By Kelly S. Nelson. Kelly S. Nelson conducts research on Asian trade issues is also a university fellow and doctoral candidate Washington University.
The Christian Science Monitor
VIETNAM is once again making headlines in the United States. For 16 years, since the Vietnam war ended, the US has refused to deal with Vietnam on either a diplomatic or economic level. The only contact between the countries since that time has been with regard to humanitarian concerns, as the two attempted to reconcile painful issues left unresolved from the war.
Over the past nine months, however, this contact has been expanded to include high-level discussions between officials from both countries. In recent weeks, the administration released a new proposal on US-Vietnamese normalization, which has led to a flurry of discussion on Vietnam in the media, in Congress, and among the public.
Normalization of relations with Vietnam has been postponed by successive administrations since 1975 for various reasons. The Bush administration has made it quite clear that normalization will only be considered in conjunction with a comprehensive political settlement in Cambodia, as well as continued cooperation on the POW/MIA issue. Vietnam has resisted the US call for a resolution of the Cambodia conflict by opposing the UN-sponsored peace plan, claiming it will allow the Chinese-backed Khmer Rouge to return to power. The timetable for normalization released last month does not deviate from previous policy. By offering Vietnam detailed incentives to comply with the peace settlement, however, the proposal signals a new attempt by the administration to end the stalemate over Cambodia.
Both countries have been adversely affected by the lack of relations. Vietnam, though rich in natural resources, is one of the poorest and most undeveloped countries in the world. The trade embargo imposed by the US on Vietnam in 1975 has succeeded in limiting development aid, multilateral loans, investment, and other sources of income needed for Vietnam's economic development.
The US has also been damaged by the fact that many countries do not recognize the US-imposed trade embargo. US companies are finding themselves at a disadvantage as many foreign concerns begin to invest and profit in Vietnam. Japan, Singapore, Australia, the United Kingdom, France, Italy, and the Netherlands have initiated trading and investment discussions with Vietnam. Indeed, Japan is now Vietnam's second largest trading partner after the Soviet Union.
Observers of Vietnam see the 1990s as a turning point for the country as its reform program continues, faces the collapse of communism around the world, and considers the declining influence of it patron, the Soviet Union. If normalization of relations were to occur, it could result in a resumption of mutually beneficial economic activity and could offer the US the opportunity to participate in a new balance of power in the region.
Under the leadership of Foreign Minister Nguyen Co Thach and General Secretary Nguyen Van Linh, Vietnam has been following a new foreign and economic policy since 1986. These leaders have undertaken Gorbachev-style reforms, called doi moi (renovation), that attempt to move the economy more in line with market forces and away from central planning, and that place an emphasis on attracting foreign investment.
Since the initiation of the economic-reform program, Vietnam has successfully entered the global economy by becoming an exporter of rice, rubber, meat, clothing, and coffee. The new reform program has encouraged Western-style economic reforms and economic development, and the the new foreign investment code - one of the most liberal in Asia - has also provided lucrative opportunities for trade and investment for nations not constrained by the embargo.
Many problems still exist, however. State enterprises still own the majority of the country's means of production, yet contribute very little to the national income. Many of the goods produced are not globally competitive because of poor quality. …