Vietnam Set to Open Its Doors
Hilton, Andrew, Business Asia
The ratification of the US-Vietnam bilateral trade agreement is expected to be passed next month by both the US Congress and Vietnam's National Assembly. ANDREW HILTON(*) reviews this historic agreement.
CONCLUDING OVER four years of negotiations, representatives of the Vietnamese and United States Governments signed the bilateral trade agreement (BTA) in Washington on 13 July last year.
The BTA comprises of seven chapters covering trade in goods, protection of intellectual property rights, trade in services, development of investment relations, business facilitation, transparency and appeal provisions, and general articles. Under the BTA, normal trade (formerly "most favoured nation") relations are established between the US and Vietnam-subject to the annual Jackson-Vanick waiver by the US President.
Under the BTA, average tariff rates on Vietnamese goods imported to the US will be reduced from about 40 per cent to three per cent. Vietnam has agreed to a phased reduction of its tariffs on a range of US goods over a three-year period.
In addition, with the exception of prohibited imports such as cigarettes, used consumer goods and used spare parts for vehicles, Vietnam has committed to eliminate quotas on imports of a wide range of US agricultural and industrial products over a period of two to seven years (with the exception of sugar, which has a 10 year period). However, quotas may still be applied by either country to textiles and textile products of the other.
Under Chapter Two of the BTA, Vietnam has agreed to adopt the World Trade Organisation (WTO) standards for intellectual property rights protection within 18 months.
Vietnam will also apply the WTO Agreement on Trade in Services (GATS), opening up a range of service industries to US investors. These include legal, accounting, auditing and taxation advice, architecture, advertising, telecommunications, construction and education, distribution, insurance and banking and finance.
Whilst some of the concessions granted to US investments in the services sector are already generally available to foreign investors, the services market in Vietnam will be opened up considerably as the BTA is implemented during the various phase in periods.
Vietnam has agreed to phase out all trade-related investment measures inconsistent with WTO regulations, such as requirements for local content and export ratios over agreed time periods. …