Establishing Normal Trade Relations with Vietnam & Laos-

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Key Points

* Congressional ratification of the bilateral trade agreements with Vietnam and Laos will complete the long-delayed normalization process with these two former U.S. enemies.

* Bilateral trade agreements are part of standard international practice and should not be confused with multilateral structures such as APEC, NAFTA, or the WTO.

* As normal relations between the U.S. and Southeast Asia continue to develop, cold war thinking resonates less and less, even among veterans and Asian-Americans.

After years of negotiations, stalling tactics, and domestic political debate, the U.S. Congress is considering ratification of bilateral trade agreements (BTAs) with the Socialist Republic of Vietnam and the Lao People's Democratic Republic (Lao PDR or Laos) this summer. These agreements represent the culmination of the post-Vietnam War normalization process. Although the Vietnamese agreement is much more specific, both documents establish normal trade relations (NTR, previously called "most favored nation" status), lowering tariff levels from an average of 40% to less than 3%. The agreements also provide for expanded trade in services and protection of intellectual property rights.

The U.S. broke relations with Vietnam in 1975; however, ties with Laos continued unabated and have never been interrupted. After President Clinton lifted the postwar embargo on Vietnam in 1994 and the two countries established diplomatic relations in 1995, negotiations began on a trade agreement. The agreement was signed in July 2000 after an agreement in principle was reached a year earlier. The Lao agreement was signed in December 1998.

NTR status is enjoyed by the vast majority of America's trading partners. The only other nations currently excluded are Afghanistan, Cuba, Libya, Iraq, and North Korea--none of which has normal diplomatic relations with Washington. Ratifying the Vietnamese and Lao BTAs gives no special market access that other countries do not possess. Rather, it finishes the decade-long process of dismantling the system of cold war sanctions applied to America's former Southeast Asian enemies: sanctions that amounted to a continuation of the war by other means.

The Vietnamese and Lao BTAs are subject to different congressional procedures for ratification. Vietnam must follow the provisions of the 1975 Jackson-Vanik Amendment, requiring yearly congressional approval of a presidential waiver allowing trade. (President Bush recently extended the waiver for another year.) Since Laos's government did not become communist until December 1975, however, it falls outside the Jackson-Vanik provisions. Thus Vietnam's NTR status, if approved, will be renewable on an annual basis. …

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