
Mr. IVES. Certainly, sir. In terms of exports, I believe,
as Mr. LaFleur indicated, our exports to Vietnam----
Mr. HOUGHTON. Could you move that microphone a little
closer to you.
Mr. IVES. In terms of our exports to Vietnam, they are up
approximately 27 percent the first 4 months of this year,
compared to the first 4 months of 2001. They are covering a
wide range of products--wood and paper, cotton, chemicals,
machinery--they are all among the important exports that we are
expanding to Vietnam.
You have also made a very important point in terms of the
rule of law. This is one of the most significant changes that
the BTA will help Vietnam with, that is, introducing
transparency in its rules and regulations, requiring Vietnam to
observe public trade related rules and regulations, requiring
Vietnam to receive public comment much along the lines that the
United States does when it implements rules and regulations. So
that is all very important.
In terms of intellectual property rights, that is a very,
very serious issue with Vietnam. We recently put Vietnam on our
special 301 list indicating that it does have serious problems
and that we need to work very closely with Vietnam on those
problems, and we will do so.
Mr. HOUGHTON. Mr. LaFleur, have you got any comments you
would like to make?
Mr. LaFLEUR. Sir, referring to your earlier comments on the
transition that has taken place in our relationship with
Vietnam, I guess I would observe on a somewhat personal note,
if you will permit me that, some 10 years ago I had an
opportunity to visit Hanoi when I was assisting General Vessey
in his efforts to improve cooperation from the Vietnamese on
our POW/MIA accounting.
I had a chance to go back to Hanoi for the first time in a
decade only a few months ago, and I can attest that Hanoi has
changed remarkably during that period. The visible level of
economic activity, the tremendous expansion of commerce, the
availability of consumer goods, in some cases quite costly
consumer goods, was extraordinary to see having seen what Hanoi
looked like a decade ago.
There was a visible change when you see it in that sort of
snapshot. Although it is true that progress on some issues with
Vietnam isn't always as rapid as we would like to see, there
clearly has been progress and it is visible.
I might note, too, that the reason I was in Vietnam a few
months ago was because Vietnam was hosting a meeting of the
Association of Southeast Asian Nations (ASEAN) Regional Forum
Members, and one of the transformations that has taken place in
Vietnam's role in the region is that is as joint ASEAN. It is
now being incorporated into the community of Southeast Asians,
which includes, of course, many excellent friends and good
allies of the United States. So the role Vietnam is playing in
the region is different. Our cooperation, I think, is expanding
with them.
So the trend, sir, as you so correctly noted, is very
different from what it was in the past, and I think, very
positive for U.S. interests.
Mr. HOUGHTON. Thanks very much.
Thank you, Mr. Chairman.
Chairman CRANE. Mr. Shaw.
Mr. SHAW. Thank you, Mr. Chairman.
I was in Vietnam many years ago, in fact, I think Sam
Gibbons of Florida was Chairman of the Trade Subcommittee when
I was there. I would hope there have been some remarkable
changes over the years, so that is very good to hear. I hear
from the Ambassador, and also from Members who have traveled to
Vietnam, that there has been a great change.
Where are we as far as corruption in the government? How
have they proceeded? How are they subsidizing trade coming into
the United States--these types of things, if you would comment
on that, either one of you.
Mr. LaFLEUR. Perhaps, if you will permit me, I will make a
couple of quick comments on the corruption issue, and perhaps
my colleague will respond on the subsidy of trade.
As I indicated in response to an earlier question, there
clearly is a significant level of corruption in Vietnam,
including corruption that affects performance of official
duties. There are studies by nongovernment organizations that
note the seriousness of this and rank it--in fact, in Vietnam
versus other countries. Vietnam certainly has a serious problem
based on those sorts of standards.
We are doing what we can, I think, to encourage Vietnam to
improve on corruption, to try to develop a more transparent
system of rules and regulations, which in the long run is
probably the best way to try to stamp out this practice in a
broad and general way.
Vietnam itself, clearly the government there has made the
prosecution of this crime, this series of crimes, when they had
identified it as a serious national concern. No question, the
general person in the street, if you will, in Vietnam finds
corruption unacceptable, even as they have to live with it.
So I think that there are efforts under way to deal with
it, but you are absolutely correct in pointing to it as a very
serious concern for the Vietnamese and for us.
Mr. IVES. Thank you, sir. In terms of your question
regarding subsidies, we are not aware of any direct subsidies
that the Government of Vietnam is providing in terms of their
exports to the United States. On a positive note, I would like
to point out that the Government of Vietnam, as part of its
transition to a market-based economy, is moving a number of its
State-owned enterprises to the private sector. So that to the
extent that the government is involved in its production,
manufacturing and sales of products, as it moves from State-
owned enterprises to the private sector, any degree of
involvement by the government should diminish.
Mr. SHAW. What if--any other restrictions on foreign
investment in Vietnam?
Mr. IVES. The BTA would require Vietnam, over a transition
period, to allow U.S. investors to gradually own greater shares
of various----
Mr. SHAW. Where are we now? What are those percentages now?
Mr. IVES. In this case, U.S. companies cannot invest in the
particular sectors that we negotiated in the bilateral trade
agreement, for example, in telecommunications distribution
services, which is one reason why in the BTA we wanted to make
sure that Vietnam would allow those investments to occur.
Mr. SHAW. It would seem to be to their advantage. I mean,
it is a capital-poor country. It would seem they would want to
be reaching out everywhere they can for foreign investment, not
necessarily from here, but all over the world. As I recall, the
desire of American business to be able to invest in Vietnam and
open up trade with Vietnam, back when I was there years ago and
it wasn't open, this was really what thrust us into opening up
trade and getting us where we are today.
Mr. IVES. Clearly, U.S. business wants to be engaged in
Vietnam, which is, of course, one reason why we asked for and
received the market openings that we did under the bilateral
trade agreement.
Mr. SHAW. I recall, when we were there, Jake Pickle, who
was a very highly regarded Member of this Committee, had his
wife along. She stumbled and broke her hip, and we really had
to fly her out of Vietnam to get her proper medical treatment.
Are their medical facilities better than they were at that
time? As I recall, we flew her over to Japan to have her
treated.
If you don't know the answer, it is not really in the scope
of things, but I think does tell us a lot about the quality of
life today in Vietnam.
That question will go unanswered. Let's hope we don't have
anyone else.
Mr. LaFLEUR. We will be happy to try and get an assessment
of that and provide it to you.
I think it is fair to say the conditions medically are
improving, but there is no question that having American
medical supplies, equipment, devices, and pharmaceuticals more
widely available in Vietnam can only improve the situation.
[The information follows:]
Currently available medical care in Vietnam is basic by U.S.
standards, reflecting the limited resources available. For example,
anything involving broken bones or other surgical procedures among the
western expatriate community usually results in a medical evacuation to
Bangkok, Singapore, or points beyond. Nevertheless, Vietnam has a
growing number of medical professionals able to provide increasingly
good care to those who can afford it, despite the lack of resources one
would find in Western clinics. Medical care for the majority of
Vietnamese remains inadequate.
Mr. SHAW. I will close with this. In just following up on
this, the physician that was traveling with us at that time
said they took her down to the hospital to x-ray her, and he
came back and said, this is fifties technology. If there was
ever a better argument for opening up Vietnam, that was it.
Thank you, Mr. Chairman.
Chairman CRANE. Mr. Herger.
Mr. HERGER. Thank you, Mr. Chairman.
Mr. Ives, which U.S. exports are we seeing the most growth
in since the BTA went into effect?
Mr. IVES. The major categories of U.S. export growth are in
wood and paper products, cotton, chemicals, and machinery.
Mr. HERGER. Can you tell me, why do you think our exports
to Vietnam have increased while our exports to many other
countries in the region have declined?
Mr. IVES. We would like to attribute it, at least in part,
to the bilateral trade agreement. I think that is a fair
attribution in that it significantly reduces tariffs on a wide
range of products to the United States and therefore lowers the
cost of exporting to Vietnam.
In addition, Vietnam is a relatively new market to the
United States since Vietnam's major trading partners are
primarily the European Union and Japan. So, we are starting
from a relatively low base and developing a market.
Mr. HERGER. Thank you.
Then a final question: How do you believe the Vietnamese
would respond if the President's Jackson-Vanik waiver were
disapproved, and would it adversely affect our ability to
encourage the Vietnamese to expedite the processing of
immigration cases?
Mr. LaFLEUR. Sir, the Jackson-Vanik waiver has clearly been
a key element in encouraging many of the positive trends we see
in Vietnam today. I think it is true that our arrangements on
the effort to account for our POWs and MIAs and, as well, as
our efforts to bring populations of people of special concern
to the United States out of Vietnam, are arrangements that were
put into place before that, commitments that the Vietnamese
made over the years and have honored.
So, our hope certainly would be that they would continue.
An expectation, I think, is that they would continue to provide
the sort of effort that we look for in those areas.
Of course, in any relationship, the steps the two sides
take are going to have an impact as new issues come up and new
problems arise. So, I think I would continue to point to the
waiver as a very important element that helps provide the
positive atmosphere in which we can more easily address our
additional concerns and problems with Vietnam, as well as
maintain the current positive trends.
Mr. HERGER. Thank you very much.
Thank you, Mr. Chairman.
Chairman CRANE. Mr. English.
Mr. ENGLISH. Thank you. Thank you, Mr. Chairman.
You know, I am continuing to be concerned somewhat with the
cooperation of the Vietnamese Government to provide the fullest
possible accounting of POW and MIA cases. I guess what I would
like to pose to the Administration witnesses is, how can the
United States continue to most effectively influence the pace
and direction of economic and political reforms in Vietnam
while, at the same time, gain the fullest possible accounting
of these POW/MIA cases and progress on remaining immigration
cases?
Mr. LaFLEUR. Sir, I think we have in place a number of
tools that have been advancing us toward our goals with
Vietnam, particularly with respect to immigration and toward
the fullest possible accounting for our POWs and MIAs.
As I indicated earlier, the work takes years and has taken
years and particularly in the case of POW/MIA accounting, we
can see that this effort is going to have to continue for some
time, but the results do come in and they do come in over time,
but they are coming. Therefore, we feel it is important to
maintain the positive momentum that we have developed with
Vietnam.
The BTA, the trading relationship is part of sustaining
that positive environment in any government. Certainly
including a government run by one party as in Vietnam, you are
always going to have differences of view among those involved
about the commitment to reform that the country should take,
the particular decisions that are going to affect the relative
economic performance, and benefits that different regions of
the country receive from any change in policy.
We want to do our best, I think, to empower those who want
to move the country forward, to have a more open trading
environment, to be more welcoming to American business, to be
more cooperative in general with the outside world. That kind
of environment, of course, benefits our economic interests,
naturally.
Mr. ENGLISH. I understand. Mr. LaFleur, reclaiming my time,
we have seen the Vietnamese Government take some baby steps to
liberalize their economy. Do you feel corruption in recent
years has increased or decreased, and to what extent within the
economy?
Mr. LaFLEUR. I am not sure I can give you a statistical
response to that. I think the sense is if you look at it over a
time span of a decade or two, you would probably see an
increase as the opportunities for that sort of behavior have
expanded in what is a more open economy and of course, too, as
officials feel the need to supplement their income from the
private economic activity that is expanding around them.
However, as I indicated earlier, I think the government
does see how serious a problem this is for them, both in
economic and political terms, and is trying to deal with it
more effectively.
Mr. ENGLISH. What concrete measures have they undertaken,
in your view, to address the problem of corruption?
Mr. LaFLEUR. They have instituted a campaign to encourage
people to report on corruption that they encounter and they
have established some--a wide series of penalties for varying
degrees of construction which go up to the most severe penalty
that can be levied. So, they are trying to deliver a signal to
the officialdom there. Whether it is going to be effective
remains to be seen.
Mr. ENGLISH. Thank you, Mr. Chairman. I have no further
questions.
Chairman CRANE. Gentlemen, I want to express our
appreciation for your testimony and cooperation in
communicating with us in getting the message out, and we look
forward to working with you on a continuing basis. Last time I
was in Vietnam was a couple of years ago, but they told me at
that time that 65 percent of the Vietnamese population was not
even born at the time of the U.S.-Vietnam War. Is that up to 70
percent by now?
Mr. LaFLEUR. Sir, once again, I don't have a statistic for
you, but I think we are pretty confident it is up in that range
now; yes, sir.
Mr. WATKINS. Mr. Chairman.
Chairman CRANE. Wes.
Mr. WATKINS. I indicated I did not have a question, and I
mention, though, from the testimony I have a question if I may
ask, sir. Are we getting the cooperation--I shouldn't say--is
Vietnam getting the cooperation from the developing banks like
World Bank, the Asian Development Authority? Are you familiar
with the increases? Are they increasing in the development
phases in Vietnam? I know they have massive problems in
pollution and solid waste and a lot of other things. The
Chairman was correct in that I think most of the population is
less than 25 years of age. Do you have any information on that
by chance?
Mr. LaFLEUR. We can certainly get you some. I am confident,
although I don't have the figures with me, that the Asian
Development Bank (ADB) has a number of projects in Vietnam, but
we can get you further information.
Mr. WATKINS. I would like to see what kind of increases or
what the situation is, because I know what several of them
involve. They have indicated they had more than just a passing
interest in trying to solve a lot of the problems, and some of
my people I worked with have indicated a desire to try to help,
and I want to see if they are truly making that effort.
Thank you, Mr. Chairman. I apologize.
[The information follows:]
Vietnam is working very closely and very successfully with
international development organizations and international financial
institutions like the World Bank, including the International Financial
Corporation, and The Asian Development Bank, as well as the IMF and the
UNDP. These organizations are actively working with Vietnam on the full
range of development issues, including health, as well as economic,
legal and institutional reform. Many other donors are also working with
Vietnam in these areas. Sustainable development, in particular
preservation of the environment and natural resources, is a primary
focus of many international organizations and donors, including the
United States.
Chairman CRANE. With that, this panel may be excused.
We now would like to call to our next panel, Mr. Gary
Benanav, Chairman and Chief Executive Officer of New York Life
International; Ms. Virginia Foote, President of U.S.-Vietnam
Trade Council. The next gentleman I am going to skip over for a
moment, because I want our distinguished colleague from
Oklahoma to introduce him, and Mr. Andre Sauvageot, Chief
Representative of General Electric in Vietnam.
Now I yield to Mr. Watkins to introduce our fourth
panelist.
Mr. WATKINS. Thank you for letting me have the honor, and
members of the panel, I just would like to say that the other
fourth member is Barry Clark, who is the Director of Oklahoma-
Vietnam Trade Office in the Oklahoma Department of Commerce. It
is our true belief that there is a lot to be developed and
gained from both sides if we are working and engaging one
another and finding out what our problems are and what we can
do to make a contribution in that area. We are very fortunate
to have a person like Barry Clark heading our efforts from
Oklahoma, and we think we are building not only trade relations
but tremendous relationships in the future not only between
Oklahoma and Vietnam, but for our country. Thank you, Barry.
Chairman CRANE. Now, gentlemen, if you will proceed in the
order that you were organized at the dais there, and try and
limit your presentations to 5 minutes of oral testimony, and
any written remarks will be made a part of the permanent
record.
Chairman CRANE. With that, Mr. Benanav.
STATEMENT OF GARY BENANAV, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, NEW YORK LIFE INTERNATIONAL, AND VICE CHAIRMAN, NEW
YORK INSURANCE COMPANY
Mr. BENANAV. Thank you, Mr. Chairman and Members of the
Subcommittee. My name is Gary Benanav. I am Chairman and Chief
Executive Officer of New York Life International and Vice
Chairman of New York Life Insurance Company. In addition to my
corporate responsibilities, I am Chair of the U.S. National
Committees of the Pacific Basin Economic Council, known as
PBEC, and the Pacific Economic Cooperation Council, known as
PECC. My company is also a leader in the U.S.-Vietnam Business
Council and the U.S.-ASEAN Business Council.
I appreciate the opportunity to testify on an issue which
is important not only to the United States and Vietnam, but to
the entire Asian Pacific region. Once again this year, Mr.
Chairman, the eyes of the world are looking to the United
States to see if we are going to continue to engage fully with
Vietnam. Once again this year, the House Committee on Ways and
Means must consider a resolution disapproving of the waiver of
the Jackson-Vanik provision of the Trade Act of 1974.
The steadily increasing bipartisan majority of the House
since the first disapproval resolution reflect the
understanding and insights which we have gained as more
officials, legislators, educators, business managers, and
tourists have seen Vietnam firsthand. This year, the stakes
remain high.
The continuation of Vietnam's normal trade relations status
is vital for four reasons:
First, it is a precondition for the further integration of
this important emerging nation into the Asian Pacific
community.
Second, it is an essential element to the continued
progress of Vietnam toward WTO membership and the rules-based
trading system.
Third, it is necessary in order to improve the
international investment environment in Vietnam, and fourth,
and perhaps most important, it is vital if we want to continue
improving the U.S.-Vietnam relationship and enhancing the
economic development, security, and stability of the region.
I believe that we must remain fully engaged with Vietnam,
both economically and politically, in order to anchor Vietnam
in the world community of nations. The multilateral rules based
on cooperation and transparency form a set of building blocks
for a global system that can secure and sustain economic
stability. Without economic stability, no nation can hope to
achieve political stability and security. Vietnam needs to be
part of this global system if it is to realize its full growth
potential.
How can the United States best anchor Vietnam in the global
rules-based system? By expanding our bilateral economic
relationship. We must continue Vietnam's NTR status and not
link it to other, albeit important, issues which should be
pursued vigorously but separately as part of the improving of
the U.S.-Vietnam relationship.
Vietnam needs to take further action to promote that
process also. First and foremost, it must fully implement the
terms of the Bilateral Trade Agreement. In addition, Vietnam
should move as rapidly as possible to join WTO and continue its
transition to a market-based economy grounded in the rule of
law.
The WTO is a crucial next step. The continuation of
Vietnam's NTR status is a precondition to the full
implementation of BTA and for Vietnam's eventual entry into the
WTO. Even with the determination demonstrated by the citizens
and leadership of Vietnam, the process of joining WTO will not
be simple. Doing so will require Vietnam to develop
institutional capacity to operate as an effective competitor in
the world's marketplace and to construct a domestic market in
which companies from the United States and other WTO member
countries can operate effectively.
Mr. Chairman, I am convinced that it is in our national
interest to assist Vietnam in developing that institutional
capacity. We should support capacity-building efforts that can
be made available through multilateral, regional, and bilateral
mechanisms. The private sector can contribute to this
assistance process. My company, for example, has made several
corporate commitments to build capacity in Vietnam's financial
sector. However, the willingness and ability of the private
sector to continue programs like this are fully dependent upon
overall economic context, the positive context created by
granting NTR status to Vietnam.
In conclusion, Mr. Chairman, continuation of progress in
the relationship between the United States and Vietnam is
dependent on this waiver. Broad engagement will benefit not
only the United States and Vietnam, but also the entire
community of responsible nations. Thank you, sir.
[The prepared statement of Mr. Benanav follows:]
Statement of Gary Benanav, Chairman and Chief Executive Officer, New
York Life International, and Vice Chairman, New York Life Insurance
Company
Mr. Chairman, Members of the Committee, my name is Gary Benanav. I
am Chairman and CEO of New York Life International, and Vice Chairman
of New York Life Insurance Company. In addition to my corporate
responsibilities, I chair the U.S. national committees of the Pacific
Basin Economic Council (PBEC-US) and the Pacific Economic Cooperation
Council (US-PECC). New York Life International also is a leader in the
US-Vietnam Business Council and the US-ASEAN Business Council.
I appreciate this opportunity to testify on an issue which is
important not only to the United States and Vietnam, but to the entire
Asia Pacific region.
Once again this year, Mr. Chairman, the eyes of the world are
looking to the United States to see if we are going to continue to
engage fully with Vietnam. Once again this year, the House Ways and
Means Committee must consider a resolution disapproving the waiver of
the Jackson-Vanik provision of the 1974 Trade Act.
Since the first disapproval resolution, the bipartisan majority of
the House has grown from 260 in 1998 to 324 in 2001. This steadily
increasing majority reflects the improved understanding and insights
which we all have gained as more officials, legislators, educators,
business managers and tourists have seen Vietnam first hand. This year
the stakes remain high. The continuation of Vietnam's Normal Trade
Relations (NTR) status is vital because:
LIt is a precondition to the further integration of
this important emerging nation into the Asia Pacific community;
LIt is an essential element to the continued progress
of Vietnam towards WTO membership and the rules-based trading
system;
It is necessary in order to improve the international
investment environment in Vietnam;
And, most important, it is vital if we want to
continue improving the U.S.-Vietnam relationship and enhancing
the economic development, security and stability of the region.
Tying Vietnam to the Global System
I believe that we must remain fully engaged with Vietnam, both
economically and politically, in order to anchor Vietnam in the world
community of nations. The multilateral rules based on cooperation and
transparency form a set of building blocks for a global system that can
secure and sustain economic stability. Without economic stability no
nation can hope to achieve political stability and security. Vietnam
needs to be part of this global system if it is to realize its full
growth potential.
The more Vietnam is rooted in the international rules-based trading
system, the greater the stake Vietnam will have in supporting the
system. This in turn will encourage Vietnam to continue to take steps
that are beneficial to its domestic economic development and towards a
more market based economy.
How can the U.S. best anchor Vietnam in the global rules-based
system? By expanding our bilateral economic relationship. How can we
best expand our bilateral economic relationship? By continuing
Vietnam's NTR status and by not linking it to other, albeit important,
issues which should be pursued vigorously, but separately, as part of
the improving US-Vietnam relationship.
Vietnam needs to take further action to promote that process also.
First and foremost, it must fully implement the terms of our Bilateral
Trade Agreement (BTA). In addition, Vietnam should move as rapidly as
possible to join the World Trade Organization and continue its
transition to a market-based economy grounded in the rule of law.
WTO membership is the crucial next step. We should have no
illusions about the challenges that Vietnam will face in ensuring an
orderly evolution of the nation's economic and political underpinnings.
There is no better economic option for Vietnam than joining the WTO.
Neither should there be any illusions about NTR. The continuation of
Vietnam's NTR status is a precondition for the full implementation of
the BTA and for Vietnam's eventual entry into the WTO.
Building Institutional Capacity
Even with the determination demonstrated by the citizens and
leadership of Vietnam, the process of joining the WTO will not be
simple. Doing so will require that Vietnam develop the institutional
capacity to operate as an effective competitor in the world's
marketplace, and to construct a domestic market in which companies from
the U.S. and other WTO member countries can operate effectively.
Mr. Chairman, I am convinced that it is in our national interest to
assist Vietnam in developing that institutional ability. We should
support capacity-building efforts that can be made available through
multilateral and regional institutions. In addition, we should be
prepared to offer bilateral technical assistance.
Many American companies committed to the development of Vietnam
have already started the assistance process. For example, my company,
New York Life, has made a corporate commitment to build capacity in
Vietnam's financial sector. We are sponsoring training programs which
regularly bring Vietnamese insurance regulators to the U.S. to work
with their counterparts here on issues ranging from risk analysis to
financial management. In addition, we are sending U.S. technical
experts to Vietnam to help develop the skills of officials in Vietnam's
Finance Ministry. The willingness and ability to continue private
sector programs like this are fully dependent upon the overall economic
context created by the granting of NTR status to Vietnam.
The Annual Waiver Process
Mr. Chairman, I would like to make one other point this morning.
Although I believe that the House will reject the resolution of
disapproval by a resounding, bipartisan majority, the annual Jackson-
Vanik waiver process has outlived its usefulness. It creates
uncertainty. It creates the impression that we are prepared to reverse
course in our foreign economic policy from one year to the next as we
manage through various issues in our relationship with Vietnam. This is
not good for business, for our bilateral relationship or for the
continued momentum needed to motivate and implement reforms in Vietnam.
The Jackson-Vanik provisions no longer serve us well, and I strongly
urge that we get beyond them as soon as possible.
Conclusion
In conclusion, Mr. Chairman, the continuation of broad engagement
will benefit not only the United States and Vietnam, but also the
community of responsible nations. Therefore, I strongly support the
waiver of the Jackson-Vanik amendment. Continuation of progress in the
relationship between the United States and Vietnam is dependent on this
waiver.
Thank you.
Chairman CRANE. Thank you, Mr. Benanav. Ms. Foote.
STATEMENT OF VIRGINIA B. FOOTE, PRESIDENT,
U.S.-VIETNAM TRADE COUNCIL
Ms. FOOTE. Mr. Chairman and Members of the Subcommittee, I
am very pleased to be here today testifying on behalf of the
U.S.-Vietnam Trade Council before your Subcommittee. At this
important time again this year, as you assess the renewal of
the Jackson-Vanik waiver for Vietnam, we strongly urge you to
vote against H.R. Resolution 101.
The Trade Council is a trade association, with strong
membership from the American business community, working to
develop relations between the United States and Vietnam. We
also chair a coalition of over 270 associations and companies
who support trade relations with Vietnam and the renewal of
Jackson-Vanik.
The U.S.-Vietnam Trade Agreement and NTR status, which only
began in December last year, is the beginning of a new and
extremely important, indeed hopeful, chapter in U.S.-Vietnam
relations. December 10, 2001 may well be the most significant
day in U.S.-Vietnam relations since the war ended.
While further steps in normalization lie ahead, the first 6
months of NTR have shown again that the 12-year path of the
step-by-step normalization process has benefited bilateral
relations, Vietnamese citizens, Americans' interests--and all
impressively. What other conflict, so bitterly and costly
fought, has come to new resolution and a new beginning so
successfully?
The U.S.-Vietnam Trade Agreement is the most comprehensive
trade agreement Vietnam has ever signed and the most
comprehensive NTR agreement the United States has ever
negotiated in exchange for sweeping commitments from Vietnam,
which include providing greater market access for trading goods
and services, protecting intellectual property rights,
improvements in the investment regime, and far greater
transparency than U.S.-granted normal trade tariffs.
The results that were identified from the last panel have
been immediate. Over the first reporting period, the first 4
months of this year, two-way trade between the United States
and Vietnam is up over 60 percent. In implementing the BTA,
Vietnam has already passed laws and ordinances, one on Most-
Favored-Nation status and national treatment status,
safeguards, Customs valuation. It is drafting a commercial
arbitration law, transparency laws, auditing laws, and
regulations. These are just a few.
Private companies, multilateral donors and governments, and
U.S. organizations such as the Trade Council are providing
technical assistance and comments on each of these laws and
multiple drafts of these laws. American companies are beginning
to turn a profit. The reforms in Vietnam don't just apply to
foreign companies but also to domestic companies. An enterprise
law was passed last year, and since that time, there are 53,000
new private enterprises creating over a million jobs in
Vietnam.
Also important was the opening of a stock market in July
2000. It is still a tiny stock market. There are only 15
companies listed, but the government has plans to expand this
year and to include joint stock companies.
American involvement in this process of economic reform is
welcome in Vietnam and is extremely important to overall
bilateral relationships in the long run. Our business
community, particularly with extensive involvement of the
Vietnamese American business community, continues to play a key
role in the economics and the normalization of commercial
relations and in the implementation of the BTA.
The initial waiver of Jackson-Vanik in 1998 allowed trade
support programs such as the Overseas Private Investment
Corporation, Export-Import (Exim) Bank to get started, but now
the waiver includes NTR status, and therefore it is even more
critical that it be renewed.
In addition to great progress the United States and Vietnam
have made on MIA and immigration work, our relationship has
strengthened in many personal and more human ways. Many
Americans are traveling to Vietnam. Vietnam veterans are
returning on organized trips and individually. Vietnam veterans
have led the way in the normalization process. Vietnamese
Americans are traveling to Vietnam; 230,000 Vietnamese
Americans returned to Vietnam last year for visits. Two to
three billion dollars are remitted annually.
Additionally, the United States and Vietnam have signed a
memorandum of understanding on labor issues that include a $3
million support program for technical assistance. Many American
companies are involved in these programs. Since our two
countries set out on a path to normalize relations, Vietnam has
had many successes while suffering a few setbacks. In the year
2000 and 2001, Vietnam became the second-largest coffee
exporter after Brazil, yet coffee prices have plummeted and
serious land rights disputes have emerged. Seafood exports have
risen dramatically from Vietnam, while catfish farmers in the
Mekong Delta, who now face an antidumping petition by the U.S.
industry, and labeling rules were changed.
The point is the trade relationship is developing. A strong
bipartisan policy of a step-by-step process of normalizing
relations with Vietnam has produced positive results for
Americans, Vietnamese, regional interests, and we encourage the
continuation of this policy. On behalf of the U.S.-Vietnam
Trade Council, we urge the renewal of Jackson-Vanik again this
year for the benefit of both American and Vietnamese interests.
Thank you.
[The prepared statement of Ms. Foote follows:]
Statement of Virginia B. Foote, President, U.S.-Vietnam Trade Council
Mr. Chairman and Committee Members, I am pleased to be here today
representing the U.S.-Vietnam Trade Council to testify before your
Committee at this important time in U.S.-Vietnam relations as you
assess extending the Jackson-Vanik waiver for Vietnam another year. We
strongly urge you to vote against H.R. 101.
The U.S.-Vietnam Trade Council, founded in 1989, is a trade
association with strong membership from the American business community
and offices in Washington D.C., and Vietnam. We have worked through the
Council and our Education Forum, to help improve relations between the
United States and Vietnam with educational exchange programs, annual
conferences, Congressional delegations and programs designed to provide
technical assistance on international trade norms and standards. We
chair a coalition of over 270 associations and companies who support
trade relations with Vietnam and the renewal of Jackson-Vanik. I hope
my full testimony can be submitted into the hearing record today.
Today I would like to discuss the importance renewing the Jackson-
Vanik waiver and maintaining NTR status. The U.S.-Vietnam Trade
Agreement and NTR status, which entered into force on December 10, 2001
and the process of normalizing relations overall have had positive
impact on cooperation between the United States and Vietnam in a number
of crucially important areas. This agreement and the granting of NTR
status, marked the beginning of a new and extremely important--indeed
hopeful--chapter in U.S.-Vietnam relations. December 10, 2001 may well
be the most important day in U.S.-Vietnam relations since the war
ended.
The reciprocal granting of NTR status is key to the economic
development of Vietnam and for the successful involvement of American
companies. Repeal of NTR status, only 6 months old, would be the
economic equivalent of an act of war and is wholly unwarranted. The old
war is over, a new one should not begin. While further steps of
normalization lie ahead, these first 6 months of NTR have again showed
that the 12 year path of step-by-step normalization has benefited
bilateral relations, Vietnamese citizens, and American interests--
impressively.
What other conflict, so bitter and so costly, has come to
resolution and a new beginning so successfully.
In the late 1980's, the Vietnamese Government committed to ending
its isolation and began working to normalize relations worldwide--
including the United States. With great effort Vietnam has had
tremendous diplomatic and commercial success in establishing relations
in Europe, within Asia, and with the United States. Vietnam normalized
with China in 1991, joined ASEAN in 1995, APEC in 1998, and now belongs
to over a dozen international organizations and signed onto numerous
international agreements. Vietnam has observer status in the WTO and
has a stated commitment to join in 2005. And now, Vietnam and the U.S.
enjoy the normal trade relations on tariffs.
The Reagan, Bush, Clinton and Bush Administrations have all
followed a policy of normalizing relations with Vietnam through a step-
by-step process pegged to cooperation on the U.S.'s principal goal of
seeking the fullest possible accounting for our missing in action from
the Vietnam War, and emigration issues. As the attached timeline shows,
this process has proceeded successfully, albeit slowly through four
administrations. Overall it has led to the lifting of the trade embargo
in 1994, the establishment of diplomatic relations in 1995, the
exchange of ambassadors in 1997. Economic normalization includes the
initial waiver of the Jackson-Vanik amendment in 1998, signing of the
Bi-lateral Trade Agreement (BTA) in July 2000, and the granting of NTR
status in December 2001. Other bilateral steps such as an aviation
agreement, a textile agreement, PNTR, and WTO accession lie ahead. BTA
implementation and WTO accession will go hand in hand over the next
several years with important U.S. involvement.
Throughout the process of normalization, Vietnam has greatly
enhanced its efforts on issues of high priority to the U.S. including
MIA efforts, emigration goals, and economic integration. Vietnam and
the U.S. have also developed important bilateral dialogue on regional
issues, human rights and labor standards. Vietnam is the second most
populous nation in Southeast Asia, the 13th largest in the world, and
with a population of 78 million it has enormous growth potential.
The entry into force of the U.S.-Vietnam Trade Agreement last year
was a key step to further progress in normalizing relations. The U.S.-
Vietnam Trade Agreement is the most comprehensive trade agreement
Vietnam has ever signed, and the most comprehensive NTR trade agreement
the U.S. has ever negotiated. In exchange for sweeping commitments from
Vietnam including providing greater market access for trade in goods
and services, protecting intellectual property rights, improvements in
the investment regime, and far greater transparency, the U.S. granted
Vietnam normal trade tariffs--moving Vietnam from column two in the
U.S. tariff code to column one.
The results were immediate. Over the first reporting period of
2002, January-April, two-way trade between the U.S. and Vietnam was up
over 60% from the same period last year. Two-way trade has grown
steadily from $666 million in 1997, $827 million in 1998, $899 million
in 1999, $1,189 million in 2000, to $1,513 million in 2001.
Equally important, the Vietnamese Government has committed to
important reform in the areas of trading rights, transparency, customs,
investment, services, and intellectual property rights. Moreover,
approval of the trade agreement ensured that exports from U.S.
companies receive treatment in Vietnam no less favorable than products
of foreign competitors. Vietnam has signed bilateral trade agreements
and granted reciprocal NTR to 72 countries, including the European
Union and its Asian neighbors.
The entry into force of the U.S.-Vietnam trade agreement was a
watershed event. While the negotiations between the U.S. and Vietnam
were long and difficult, it was the discussions between and among the
Vietnamese that were the most important. The result is that the BTA is
an important blueprint or roadmap for Vietnam to follow while tackling
some of the more difficult issues of economic reform which lie ahead.
It is a roadmap of economic reform commitments that the Vietnamese
Government reached consensus on before signing.
Towards this end, commercial law reform is already underway. To
help track these efforts since the BTA was signed in 2000, the Trade
Council's Education Forum has been publishing a Catalog of Legal
Updates, which compiles summaries of new laws, decrees and regulation
that address commercial law reform and with possible impact on BTA
implementation. Our July 2002 Catalog is 33 pages long. In the last two
months Vietnam has passed laws and ordinances on MFN and NT,
Safeguards, Customs Valuation, and is drafting Commercial Arbitration,
Transparency and Auditing laws and regulations to mention just a few.
Private companies, multilateral donors and governments, and U.S.
organizations such as the Trade Council are providing technical
assistance and comments on each of these new laws. The Catalog can be
found on our website.
Some examples: Vietnam passed a new Insurance Law in December 2000
and is finalizing the implementing regulations. The General Department
of Customs drafted a new Customs law, which passed overwhelmingly in
the National Assembly on last year. The new law is based on WTO
valuation procedures and has been favorably reviewed by international
customs experts. Vietnam is also addressing competition policy, the
elimination of burdensome registration and licensing procedures,
intellectual property protection, administrative procedures, and
increased transparency. A new database of Vietnamese law is now
available on the internet and the Ministry of Planning and Investment
in Ho Chi Minh City will offer online licensing for foreign investment
projects that do not require appraisal.
With respect to IPR issues, Vietnam has recently made significant
legal reforms in its implementation of the trade agreement. A system
has been put in place for patent and trademark registration. In the
year 2000 several important decrees protecting trade names, trade and
business secrets, patent registration, and protection of industrial
designs were issued.
The Enterprise Law, which came into effect in January 2000, marked
a turning point in Vietnam's efforts to reform the domestic private
sector. According to the World Bank, more than 30,000 private small and
medium sized enterprises (SMEs) were registered under the new
Enterprise Law in the first year compared to only 3,000 registrations a
year for the previous three years. These figures are very significant
given the small size of Vietnam's fledging private sector. The number
of enterprises founded in the six months after the law went into effect
in January 2000 equals the total number of enterprises founded in the
previous nine years. By the end of 2001 there were an estimated 53,000
new enterprises creating over a million jobs.
The number of private enterprises engaged in trade has multiplied
five times between 1997 and 2000. As a result the share of private
domestic firms has increased from 4 percent to 16 percent of total
imports and from 10 percent to 17 percent of total exports. For non-oil
exports the percentage is higher at 22 percent. Total non-oil exports
grew by 42 percent from 1997 to 2000. Private domestic exports grew by
161 percent during this time period and accounted for 46 percent of the
overall increase.
And Foreign Direct Investment continues to grow as well. New
reforms in licensing procedures were partially responsible for an
upsurge in foreign investment last year. Total FDI to date by May 2002
is $38.3 billion, with over one billion coming from the U.S. $3.4
billion in new investment was committed in 2001. $19.8 billion has been
disbursed. Overseas Development Assistance has been generous as well.
From 1993 when Vietnam first became eligible to the end of 2001, total
ODA equaled over $9.0 billion.
Also important was the opening of a stock market in July 2000. The
tiny stock market started with treasury bonds and shares of only five
listed companies, which has now increased to fifteen and the government
plans to open a second transaction center in Hanoi and develop the OTC
market (Over-the-Counter) for companies prior to listing. Additional
companies are expected to be listed on the market this year.
The United States should continue to be involved in this process.
It is in our interest to see an economically healthy and
internationally engaged Vietnam. The Economist Intelligence Unit
foresees annual GDP growth of 6-7% over the coming years. With fully
normalized economic relations, the United States could well join the
top ranks of investors in Vietnam, up from our rank in 13th position.
The agreement includes important benefits for American business,
consumers and farmers. Trade rights will be liberalized for U.S. firms,
current tariff rates on key agricultural and industrial goods have been
reduced and will be reduced further; and quantitative restrictions will
be removed on steel and cement after six years and petroleum products
after seven years. Other immediate improvements were made in trading,
IPR, transparency, investment and services. In the services sector,
Vietnam is providing American companies with greater access in many
sectors, and entry into and equity in banking services will be
increased. WTO consistent intellectual property rights will be
introduced in 12-18 months after the date of entry into force of the
BTA, and all WTO inconsistent trade related investment measures will be
eliminated within five years. The chapter on transparency requires that
all laws and governing decrees be published, and that the right of
appeal and tribunals for review be established. The Trade Council's
Summary of the U.S.-Vietnam Trade Agreement will be available on our
website later this month.
The BTA is not only strengthening market access for American
companies in Vietnam, it is also greatly benefiting the people of
Vietnam. With a per capita GDP of $395 in 2001, Vietnam is still one of
the poorer nations in the world. In a comprehensive report, the World
Bank concluded the significant achievements on reducing poverty that
were made in the period between 1993 and 1998, continue today. Indeed
per capita rose from 370 to 395 in one year. The proportion of people
with per capita expenditures under the total poverty line dropped
impressively from 58 percent in 1992/93 to 37 percent in 2000. The
number of people below the much lower ``food poverty line,'' has also
declined from 25 percent to 15 percent, indicating that the very
poorest segments of the population have experienced improvements in
their living standards between 1993 and 1998. The poverty rate has
fallen by half in the past ten years, one of the sharpest declines for
any country.
The BTA could contribute to lifting Vietnam out of endemic poverty
by increasing trade, investment, and development in Vietnam, as well as
promoting market reforms, including greatly expanded trading rights.
Furthermore, by expanding trade and extending the rule of law in
Vietnam, the BTA will encourage access to information and greater
transparency for domestic enterprises as well. Vietnam has great
potential for development as a significant trading partner worldwide.
Over half the population is under the age of 25 and the literacy rate
is over 90%. The work ethic, entrepreneurial talent, and emphasis on
education is strong.
American involvement in the process of economic reform is welcome
in Vietnam and could be extremely important to overall development in
the long run. American companies set a high standard for trade,
investment, labor and business practices. American technology is
greatly admired in Vietnam. American companies are actively involved in
training and technical assistance programs in Vietnam, through the
Trade Council and individually. American products are popular. Our
business community, particularly with the extensive involvement of the
Vietnamese-American businesses, continues to play a key role in the
normalization of economic relations and BTA implementation.
In the absence of NTR status, a trade agreement, and initially
without trade support programs, American companies and individuals
nonetheless began traveling, investing and trading with Vietnam when
the embargo was lifted in 1994. Given that the U.S. normalized
relations far more slowly than other nations did, American business
involvement in Vietnam has lagged behind other nations and still
operates with handicaps. The U.S. fell from the fifth largest investor
in 1995, to the 12th largest investor in 2001 with slightly under one
billion committed to foreign investment projects, and one billon in
two-way trade.
But following the initial ``road map'' for normalization laid out
under the Bush Administration in April 1991, the bilateral relationship
has made a great deal of progress. In 1998 President Clinton issued the
first waiver of the Jackson-Vanik Amendment, which Congress upheld by a
vote of 260 in favor and 163 opposed. Congress renewed the waiver in
1999 by a vote of 297 in favor and 130 opposed. In 2000 the margin
increased positively again to 332 in favor and only 91 opposed. The
2001 vote was 324-91 in favor of renewing the waiver. We hope this
year's vote will be equally strong.
The initial Jackson-Vanik waiver in 1998 allowed trade support
programs, such as loans from the Overseas Private Investment Corp
(OPIC), the Export-Import Bank (Exim) and other credits for American
business to establish operations in Vietnam. In December 1999 Exim and
the State Bank of Vietnam completed the framework agreements, which
allowed Exim to begin operations in Vietnam. Now the waiver is
necessary for the continuation of normal tariffs as well.
Initially, U.S. policy pegged the Jackson-Vanik waiver to progress
on the Resettlement Opportunity for Vietnamese Returnees (ROVR) program
specifically and immigration in general. Although it was extremely
difficult to reach agreement initially, the implementation of the ROVR
program has been fairly smooth and rapid. The State Department reports
that the Government of Vietnam has cleared all but a handful of the
nearly 20,000 ROVR cases. The Orderly Departure Program overall has
also been successful. Approximately half a million Vietnamese have come
to the United States under ODP and only a small number of ODP cases
remain to be processed. Since the initial waiver of Jackson-Vanik, the
Vietnamese have allowed all remaining ODP cases--including the
Montagnard cases which are of particular concern to the U.S.--to be
processed under the new more responsive system developed by the
Vietnamese initially just for ROVR cases.
The U.S. and Vietnam are jointly pursuing the 913 missing in
Vietnam, of the 1,363 missing in Southeast Asia. Since 1973, 578
Americans have been accounted for, including 412 in Vietnam. Since
January 1993, the remains of 258 individuals have been repatriate,
identified and returned to their families. Additionally, the Department
of Defense has confirmed the fate of all but 39 of 196 individuals who
fall in the ``last known alive'' discrepancy cases. The U.S. has
maintained a permanent staff to visit crash sites and interview
witnesses throughout the country since 1993, with teams of experts
coming to Vietnam monthly. The U.S. and Vietnam have provided
reciprocal access to information on MIAs from the war and have
conducted 68 Joint Field Activities on POW/MIA cases since 1988.
Vietnam has unilaterally undertaken case specific investigations in 216
cases since 1996. President Bush most recently certified Vietnam
issuing a determination that Vietnam ``is fully cooperating in good
faith with the United States.'' It is a model program.
Our relationship has strengthened in other areas as well. Americans
are traveling to Vietnam in great numbers. In 1997 Vietnam issued
98,000 visas for Americans to travel to Vietnam, over 66,000 for
Vietnamese Americans. In 2000 the total was 152,928 visas,
approximately 137,000 of which were for Vietnamese Americans. In 2001
this number grew to 230,470. Remittances from overseas Vietnamese are
estimated at $2-3 billion annually. Vietnam veterans are traveling,
working and involved in charitable activities in Vietnam. Veterans
groups organize visits for their members and their families.
In November 2000, President Clinton became the first U.S. President
to visit Vietnam since the end of the war. During the President's trip
ten new business partnerships were announced and our two countries
concluded numerous bilateral agreements. One of these was an Agreement
on Scientific and Technological Cooperation to facilitate cooperation
between American and Vietnamese scientists in areas such as health,
technological innovation and entrepreneurship, disaster mitigation and
marine and water resource management. Increased cooperation in the
prevention and treatment of infectious diseases, including typhoid
fever and HIV/AIDS, will strengthen Vietnam's ability to meet critical
health challenges. Environmental projects operate through the U.S.-Asia
Environmental Partnership and cooperation on Agent Orange research. The
Vietnam Education Foundation was established.
Equally important, the U.S. and Vietnam also signed a Memorandum of
Understanding on Labor in November 2000. The MOU was the result of a
dialogue over labor that the U.S. and Vietnam have developed. The MOU
includes $3 million in technical assistance working with the ILO to
strengthening labor protection, skills training, employment services,
social insurance and safety nets, employment of the disabled,
industrial relations and child labor. The child labor provisions focus
on street children and child trafficking. Workplace education and
prevention programs on HIV/AIDS are also including in the MOU. These
projects are ongoing.
The 2002 Labor Code, incorporating standards of internationally
recognized worker rights. A complete English translation of the Labor
Code can be found at http://www.ivietnam.com/Eng/ in the iVietnam Law
database. The labor code stipulates the requirements for the formation
of unions. In addition to trade unions, the Labor Code stipulates a
number of workers' basic rights including: freedom to choose employer
(Article 30), standard work week (Article 68), overtime limits and pay
(Article 61), leave, holidays, and rest (Article 71, 73, 74 & 78),
minimum wage, bonuses (Article 64), maternity leave (Article 114 &
144), severance entitlements (Article 17 & 42), workplace safety
(Article 97 & 100), etc. In recent years, the Government of Vietnam has
sent labor experts to the U.S., the U.K., Singapore, New Zealand, South
Korea, and Hong Kong in its efforts to update the 1994 Labor Code.
In April 2002, Vietnam's National Assembly passed the Law on
Amendment of and Addition to a Number of Articles of the Labor Code.
The Assembly made changes and revisions to 56 articles of the Labor
Code, updating and amending existing law and clarifying points, which
had been unclear in the previous regulations. In a major shift, foreign
enterprises will be allowed to directly recruit and hire staff without
going through employment agencies and middlemen. The new Code also
clarifies regulations on wage and salary scales, which had been the
subject of some dispute under existing Circular 11. Private and
foreign-invested enterprises are not required to follow State
Enterprise wage scale systems under the new Code. However they are
required to establish and make public a salary scale system, which must
be registered with the Labor Department. Some 56 amendments were made
including articles 17, 27, 41, 69, 85, 140 and 166. The new Labor Code
will require additional implementing regulations to take effect and
will come into force January 1, 2003.
Since 1992, Vietnam has ratified 15 ILO conventions, including
three of the ILO's eight core human rights conventions: No. 100, equal
pay for men and women for work of equal value (ratified by Vietnam in
1997); No. 111, prohibiting discrimination in employment (1997); and
No. 182, prohibiting the worst forms of child labor (2000). Currently,
the Vietnamese are working on a plan to gradually ratify the remaining
core ILO conventions and hope to ratify both forced labor conventions
and the minimum age convention. With offices in Hanoi, the ILO has 24
ongoing projects, 6 of which the ILO defines as promoting fundamental
principles and rights.
On commercial law reform, the U.S also pledged six million in
technical assistance to Vietnam over a three-year period to assist with
implementation of the bilateral trade agreement. Through a grant from
the U.S. Agency for International Development (USAID) and the support
of our members, and in coordination with USAID's STAR project, the
Council's Education Forum has provided technical assistance on
commercial and legal reform to Vietnamese Ministries and government
branches with economic portfolios on the issues raised by the BTA and
WTO standards. For example, just last week the Department of Commerce,
three prominent U.S. insurance companies, and the Trade Council held
two days of seminars in Hanoi with the Ministry of Finance. Other
training has been ongoing with the Ministries of Trade, Justice, Labor,
Finance, Planning and Investment, with effective public/private
partnerships.
Unique to this agreement, the U.S.-Vietnam BTA establishes a Joint
Committee to monitor implementation, to guarantee enforcement, and to
make recommendations. This Committee will meet at a minimum of once a
year and should be a very effective mechanism for both sides on
implementation and in shaping technical assistance and monitoring
compliance. The Committee met for the first time in May this year in
Hanoi, with Ambassador Jon Huntsman, Deputy USTR as chair on the US
side.
Since our two countries set out on the path to normalized
relations, Vietnam has enjoyed many successes, while suffering a few
setbacks. The bold economic reform program that Vietnam embarked on in
the late eighties showed impressive results almost immediately. Vietnam
went from near famine to become the third largest rice exporter behind
Thailand and the United States in a matter of a few years. In the year
2000, Vietnam was the second largest coffee exporter after Brazil,
while coffee prices have plummeted and serious land right disputes
emerge. Seafood exports have risen dramatically from Vietnam while
catfish farmers in the Mekong Delta face an anti-dumping petition by
the U.S. industry and labeling rules change.
But the strongly bipartisan policy of a step-by-step process of
normalizing relations with Vietnam has produced positive results for
American, Vietnamese, and regional interests, and we encourage a
continuation of this policy into the future.
Vietnam and the U.S. share a tragic history, which both countries
remain mindful of as we build a new future. Normalization of relations,
matched with a growing economy and commitment to a market based economy
will continue to contribute to Vietnam's increased openness, increased
transparency in government, a rise in living standards, and greater
international economic and political integration. But more important to
the U.S., this policy of normalization has also ensured that American
business, diplomatic, and regional interests are met. The past ten
years are proof.
On behalf of the members of the U.S.-Vietnam Trade Council, we urge
the renewal of the Jackson-Vanik waiver for the benefit of Vietnamese
and American interests, again this year.
Chronology of U.S.-Vietnam Relations
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
April 30, 1975 North Vietnamese forces take over the southern part of Vietnam, ending the war.
Washington extends an embargo to all of Vietnam and breaks diplomatic relations.
----------------------------------------------------------------------------------------------------------------
1978 Talks between Hanoi and Washington on normalizing relations break down.
----------------------------------------------------------------------------------------------------------------
1988 Under the Reagan Administration, Vietnam begins cooperation with the United
States to resolve the fate of American servicemen missing in action (MIA).
----------------------------------------------------------------------------------------------------------------
September 1989 Vietnam completes its withdrawal from Cambodia.
----------------------------------------------------------------------------------------------------------------
April 1991 Under the Bush Administration, Washington presents Hanoi with a ``roadmap'' plan
for phased normalization of ties. The two sides agree to open a U.S. Government
office in Hanoi to help settle MIA issues.
----------------------------------------------------------------------------------------------------------------
April 1991 U.S. begins humanitarian aid projects for war victims to be administered by the
U.S. Agency for International Development (USAID).
----------------------------------------------------------------------------------------------------------------
October 1991 The Senate Select Committee on POW/MIA Affairs established with Senator John
Kerry as Chair and Senator Bob Smith Vice Chair.
----------------------------------------------------------------------------------------------------------------
October 1991 Vietnam supports U.N. peace plan for Cambodia. Secretary of State James Baker
announces Washington is ready to take steps toward normalizing relations with
Hanoi.
----------------------------------------------------------------------------------------------------------------
December 1991 Washington lifts the ban on organized U.S. travel to Vietnam.
----------------------------------------------------------------------------------------------------------------
1991 U.S. Congress authorizes the United States Information Agency (USIA) to begin
exchange programs with Vietnam.
----------------------------------------------------------------------------------------------------------------
February 1992 Joint Task Force--Full Accounting founded to conduct field activity on MIA
accounting with General Thomas Needham in command.
----------------------------------------------------------------------------------------------------------------
February 1993 The work of the Senate Select Committee concludes.
----------------------------------------------------------------------------------------------------------------
July 2, 1993 President Clinton clears way for resumption of international lending including
IMF and World Bank to Vietnam.
----------------------------------------------------------------------------------------------------------------
January 26, 1994 Senate amendment (S.AMDT.1266) re: the lifting of sanctions being contingent upon
a resolution of all cases or reports of unaccounted for U.S. personnel lost or
captured during the war in Vietnam fails by a vote of 42-58.
----------------------------------------------------------------------------------------------------------------
February 3, 1994 President Clinton lifts trade embargo.
----------------------------------------------------------------------------------------------------------------
January 28, 1995 United States and Vietnam sign agreements settling property claims and
establishing liaison offices in each other's capitals.
----------------------------------------------------------------------------------------------------------------
May 15, 1995 Vietnam gives U.S. presidential delegation batch of documents on missing
Americans, later hailed by Pentagon as most detailed and informative of their
kind.
----------------------------------------------------------------------------------------------------------------
Chronology of U.S.-Vietnam Relations--Continued
------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
June 1995 Veterans of Foreign Wars announces support of U.S. normalization of diplomatic
relations with Vietnam.
----------------------------------------------------------------------------------------------------------------
July 11, 1995 President Clinton announces ``normalization of relations'' with Vietnam.
----------------------------------------------------------------------------------------------------------------
August 6, 1995 Secretary of State Warren Christopher visits Hanoi and officially opens U.S.
embassy. Vietnam opens embassy in Washington.
----------------------------------------------------------------------------------------------------------------
September 20, 1995 Senate amendment (S.AMDT.2723) re: prohibiting financial assistance to Vietnam
unless certain conditions relating to Americans unaccounted for from the Vietnam
War are met fails by a vote of 39-58 (3 NV).
----------------------------------------------------------------------------------------------------------------
May 1996 U.S. presents Vietnam with trade agreement blueprint.
----------------------------------------------------------------------------------------------------------------
July 25, 1996 Senate amendment (S.AMDT.5027) re: striking funds made available for the
Socialist Republic of Vietnam for technical assistance fails by a vote of 43-56
(1 NV).
----------------------------------------------------------------------------------------------------------------
April 7, 1997 U.S. Treasury Secretary Robert Rubin and Finance Minister Nguyen Sinh Hung sign
accord in Hanoi for Vietnam to repay debts of $145 million, from the former
Government of South Vietnam.
----------------------------------------------------------------------------------------------------------------
April 10, 1997 Senate confirms Douglas ``Pete'' Peterson, Vietnam War veteran and former
prisoner of war (POW), as Ambassador.
----------------------------------------------------------------------------------------------------------------
April 16, 1997 United States and Vietnam reach agreement on providing legal protection for
copyright owners.
----------------------------------------------------------------------------------------------------------------
May 9, 1997 Peterson takes up post as U.S. Ambassador in Hanoi, Le Van Bang becomes
Ambassador in Washington, DC.
----------------------------------------------------------------------------------------------------------------
August 1997 U.S. Government, under the U.S. Agency for International Development (USAID),
begins a commercial law program.
----------------------------------------------------------------------------------------------------------------
October 1997 Vietnam institutes new processing procedure in ROVR program significantly
improving progress.
----------------------------------------------------------------------------------------------------------------
March 11, 1998 President Clinton issues waiver of Jackson-Vanik Amendment for Vietnam, paving
the way for OPIC, Ex-Im, TDA, USDA and MARAD.
----------------------------------------------------------------------------------------------------------------
March 26, 1998 Minister of Planning & Investment Tran Xuan Gia and Ambassador Pete Peterson
finalize signing of the OPIC bilateral for Vietnam.
----------------------------------------------------------------------------------------------------------------
July 23, 1998 The U.S. Senate votes 66-34 to continue funding for the U.S. Embassy in Vietnam
based on ongoing cooperation on the POW/MIA issue.
----------------------------------------------------------------------------------------------------------------
July 30, 1998 The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
a 260-163 vote.
----------------------------------------------------------------------------------------------------------------
October 1998 U.S. and Vietnam agree to negotiate Science & Technology Agreement.
----------------------------------------------------------------------------------------------------------------
June 30, 1999 President Clinton re-extends the Jackson-Vanik waiver for Vietnam.
----------------------------------------------------------------------------------------------------------------
July 25, 1999 USTR Ambassador Richard Fisher and Vietnam Trade Minister Tuyen agree to a
bilateral trade agreement in principle in Hanoi, Vietnam.
----------------------------------------------------------------------------------------------------------------
August 3, 1999 The Jackson-Vanik waiver passes the House by a vote of 297-130.
----------------------------------------------------------------------------------------------------------------
December 9, 1999 Ex-Im and the State Bank of Vietnam complete the framework agreements which allow
Ex-Im to begin operations in Vietnam.
----------------------------------------------------------------------------------------------------------------
March 13, 2000 Secretary of Defense William Cohen becomes the first U.S. Defense Secretary to
visit Vietnam since the end of the War.
----------------------------------------------------------------------------------------------------------------
Chronology of U.S.-Vietnam Relations--Continued
------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
July 13, 2000 Vietnam Trade Minister Vu Khoan and USTR Ambassador Barshefsky sign an agreement
on trade relations at USTR. President Clinton announces the conclusion of a
bilateral trade agreement with a White House Rose Garden ceremony.
----------------------------------------------------------------------------------------------------------------
July 26, 2000 The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
a 332-91 vote.
----------------------------------------------------------------------------------------------------------------
November 16-20, 2000 President Clinton visits Vietnam, with Commerce Secretary Norman Mineta, USTR
Ambassador Charlene Barshefsky, Senator John Kerry (D-MA), Congressmen Earl
Blumenauer (D-OR), Vic Snyder (D-Ark), Mike Thompson (D-CA) and Congresswoman
Loretta Sanchez (D-CA). Business delegations and the leadership of the Veterans
of Foreign Wars attend.
----------------------------------------------------------------------------------------------------------------
November 17, 2000 The U.S. Department of Labor and Vietnam's Ministry of Labor, Invalids, and
Social Affairs sign a Memorandum of Understanding on Labor cooperation.
----------------------------------------------------------------------------------------------------------------
January 15-18, 2001 House Minority leader Dick Gephardt (D-MO) and Congressman Ray LaHood (R-IL) lead
a Congressional delegation to Vietnam.
----------------------------------------------------------------------------------------------------------------
June 1, 2001 President Bush renews the Jackson-Vanik waiver for Vietnam.
----------------------------------------------------------------------------------------------------------------
June 8, 2001 President Bush transmits the request for NTR for Vietnam and implementation of
the trade agreement to Congress.
----------------------------------------------------------------------------------------------------------------
July 17, 2001 Senate Finance Committee consideration and mark-up session held. BTA ordered to
be reported by voice vote.
----------------------------------------------------------------------------------------------------------------
July 26, 2001 House Committee on Ways and Means consideration and mark-up session held. BTA
ordered to be reported by voice vote.
----------------------------------------------------------------------------------------------------------------
July 26, 2001 The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
a 324-91 vote.
----------------------------------------------------------------------------------------------------------------
September 6, 2001 BTA passes by voice vote in the U.S. House of Representatives.
----------------------------------------------------------------------------------------------------------------
October 3, 2001 BTA passes without amendment by 88-12 vote in the U.S. Senate.
----------------------------------------------------------------------------------------------------------------
October 10, 2001 Ambassador Nguyen Tam Chien presents Letter of Credence to President George W.
Bush at the White House.
----------------------------------------------------------------------------------------------------------------
October 16, 2001 President George W. Bush signs BTA into Public Law No: 107-52.
----------------------------------------------------------------------------------------------------------------
November 28, 2001 BTA Ratified by Vietnam National Assembly, 278-85.
----------------------------------------------------------------------------------------------------------------
December 3, 2001 Ambassador Raymond Burghardt sworn in as U.S. Ambassador to Vietnam.
----------------------------------------------------------------------------------------------------------------
December 7, 2001 BTA signed into law by Vietnamese President Tran Duc Luong.
----------------------------------------------------------------------------------------------------------------
December 9-14, 2001 Permanent Deputy Prime Minister Nguyen Tan Dung heads a high level delegation to
Washington, DC, New York and San Francisco, accompanied by Vu Khoan--Minister of
Trade, Tran Xuan Gia--Minister of Planning and Investment, Nguyen Manh Kiem--
Minister of Construction, and other government officials and over 60 members
from the Vietnamese private sector.
----------------------------------------------------------------------------------------------------------------
December 10, 2001 U.S.-Vietnam Bilateral Trade Agreement signed into force at a Blair House
ceremony with Deputy Prime Minister Dung, Trade Minister Vu Khoan and USTR
Ambassador Robert Zoellick. Conference and banquet hosted by US-VTC.
----------------------------------------------------------------------------------------------------------------
Chronology of U.S.-Vietnam Relations--Continued
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
May 6-7, 2002 Deputy USTR Ambassador Jonathan Huntsman in Hanoi to open BTA Joint Committee.
----------------------------------------------------------------------------------------------------------------
May 10, 2002 Vice President Nguyen Thi Binh visit to Washington, DC.
----------------------------------------------------------------------------------------------------------------
May 13, 2002 Farm bill including catfish provision requiring Vietnam to rename its catfish
product signed by the President Bush.
----------------------------------------------------------------------------------------------------------------
May 18, 2002 Vice Minister Luong Van Tu of Ministry of Trade Delegation to the U.S.
----------------------------------------------------------------------------------------------------------------
June 1-8, 2002 Minister of Justice Nguyen Dinh Loc visit to the U.S. on BTA implementation.
----------------------------------------------------------------------------------------------------------------
June 3, 2002 Jackson-Vanik waiver signed by the President Bush.
----------------------------------------------------------------------------------------------------------------
June 12-22, 2002 Deputy Prime Minister Nguyen Manh Cam visits to Texas, New York, Massachusetts
and Washington DC.
----------------------------------------------------------------------------------------------------------------
June 28, 2002 The Catfish Farmers of America filed an anti-dumping petition against Vietnam.
----------------------------------------------------------------------------------------------------------------
July 18, 2002 Ways and Means Committee hearings on Jackson-Vanik renewal.
----------------------------------------------------------------------------------------------------------------
Chairman CRANE. Mr. Clark.
STATEMENT OF BARRY L. CLARK, PRESIDENT, PACIFIC VENTURES,
INCORPORATED, TULSA, OKLAHOMA, AND DIRECTOR, VIETNAM TRADE
OFFICE, OKLAHOMA DEPARTMENT OF COMMERCE
Mr. CLARK. Thank you, Mr. Chairman and Members of the
Subcommittee, and Congressman Watkins, thank you for that very
kind introduction, sir.
Thank you for the opportunity to testify before you today.
My name is Barry Clark, and I am the President of Pacific
Ventures, which is an Oklahoma-based consulting and private
equity company. Headquarters are in Tulsa, Oklahoma with field
offices in Ho Chi Minh City and Hanoi, Vietnam.
The focus of our consulting business has been to assist
American companies entering the Vietnamese market. We have been
in Vietnam since 1995, 1 year after President Clinton lifted
the trade embargo.
From my first visit to Vietnam in 1993 to moving there in
1995 for 3 years, I have witnessed firsthand the dramatic
changes as Vietnam took the first uncertain steps toward a
market economy. These changes are providing new economic and
civic hopes for many Vietnamese people and new business
opportunities for American companies.
Similar to most people doing business in Vietnam, our
challenges have been frequent and time-consuming, but
nevertheless we are seeing real and significant successes as a
result of the improved trade relations between the United
States and Vietnam.
In addition to our private endeavors, Pacific Ventures also
represents the State of Oklahoma Department of Commerce. In
September 1996, the State of Oklahoma became the first State of
any nation to open a trade office in Vietnam. Through our
company infrastructure, Oklahoma now has offices in Hanoi and
Ho Chi Minh City with a staff of 10 Vietnamese and 2 Americans.
Oklahoma is still the only American State to have a trade
office there, and the reason the State of Oklahoma opened the
trade office was because many of the major industries matched
those of Vietnam. Some of those industries are agriculture, oil
and gas, education, and the need for building infrastructure.
Through businesses we represent directly and through our
ties with the State of Oklahoma, we manage the daily challenges
of arranging meetings, securing licenses, conducting market
research, and identifying potential partners, distributors, and
agents. It is significant that Oklahoma ranked 38 in overall
international exports, ranks 13 in exports to Vietnam with over
$10 million in export sales. Through our contract with the
State of Oklahoma, Pacific Ventures has led 14 delegations of
Oklahoma businesses and institutions to Vietnam to sell
Oklahoma goods and services, as well as 8 delegations from
Vietnam that have come to Oklahoma to purchase equipment and
look for potential business partners.
The goods and services sold to Vietnam have included oil
field service equipment, biotech products for shrimp farming,
assistance in building environmentally friendly landfills, beef
and dairy cattle genetics, and infrastructure building
equipment.
One major export for which the State of Oklahoma has great
pride is education. Oklahoma has more than 9,000 foreign
students studying in its colleges and universities. Oklahoma is
second in the Nation in the number of Vietnamese students that
are studying in higher education in our State. This next month
our Governor, Frank Keating, will travel to Vietnam to sign a
major education agreement between 12 Oklahoma universities and
Vietnam National University.
Currently, Petro Vietnam, the Vietnamese national oil
company, has 65 students, young people, that they feel will be
its future leaders, as full-tuition-paying graduate and
undergraduate students at the world famous Sarkeys Energy
Center at the University of Oklahoma. These students will go
back to Vietnam not only with a world-class education, but also
a better understanding of the American way of life.
The Jackson-Vanik waiver has brought about dramatic changes
that are indeed part of the rising tide that is floating more
hopes and dreams for Vietnamese companies and entrepreneurs. As
the Vietnamese economy continues to emerge, the middle class is
growing, the population is becoming more educated and exposed
to more free market realities, and Vietnam continues to evolve
in a more open and transparent society.
A good example of Vietnam's new efforts toward the
development of an open market is reflected in its new
enterprise law. This law allows Vietnamese citizens to freely
establish enterprises in most industries without restriction.
Because of this new law, within the first 2 years there were
over 35,000 new registered enterprises. This number exceeded
the total number of registered enterprises established during
the past 9 years. The number of new jobs created directly
through the enterprise law encompassed over one-third of
Vietnam's annual increase in the labor force.
However, changes come in increments. There now exists a
critical moment of opportunity between the United States and
Vietnam, and by extending the Jackson-Vanik waiver, continued
implementation of the Bilateral Trade Agreement, the United
States can best support Vietnam's ongoing transition to a
sustaining market economy.
In conclusion, I want to express my appreciation to
Oklahoma's business and government leaders for continuing their
pioneering spirit of opening up and building valuable trade
relationships in global markets that will benefit future
generations of Oklahomans. I would like to thank the U.S.
Embassy in Vietnam and the U.S.-Vietnam Trade Council for their
continued efforts and support and leadership on behalf of all
the American businesses with interests in Vietnam. They have
made our work much more productive than we could have been
otherwise. Thank you again for the privilege to be here today.
[The prepared statement of Mr. Clark follows:]
Statement of Barry L. Clark, President, Pacific Ventures, Incorporated,
Tulsa, Oklahoma, and Director, Vietnam Trade Office, Oklahoma
Department of Commerce
Thank you, Mr. Chairman, Members of the Subcommittee, for the
opportunity to testify before you today. My name is Barry Clark and I
am President of Pacific Ventures, which is an Oklahoma-based consulting
and private equity company. Our headquarters is in Tulsa, Oklahoma with
field offices in Hanoi and Ho Chi Minh City, Vietnam. The focus of our
consulting business has been to assist American companies entering the
Vietnamese market. We have been in Vietnam since 1995, one year after
President Clinton lifted the trade embargo. From my first visit to
Vietnam in 1993, to moving there in 1995 for three years, I have
witnessed firsthand the dramatic changes as Vietnam took the first
uncertain steps towards a market economy. These changes are providing
new economic and civic hopes for many Vietnamese people--and new
business opportunities for American companies. Similar to most people
doing business in Vietnam, our challenges have been frequent, and time-
consuming, but never the less, we are seeing real and significant
success as a result of the improved trade relations between the United
States and Vietnam.
In addition to our private endeavors, Pacific Ventures also
represents the State of Oklahoma, Department of Commerce. In September
1996 the State of Oklahoma became the first State of any nation to open
a trade office in Vietnam. Through our company infrastructure Oklahoma
now has offices in Hanoi and Ho Chi Minh City with a staff of ten
Vietnamese and two Americans. Oklahoma is still the only American State
to have a full-time presence in Vietnam. The reason the State of
Oklahoma opened this trade office was due to several of Oklahoma's
major industries matching those of Vietnam's. The industries are of
vital importance to both economies. Some of those industries include,
but are not limited to, oil and gas, agriculture, education, and
infrastructure development. For the businesses we represent directly
and through our ties to the State of Oklahoma, we manage the daily
challenges of arranging meetings, securing licenses, conducting market
research, and identifying potential partners, distributors, and agents.
It is significant that Oklahoma, ranked 38th in overall international
exports, ranks 13th in exports to Vietnam with over ten million dollars
in export sales.
Through our contract with the State of Oklahoma, Pacific Ventures
has led fourteen delegations of Oklahoma businesses and institutions to
Vietnam to sell Oklahoma-made goods and services as well as eight
delegations from Vietnam, that have come to Oklahoma to purchase
equipment and look for business partners.
The goods and services sold to Vietnam from Oklahoma have included
oil-field service equipment, which you might expect, but also biotech
products for shrimp farming, assistance in building environmentally
sound landfills, beef and dairy cattle genetics, and infrastructure
building equipment.
One major export for which the State of Oklahoma has great pride is
education. Oklahoma has more than 9,000 foreign students studying in
its colleges and universities. Oklahoma is second in the nation in the
number of Vietnamese students in higher education. This next month our
Governor, Frank Keating, will travel to Vietnam to sign a major
education agreement between twelve Oklahoma higher education
institutions and Vietnam National University. Currently, Petro Vietnam,
the Vietnamese national oil company, has 65 students (young people
which the company sees as its future leaders) as full-tuition paying
undergraduate and graduate students at the world-famous Sarkeys Energy
Center of the University of Oklahoma. These students will go back to
Vietnam not only with a world-class education in petroleum science and
engineering, but also with a better understanding of the American way
of life. We are also hopeful that they will take back a knowledge of
and an appreciation for the products and services of Oklahoma
companies.
The Jackson-Vanik wavier has brought about dramatic changes that
are indeed part of the rising tide that is floating more hopes and
dreams for Vietnamese entrepreneurs and small business owners. As the
Vietnamese economy continues to emerge, the middle class is growing,
the population is becoming more educated and exposed to more free
market realities, and Vietnam continues to evolve into a more open and
transparent society. A good example of Vietnam's new efforts towards
the development of an open market economy is reflected in its new
enterprise law. This law allows Vietnamese citizens to freely establish
enterprises in most industries without restriction. Because of this new
law, within the first two years, 2000-2002, there were over 35,000 new
registered enterprises. This number exceeded the total number of
registered enterprises established during the previous nine years. The
number of new jobs created directly through the enterprise law
encompassed over one-third of Vietnam's annual increase in the labor
force. However, changes come in increments. There now exists a critical
moment of opportunity between the United States and Vietnam and by
extending the Jackson-Vanik waiver and continuing the implementation of
the Bilateral Trade Agreement (BTA), the U.S. can best support
Vietnam's ongoing transition toward a sustaining market economy.
In conclusion, I want to express my appreciation to Oklahoma's
Government and business leaders for continuing their pioneering spirit
of opening and building valuable trade relationships in global markets
that will benefit future generations of Oklahomans. I would also like
to thank the U.S. Embassy in Vietnam and the U.S.-Vietnam Trade Council
for their continued efforts, support, and leadership on behalf of all
American businesses with interest in Vietnam. They have made our work
much more productive than we could have been otherwise.
Again, thank you for the privilege to be here today.
Chairman CRANE. Mr. Sauvageot.
STATEMENT OF ANDRE SAUVAGEOT, CHIEF REPRESENTATIVE, GENERAL
ELECTRIC COMPANY, HANOI, VIETNAM
Mr. SAUVAGEOT. I am Andre Sauvageot, residing in Hanoi as
the Chief Representative for General Electric (G.E.) in
Vietnam. In fact I met you, Mr. Chairman, in Hanoi a couple of
years ago. I have held this position for over 9 years, and we
greatly appreciate the opportunity to present testimony before
your Subcommittee this morning.
As one of the first 10 American companies to establish a
representative office in Vietnam and as an active player in the
Vietnam market for over 9 years, General Electric strongly
supports the President's Jackson-Vanik waiver.
First, our 9 years' experience certainly is indicative that
Vietnam is committed to and inexorably moving toward a market
economy, as has been testified this morning in greater detail.
I would like to say this morning, sir, that the waiver of
the Jackson-Vanik amendment is more important to us this year
than it has ever been before, and it has been important every
year. And the reason for that is that the waiver, or the lack
thereof, will have an immediate, direct effect on project
opportunities that--whether we win or not--will greatly affect
the number of exports, American exports, into the Vietnam
market in the very near future.
And I would just like to point out a couple of dramatic
ones. One of the most--the most successful G.E. business in
Vietnam is G.E. Power Systems based in Atlanta, Georgia. The
Vietnamese are soon going to invite four companies to bid on a
720-megawatt combined cycle power plant. The only competitors
we have are going to be foreign, because they will restrict the
bidding to those companies in the world who can provide high-
level technology--we call F level technology for big gas
turbines. There are only four in the world that can: Alstom
from France, Siemens from Germany, Mitsubishi Heavy Industries
from Japan, and General Electric.
Now, since this project is going to be fully run by the
Vietnamese--in other words, this is not like some of the other
projects where the prime contractor was Sumitomo from Japan.
This is strictly a Vietnam operation, so they either fund it
themselves or they demand supplier credit. In this case, I am
quite sure they are going to need supplier credit. Our foreign
competitors can all arrange it. We can arrange it with the
waiver of the Jackson-Vanik amendment. We cannot without.
We have significant technical advantages because we have
the best turbines, the most firing hours, by any measure, we
are the best. They can't acquire our technology without
recourse to American financing option. Now, should we win this,
sir, that is not only an opportunity for General Electric but
for--as many, depending upon our specific sourcing
arrangements, for as many as 190 American companies based in 38
States. You know, that includes Oklahoma, by the way, Texas,
and California, but I have listed those States in my testimony.
Also, we have a current proposal to the Vietnam railway to
provide upgrades for 25 old G.E. locomotives, and these kits
would be made in Erie, Pennsylvania, and also offer
opportunities for other suppliers. Right now, the feedback I am
getting from the railway, they like our technical proposal a
lot, but they are not so enamored with our partner's financing
proposal. I would like to be able to assure them that we could
arrange U.S. Ex-Im Bank financing, and I think that would put
us over for this opportunity.
We are also provided leasing arrangements. We have three
Boeing 767s on lease to the airlines now for over 6 years into
the lease, with our engines manufactured in Cincinnati, Ohio.
Again, our relationship with the airline has a strong
commitment with a Vietnamese major company to the
implementation of their contractual obligations to General
Electric. We are very impressed.
Medical systems, x-ray machines, ultrasound, we have very
good opportunities there. We continue to expand our market
share. Very soon we are going to take advantage of the
Vietnamese liberalization of their laws to form 100-percent-
owned General Electric Company, to provide after-market service
for our MRI machines, our high-technology stuff that we make in
Milwaukee, Wisconsin, and other locations.
So we really need this waiver, Mr. Chairman, and we
appreciate your Committee's support in the past years, but this
year it is more important than ever. We will continue to work
closely, of course, with the U.S. Government every step of the
way.
We greatly appreciate the active support received from
Ambassador Burghardt and his fine staff in Hanoi, and we are
going to continue our active involvement with the U.S.-Vietnam
Trade Council and the American Chamber of Commerce. Clearly, as
the U.S.-Vietnam relationship continues to improve on the basis
of mutual respect and mutual benefit, progress will continue on
all fronts. Thank you so much.
[The prepared statement of Mr. Sauvageot follows:]
Statement of Andre Sauvageot, Chief Representative, General Electric
Company, Hanoi, Vietnam
I am Andre Sauvageot, residing in Hanoi as the Chief Representative
for General Electric in Vietnam. I have held this position for over 9
years. As I have for several years, I am again submitting the following
updated information to assist the Committee in its decision regarding
the renewal of the Jackson-Vanik waiver for Vietnam.
My 38 years of involvement in Vietnam began in 1964 with a U.S.
Army assignment in South Vietnam and continues as General Electric's
Chief Representative resident in Vietnam.
Reasons for Supporting the President's Jackson-Vanik Waiver
I. Vietnam continues its development of a market economy
Vietnam continues its steady development of a market economy,
notwithstanding the difficulties in moving from feudalism through
Soviet-style state socialism after years of fighting for independence
and national unity. Some of the milestones on this road include:
A. LSixth Party Congress--(December 1986) Committed Vietnam to
begin economic reform--every Party Congress since has augmented
and strengthened this process.
B. LAgricultural reform--(1989) Made Vietnam a rice exporter
(after importing since the 1930's). Vietnam is currently the
second largest rice exporter in the world after Thailand.
C. LConstitution of Socialist Republic of Vietnam--(1992)
a. LCommits Vietnam (Article 15) to develop a
diversified market economy.
b. LProvides constitutional guarantee (Article 25)
against nationalization of foreign invested
enterprises.
D. LInvestment Law passed by National Assembly--(1997) Improved
incentives/protections for investors.
E. LEnterprise Law--(2000)
a. LHelps level playing field between state and
privately held companies--more private companies now
being licensed.
b. LAchievements acknowledged by World Bank, UNDP
during donor meeting in Ho Chi Minh City in June 2002.
F. LU.S.-Vietnam Bilateral Trade Agreement--(2001) Ratification
committed Vietnam to extensive, measurable reform.
II. Vietnam provides stable, friendly, predictable environment
The Vietnamese have forged a society in which 80 million people of
some 54 different ethnic groups with a wide variety of religions all
live peacefully together, free of the ethnic and religious strife with
which so many other countries are afflicted.
After the September 11, 2001 attacks on the World Trade Center and
the Pentagon, the Political and Economic Research Company (PERC) based
in Hong Kong upgraded its assessment of the security among 14 Asian
Pacific countries to reflect the changing post-9/11 perceptions of
entrepreneurs. The new assessment ranks Vietnam as the most secure of
those 14 countries.
III. American business needs Jackson-Vanik waiver to compete
A. LGE was one of the first American companies to enter
Vietnam. GE was among the first ten American companies to
establish a representative office, obtaining a license on June
18, 1993. Several of GE's 11 major businesses, each with its
own separate headquarters in the United States, have already
successfully entered the Vietnamese market.
B. LGE businesses in Vietnam and effect of the waiver:
GE Power Systems (GEPS)
GE Power Systems (headquartered in Atlanta, Georgia) manufactures
steam turbines and generators in New York; gas turbines in Greenville,
South Carolina; and turbine and generator control equipment in Salem,
Virginia. During tough international bidding, GEPS won the following
contracts in Vietnam:
First ever gas compressors for the White Tiger field
transporting gas from off-shore (1995);
Two hydro turbines for Song Hinh 72MW hydro plant--
plant already commissioned (March 2000);
Two generators, governors, exciter units for Ham
Thuan 300MW hydro plant--generators commissioned and handed
over (May 2002);
Two steam turbines and two hydrogen-cooled generators
for Pha Lai 2 600MW thermal, coal fired power plant--nearing
completion;
Two gas turbines for the Phu My 2.2 combined cycle
power plant.
Many more bidding opportunities lie just ahead.
GEPS field engineers from many countries (including the United
States, Canada, Norway and Sweden) with great experience installing
turbines, generators and other GE equipment in power plants praise the
positive attitude, intelligence and work ethic of Vietnamese workers,
as well as the eagerness of Vietnamese managers to improve
productivity. Many have volunteered to return to Vietnam whenever we
have a project.
Immediate Project Opportunity and Need for Jackson-Vanik Waiver
Ca Mau is a 720MW combined cycle power plant on which GE is
preparing to bid by the end of this year (2002). The Vietnamese are
expected to restrict the bidding to manufactures of high (``F'' level)
gas turbine technology (i.e., Alstom--France; Siemens--Germany and
Mitsubishi Heavy Industries--Japan). Although GE enjoys many technical
advantages and hopes to provide its giant Frame 9A gas turbines from
Greenville, South Carolina, the supplier may have to provide a
financing package. If the Congress were not to support the President's
Waiver for Vietnam from the Jackson-Vanik Amendment, GE and many of its
American suppliers would lose this opportunity to foreign competition.
Depending on specific sourcing arrangements, if GE were to win the
contract to provide two Frame 9A gas turbines, three generators, and a
steam turbine for the Ca Mau power plant, as many as 190 American
companies could benefit as suppliers to GE. These companies are located
in the following 38 States: Alabama, Alaska, Arizona, California,
Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New
York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode
Island, South Carolina, Tennessee, Texas, Vermont, Virginia,
Washington, and Wisconsin.
GE Aircraft Engines (GEAE)
GE Aircraft Engines (headquartered in Cincinnati, Ohio) regards
Vietnam Airlines (VNA) as a strategic customer with significant growth
potential. GE engines power three Boeing B767 aircraft and a GE joint
venture's engines power ten Airbus A320 aircraft in Vietnam Airlines
current small fleet. These engines represent an aggregate value of some
$162 million.
Earlier this year, the Vietnam Airlines selected the GE90-94B
engine to power two Boeing B777-200ER aircraft, which it will lease
from another American company, the International Lease Finance
Corporation (ILFC). The U.S. Trade Development Agency (TDA) offered
Vietnam Airlines funds for training on the GE90 engine if it were to be
selected. We believe this played an important supporting role in the
selection of the GE90 for these two aircraft.
GE Capital Aviation Services (GECAS)
GE Capital Aviation Services (headquartered in Stamford,
Connecticut) has dry-leased three new Boeing 767-300ER aircraft to
Vietnam Airlines (VNA) for a period of nine years. Now, over six years
into the lease, GECAS is very favorably impressed with the management
of VNA, a customer that has always paid its lease obligations on time,
even after the currency crisis hit the Pacific nations in the late
1990s. We attach a high value to the commitment our Vietnamese
customers bring to the implementation of their contractual obligations
to GE.
GE Transportation Systems (GETS)
Headquartered in Erie, Pennsylvania, GETS manufactures locomotives,
as well as parts and components. In Vietnam, GETS has won two
international bids (1996, 1997) to provide parts/components to the
Vietnam Railways (VR).
Immediate opportunity and possible need for Jackson-Vanik waiver
GETS recently submitted a technical proposal to VR to upgrade 25
old GE locomotives in VR's current inventory. If GE's current technical
proposal is accepted but the financing proposal is not, the U.S.
Eximbank could become the principal source for another financing
proposal.
GE Medical Systems (GEMS)
Medical Systems, a global business (headquartered in Milwaukee,
Wisconsin) was the first of GE's 11 major businesses to enter the
Vietnamese market because medical equipment was included among certain
humanitarian items exempted from the Trade Embargo by President George
H.W. Bush in April 1992. Since 1993, GEMS has sold ultrasound and x-ray
equipment in Vietnam against stiff foreign competition from long
established companies.
Vietnam's leadership devotes considerable resources to upgrading
the health of the people, with special attention to children, ethnic
minorities and people living in remote areas. Vietnam is the leading
Southeast Asian country in the number of eye specialists per capita,
with one eye specialist for every 87,000 people. This far exceeds the
United Nations standard of one doctor per 250,000 persons. Skilled
Vietnamese eye surgeons traveled regularly to remote areas in a
continuous campaign to prevent blindness and to restore sight to the
blind.
GE has for a number of years contributed funding towards
``Operation Smile'' (headquartered in Norfolk, Virginia) to bring
American doctors to countries like Vietnam to operate on children with
facial deformities such as harelips and cleft palates.
We believe that GEMS can contribute significantly to the upgrade of
healthcare in Vietnam.
GE Lighting (GEL)
GE Lighting (headquartered in Cleveland, Ohio) has gained a modest
presence in Vietnam with annual sales running over $1 million.
GE Appliances (GEA)
GE Appliances (headquartered in Louisville, Kentucky) has
contracted with a private company to sell American (GE) manufactured
appliances (refrigerators, air conditioners, washing machines, etc.) to
the Vietnamese market.
IV. Conclusion
The Vietnamese leadership's commitment to economic reform and to
the diversification of Vietnam's international relationships, coupled
with a strong national work ethic far outweighs the country's well
known difficulties like the weak banking system, underdeveloped body of
law, and lack of infrastructure.
Vietnam is using its strengths to effectively address its
shortcomings and successfully integrate into the global economy. The
ultimate question is which companies from which countries will grow
their businesses in Vietnam, and in turn, will grow with Vietnam by
their engagement.
We deeply appreciate the support of your Subcommittee and
ultimately of the entire Congress for renewing waiver of the Jackson-
Vanik Amendment for the past several years. Because of this, General
Electric is better positioned than ever to meet foreign competition and
thereby create opportunities for our American workers to produce
equipment for sale into Vietnam's growing market.
We will continue to work closely with the U.S. Government and we
greatly appreciate the active support received from Ambassador
Burghardt and his fine staff in Hanoi for American business and
workers. We will also continue our active involvement with such
organizations as the U.S.-Vietnam Trade Council and AMCHAM.
Clearly, as the U.S.-Vietnam relationship continues to improve on
the basis of mutual respect and mutual benefit, progress will continue
on all fronts.
Chairman CRANE. I have a couple of questions I would like
to put to anyone on the panel who feels inclined to respond.
The first one is, how does the level of activity of U.S.
companies in Vietnam compare with other countries' investment
in the region? Second, do foreign companies receive greater
government-sponsored trade promotion and investment support
than U.S. companies? Anyone?
Ms. FOOTE. I may be able to take a crack at that, sir. The
United States is still--I think it is maybe 12th or 13th on the
list of foreign investors in Vietnam. As I mentioned in my
testimony, it has only been 6 months that the United States has
extended NTR status. We are still behind the curve on the
economic normalization process. We are catching up, but we have
had a much slower start than other countries in the region and
I think our numbers show that.
The U.S.--the companies who have been there now for some
time have turned the corner in terms of profits and are looking
at their second and third generations of investment. So, I
think the United States is beginning to move up in the process.
Chairman CRANE. Thank you. Anyone else want to add anything
to that?
If not, second question: Where has Vietnam been most
successful in implementing the Bilateral Trade Agreement, and
where is more work required? What are your priorities?
Ms. FOOTE. I could start that one.
Chairman CRANE. Ladies first.
Ms. FOOTE. One of maybe the model programs has been in the
area of insurance technical assistance. We just last week had
an insurance program in Hanoi that New York Life, ACE, and the
American International Group (AIG) with the Department of
Commerce and the Trade Council worked on. There are four
chapters of the trade agreements, and different ministries are
involved in different chapters. Things get phased in over time.
I think probably the most technically difficult would be the
intellectual rights chapter. The investment chapter is pretty
straightforward and the rules and regulations are being
implemented right now.
Chairman CRANE. You raised a question there. Let me follow
up on that. Vietnam has one of the worst records on protecting
intellectual property rights. What specific steps have they
taken to improve IPR enforcement?
Ms. FOOTE. They have been very involved in some of the U.S.
Government programs. We have been able to facilitate bringing
Vietnamese officials to the United States and other programs.
The drafting of the law and the writing of the regulation I
think is going fairly well.
The problem is on the other side, which is enforcement.
That is where I think a lot of work needs to be done, and there
is an increasing amount of products coming in from their
neighboring countries. This is not a problem of companies
producing products in Vietnam. It is a smuggling and import
problem.
Chairman CRANE. Anyone else want to comment? Mr. Levin?
Mr. LEVIN. Thank you. Welcome. I think most on the
Subcommittee and the Committee share your basically positive
approach. I admire your enthusiasm, Mr. Sauvageot. You have
been in Vietnam a number of years, but you haven't forgotten
how to look at the impact of programs on each State. Well done.
Let me, though, comment, because I do think we have come
far enough with Vietnam, even though it has been briefed that
we can have kind of an honest dialog with them on outstanding
issues. I regret there is nobody here today to talk about human
rights issues. The State Department report, as you know, the
most recent report, essentially says that the human rights
situation in Vietnam worsened in 2001. Then they go on to spell
out why that is true. Then they say with respect to labor
conditions, the annual human rights report reports that Vietnam
restricts the ability of workers to form or join unions of
their own choosing.
I think it is important to keep that in mind, Ms. Foote, in
regard to your statement you cover labor issues.
Then, at the end, say the main criticism of Vietnam's labor
code remains the requirement that all unions affiliate with a
quasi-governmental entity. That is a major deviation, to put it
mildly, from the labor standards and, as I discussed with the
Ambassador yesterday, I think a critical issue that we need to
discuss with them.
Each country is different. Cambodia is not the same as
Vietnam, I acknowledge.
I wanted to say something, if I might, to our friend from
General Electric about the annual process versus elimination of
it. The waiver will continue, and I hope with a decisive vote.
I think that is the way we should proceed. The issue of
eliminating the Jackson-Vanik provisions as to Vietnam I think
is more complicated than just saying that you do. It creates
uncertainty. It also--there really isn't that much uncertainty
in the sense that we are going to annually--presuming that
there is a continued positive evolution, we are going to vote
yes.
It also creates, I think, some useful pressure. That was
true of our deliberations as to China. Remember, Jackson-Vanik
did not start as an immigration provision. It started as a
trade bill, and the immigration portion was added on to it. It
was a vital addition.
We are facing this issue, for example, as to Russia, and I
think we need to ask ourselves carefully how the annual process
fits into the discussions of the terms of accession to WTO, as
well as keeping the pressure--intellectual property, for
example, has been mentioned.
I mean, the business community has a major stake in
Vietnam, not only passing good laws but implementing them. You
have a major stake in the workers back here who work for the
companies--have a major stake in Vietnam developing a true rule
of law, because if you get contracts and you can't enforce them
through any transparent process, I mean you are not further
ahead, and you may be further behind if any government entity
is dealing underneath the table with some entity other than a
U.S. company where there are restrictions on that.
So, I think your positive approach resonates, provided that
we look at it in its full perspective. I mean, it is going to
take time. There are going to be problems in our relationship.
The catfish issue is just one example. I would not have voted,
if I had a separate vote, the way the Senate did, and that is
another issue.
Anybody want to spend--the red light is on--do you want to
spend 15 seconds before the Chairman----
Mr. BENANAV. I agree with you that there are many issues
inside Vietnam that we need to keep the pressure on--labor
issues, human rights issues--and we are going to see progress
be sort of two steps forward, one step back, and those are
certainly issues that the Government and the people of the
United States have an interest in.
I also agree with you that Jackson-Vanik in the early days
was an extremely effective tool for getting some progress for
it. I do believe that we have reached the point in our
relationship where the value of this, what I call kabuki dance,
has really become minimal. There are many, many other
mechanisms in place today to deal with those issues, the
catfish issue, the enforcement of contract issues. There are
lots of mechanisms that are in place.
The relationship has reached such a level of maturity and
positiveness that I think the whole waiver process has become a
tremendously inefficient utilization of your time and a lot of
other people's time. We would, I think, serve ourselves much
better by treating the relationship with Vietnam as a mature
relationship, as we have with other countries where we have big
issues, and not go through this annual kabuki dance, with the
results almost being certain anyway.
Mr. LEVIN. My time is up. You know, we don't spend enough
time talking about these relationships, really. I mean, you all
come and visit us, but our institutions should spend more time
rather than less, I think, understanding what is going on in
Vietnam. We can argue whether this is the best way to do it.
Thank you.
Chairman CRANE. Mr. Houghton.
Mr. HOUGHTON. Thanks, Mr. Chairman. I agree with Mr. Levin
that it is too bad that we have to have this annual review of
the Jackson-Vanik waiver, but it does afford us an opportunity
to talk about some of our international relations. I tend to
think that we as a country tend to sort of fall back in sort of
an insular position and think that a lot of things we can do
ourselves, or do, you know, within the continental limits. So,
I think there is an opportunity for us to be able to have a
conversation and dialog with people like yourself.
Mr. Benanav, I would like to ask you a question. You are
obviously concerned about the Bilateral Trade Agreement and
also I think you are interested in the World Trade Organization
involvement, but you say something about your company going
into Vietnam to try to increase the financial services sector
there. You know, everybody's got his or her own participation
here, and ultimately the financial services section, in
addition to the whole concept of the rule of law, is going to
be very, very important. So, what do you plan to do? Are there
others doing this thing with you? What is going to be the
impact?
Mr. BENANAV. Yes, sir. I think the financial service sector
is a very important industry if we are going to see Vietnam's
economic development continue. We actually, in one way, shape
or form, provide a lot of the fuel, if you will, for a growing
economy. Today in the life insurance sector, Vietnam has one
state-owned company and three foreign companies operating. One
is an American company, AIG; one is a British company,
Prudential U.K.; and one is a Canadian company, Manual Life.
Others, including my company, would like to enter that market,
and we think we can bring significant value both to the
consumers in Vietnam as well as the Vietnamese economy.
The Bilateral Trade Agreement requires Vietnam to open its
market over a 5-year period to American insurance companies. We
are encouraging the Vietnamese to move much more quickly than
that. We think the market is a large enough market with great
potential. We have tried to educate the Ministry of Finance on
how life insurance in particular is a valuable, valuable tool.
We collect the very small savings of the 80 million people in
Vietnam, we can pool them together and reinvest them into the
Vietnamese economy in long-term projects, not short-term
projects, but long-term infrastructure projects that are
absolutely essential if that country is going to develop.
The life insurance industry financed the infrastructure of
the United States, railroads, many of the roads and housing. We
can do the same for Vietnam, but we can't do so until they open
the door to us. As I said, we think that a strong, positive
relationship with the United States, the waiver of the Jackson-
Vanik will encourage them to open doors to American companies.
Mr. HOUGHTON. Do you have the same restrictions in Vietnam
in doing business that you would here in terms of the same
financial walls against various financial institutions,
commercial banking, insurance?
Mr. BENANAV. The first wall we have in Vietnam is that you
are not allowed to do business in Vietnam until they give you a
license, and they are not required to give you a license at
this point. Once you are there, the companies operating there
are operating in a regulatory structure that I would say is
somewhat primitive, if you will. The regulations are not highly
developed. They don't have the expertise. They do keep the
industries separate--banking, insurance and whatever they have
of securities at this point.
One of the things that my company is doing, and other
companies, is really trying to provide expertise to the
Government of Vietnam and its various regulatory bodies so they
can develop their regulations and move them ahead. Whether they
keep the financial pillars separate for many years I think will
have to be a decision they have to make. They are a long way
from making that decision. They are really significantly behind
much of the world in developing solvency regulation and
consumer protection regulation.
Mr. HOUGHTON. I guess what I was trying to get at, do you
have more flexibility in terms of financial services in Vietnam
than you would in the United States?
Mr. BENANAV. No, we don't. We have less.
Chairman CRANE. Mr. Watkins.
Mr. WATKINS. Thank you, Mr. Chairman, and members of the
panel. I am listening with great interest to the various
testimonies. I know, as Mr. Clark is there and I think----
Ms. Foote, you made the comment about our companies, more
involvement with the companies. There is a great deal more
dumping of solid waste, more problems, and that is one of the
things that has been brought to my attention by several people;
the problems that Vietnam has in pollution is one of the major
problems.
That is why I was asking the other question of the other
panel about the involvement of World Bank and the Asian
Development Bank and the group there, are they participating? I
was looking at some other testimony here earlier or reading
some other document, and we have the foreign--the United States
Foreign Commercial Service, Foreign Agricultural Service. We
have offices in Hanoi as well as in Ho Chi Minh City.
I am reading these groups, a number of priorities--they
have got several, including about the sixth or seventh listed
down there, the need for environmental and pollution control
efforts, but some inquiries have been made from time to time;
they haven't seemed as interested in trying to get involved, to
getting it solved. Do you have any--I know I have one other
major question about this. Do any of you have an answer of how
we open that door to get more activity in there? Evidently they
are getting the same problem. The water, the sanitation,
pollution problems, are affecting drinking water and everything
else in a big way.
Ms. FOOTE. I can tell you that the multilateral donor
community is extremely active in Vietnam. I believe World Bank,
ADB, United Nations Development Programme, some of the other
organizations, have pledged about 9 billion in poverty
reduction, development assistance funds in the last 5 to 7
years. The United States has----
Mr. WATKINS. United Nations made a commitment in the area?
Ms. FOOTE. The USAEP, the United States Asia Environmental
Partnership, which is an USAID-funded program in Vietnam, it is
small, I don't know what its annual budget is, but there is an
environmental group there funded by the United States. There
are also many bilateral donor-assisted programs such as
building a new dike system in Hanoi, the water system in Hanoi
which desperately needs it, as you point out. There is
certainly a door very much open in Vietnam for environmental
help, pollution control, waste management. There are donors who
are working on that. Poverty reduction is the overall theme of
the World Bank program, and pollution control is only one part
of that.
Mr. WATKINS. A lot of that is probably in the agriculture.
I know, Barry, you have done some things in that area. I assume
there is a tremendous need of increase in their production in
order for them to have some gainful income. Are they trying to
increase the production of their land?
Mr. CLARK. Dramatically, sir, and they are doing it both in
the production of--in the rice area, but also in shrimp
farming. They have become the second-largest exporter of shrimp
behind Thailand. A lot of it is because of the technology from
a company there in Tulsa that provides biotech products to
clean up the ponds and has been a dramatic improvement in their
shrimp production, taking them to second place in the world.
Mr. WATKINS. Another thing in discussing with a number of
people, their development depends a good deal on a great more
involvement of training and the lack of training in job
descriptions, job areas. Do you find this to be an area that
needs some attention? Any of you got firsthand experience with
that?
Mr. BENANAV. Definitely.
Mr. WATKINS. That is education, you know.
Mr. BENANAV. Absolutely. Training is vital if they are
going to move ahead, if they are going to open the economy. I
think the Vietnamese recognize it, and they are willing to
accept it.
For example, my own company is about to implement a program
where two officials from the Vietnamese Ministry of Finance
will come to New York for several months for training on
insurance regulation. They are quite open about their need for
it. They are not ashamed to admit that they need to move
forward, and the best way to get it is through training. Other
companies are providing the same kind of training in various
industries, and the universities are really doing a wonderful
job of training the younger people in general skills.
I do believe that the more Vietnamese that we can bring to
this country either for short-term training or long-term
training, the better off the relationship will be, as well as
our ability to convince them that open markets and democratic
societies are really the way to go.
Mr. WATKINS. How about technology and mechanical areas?
Mr. SAUVAGEOT. Sir, we have the same positive experience
with our Vietnamese customers and their enthusiasm for getting
technical training.
A couple of examples. Very recently we had a very tough
competition against a British company, Rolls Royce, for
selection of aircraft engines the Vietnamese are leasing to--
they have already signed a lease agreement with International
Leasing Finance Corporation, ILFC, to lease two brand new
Boeing triple 7200 ER--for extended range--which will do heavy-
duty service, nonstop between Vietnam and Paris with heavy
payloads. The ILFC could offer either the Rolls Royce engine or
could offer the General Electric engines. Tough competition.
One of the things that helped us get selected was the Trade
and Development Agency offered approximately $300,000, the
exact amount we will know in a little bit, but about $300,000
to the Vietnam airlines to provide training in the United
States. We are now seeking other help from trade development
agencies to bring some Vietnamese from Vietnam Oil and Gas
Company, PetroVietnam, and maybe Lei Llama, the big
construction company who is the prime contractor on this 720-
megawatt combined cycle plant that I mentioned in my 5-minute
remarks. We are seeking those funds to bring them to an
orientation visit, and later maybe for some additional
training. We are finding a lot of interest on technical
training in the United States.
Mr. WATKINS. I have had some interest expressed to me and
that is why I wanted to follow up on it. Mr. Chairman, I thank
you. I know my time has run out. I appreciate the panel and I
appreciate you hosting this particular hearing.
Chairman CRANE. Well, we all appreciate your testimony and
your involvement in this effort that is one that I think our
Committee on a bipartisan basis is supportive of.
We will be meeting in here at 2:30 this afternoon with the
full Committee, and the objective is to renew Vietnam's
Jackson-Vanik waiver. With strong bipartisan support, I am
confident that we will report it out favorably; might take 15
minutes or so, but report it out favorably. It is in no small
measure because of the constant ongoing input from people like
you and your involvement and communicating that to us and we
are grateful.
With that, the Subcommittee stands adjourned.
[Whereupon, at 12:00 noon, the hearing was adjourned.]
[Submissions for the record follow:]
American Chamber of Commerce in Vietnam
Hanoi, Vietnam
July 17, 2002
Dear Member of Congress:
As members of the American business and development community, we
strongly support action to continue normal trade relations with
Vietnam. Renewal of the Jackson-Vanik waiver is a key step in this
process. The American Chamber of Commerce in Hanoi opposes H.J.
Resolution 101, which would overturn the waiver, and our membership
urges you to vote against the resolution when it comes to the floor on
July 18, 2002.
The United States has granted Vietnam a waiver of the Jackson-Vanik
provisions of the Trade Act of 1974 since March 1998. Renewal of the
Jackson-Vanik waiver will ensure that U.S. companies and farmers
exporting to Vietnam will maintain access to critical U.S. export
promotion programs, such as those of the U.S. Export-Import Bank, the
Overseas Private Investment Corporation, and agricultural and maritime
credit programs. Ultimately, the Jackson-Vanik waiver, plus the
bilateral trade agreement, will continue to lead the way for normal
trade relations, enabling American companies and products to compete
effectively with European and Asian companies and products in the
Vietnamese market.
The Administration's policy since the establishment of diplomatic
relations in 1995 has been to work with Vietnam to normalize
incrementally our bilateral political, economic and consular
relationship. This policy builds on Vietnam's own policy of political
and economic reintegration in the world. U.S. engagement will promote
the development of a prosperous Vietnam integrated into world markets
and regional organizations that, in turn, will contribute to regional
stability. Our involvement has secured Vietnamese cooperation and
engagement on a range of important U.S. policy goals. It is in the U.S.
national interest for this progress to continue.
Important progress in the bilateral relationship has been made in
the past year. After five years of negotiations, the U.S.-Vietnam
Bilateral Trade Agreement (BTA) was activated on December 10 of last
year. The BTA, which addresses issues relating to trade in goods and
farm products, trade in services, intellectual property rights and
foreign investment, creates more open market access, greater
transparency and lower tariffs for U.S. exporters and investors in
Vietnam.
U.S. business views Vietnam, the thirteenth most populous country
in the world with nearly 80 million people, as an important potential
market for U.S. exports and investment. Increased U.S. exports to and
investment in Vietnam that result from progress towards an open,
market-oriented economy, in turn, translate into increased jobs for
American workers.
The American business and development community believes that a
continued policy of economic normalization with Vietnam is in our
national interest. Last year, the House defeated the resolution of
disapproval on Jackson-Vanik by a vote of 324 to 91. We urge you to
support the renewal of the Jackson-Vanik waiver this summer as an
important step in positive relations between the two countries.
Without a Jackson-Vanik waiver, American businesses would lose
access to U.S. Government trade promotion and investment support
programs. This would restrict our ability to compete on a level playing
field with our European and Asian competitors who have access to
similar programs.
Accordingly, on behalf of the growing US business community in
Vietnam, we appeal for your understanding and action in continuing the
good work that you have already done to move the bilateral relationship
forward.
Thank you in advance for your consideration.
Sincerely,
Chris S. Tragakis
Chairman
Statement of the Boeing Company, Arlington, Virginia
The Boeing Company appreciates this opportunity to comment on the
U.S. trade relationship with Vietnam and commends the Chairman for his
leadership on this important issue. Boeing strongly supports U.S.-
Vietnam trade relations and applauds the Congress and the
Administration for their efforts to implement the policies necessary to
further expand trade with Vietnam.
The U.S.-Vietnam trade relationship is beneficial to both nations.
Open trade with Vietnam provides a market for U.S. exports, creating
high-paying jobs here at home, and gives the Vietnamese people an
opportunity to experience the benefits of free enterprise. Commercial
aviation is a key element of that relationship, increasing trade,
tourism, and other types of commerce, promoting communication, and
generating the foreign currency necessary for continued economic growth
and development.
The Boeing Company supports renewal of Vietnam's waiver under the
Jackson-Vanik amendment to the Trade Act of 1974 and recommends that
Vietnam and the U.S. complete an air transportation bilateral agreement
to accelerate Vietnam's progress toward a vital free market economy.
The waiver of Jackson-Vanik gives American companies selling to
Vietnam access to crucial U.S. export promotion programs offered by the
Export-Import Bank and the Overseas Private Investment Corporation.
These programs are vital to meeting the challenges of doing business in
Vietnam's emerging market.
Since the President lifted the trade embargo on Vietnam in 1994,
the country has made significant free market reforms and has
experienced substantial economic growth. Foreign companies have joined
forces with the Vietnamese to undertake a major rebuilding of the
economy in almost every sector. The aviation sector is no exception.
Vietnam Airlines has been working hard to make those changes
necessary to compete in the increasingly competitive commercial
aviation industry. Less than 10 years ago, the airline operated a small
fleet of older, Russian-made aircraft generally considered unreliable
and uncomfortable by today's standards. Vietnam Airlines now has
replaced much of this fleet with modern equipment, allowing the airline
to greatly improve its level of service and better meet the demands of
today's sophisticated traveler. The results have been dramatic.
Most recently, after passage of the U.S.-Vietnam Bilateral Trade
Agreement last year, Vietnam Airlines purchased four Boeing 777s in a
deal worth $680 million. The sale was historically significant, as it
was the first time Vietnam Airlines purchased aircraft instead of
leasing them. The deal marked a major step forward in the U.S.-Vietnam
trade relationship.
Since then, Vietnam Airlines has leased two more 777s in order to
expand and upgrade its fleet. Boeing will have to continue to compete
aggressively for this business, but cannot do so in the absence of a
strong trade relationship with Vietnam.
The Boeing Company believes that with the extension of annual NTR
to Vietnam and the eventual accession of Vietnam to the World Trade
Organization, that U.S.-Vietnam trade will be of significant benefit to
both nations.
The potential for major economic growth in Vietnam is undeniable.
From 1992 to 1997, prior to the Asian financial crisis, Vietnam
Airlines experienced annual traffic growth averaging 30 percent per
year. This compares to an average for the industry worldwide of five
percent per year, and for Asia as a whole, of seven percent. The
financial turmoil that engulfed Asia in late 1997 and in 1998 did not
have the same negative impact on Vietnam Airlines that it did on the
airlines in neighboring countries. Some of these airlines suffered from
double-digit percentage reductions in traffic, and significant erosion
in profits. While Vietnam Airlines did lose profits, the carrier was
able to hold on to a generally constant level of traffic during the
depths of the crisis.
As these statistics indicate, the potential market for aircraft
sales in Vietnam over the next 10 to 15 years is significant. Boeing
projects Vietnam Airlines could require three to five billion dollars
worth of modern aircraft during this period. Such growth means that
Vietnam Airlines could develop an operation comparable to the size of
Thai International Airways, Cathay Pacific, or Singapore Airlines, each
with 60 to 80 aircraft.
Approval of annual NTR for Vietnam is essential to Boeing's ability
to continue to compete for commercial aircraft sales to Vietnam.
The Boeing Company strongly supports the extension of NTR for
Vietnam. Increased trade between our two nations will create jobs and
economic opportunity both in the United States and Vietnam.