Vietnam Deja Vu

"It seems tied to Cohen’s visit," said one U.S. businessman. "It may seem weird, but a visit of a high-level official can be a catalyst even for trade talks he doesn’t talk about. Don’t try to figure out why. That’s how things go in Vietnam."

American Ambassador Douglas Peterson confirmed that the U.S. Embassy had received "our first communication from the Vietnamese in months. It is a good signal," he said. "We had been waiting for something from them for six months."

The Vietnamese sent a letter requesting clarification on some points of the Bilateral Trade Agreement, which had been on hold since last summer. America has deals with every nation it has diplomatic relations with — except Vietnam.

Three years of exhaustive negotiations produced a pact that American officials described as the most comprehensive trade deal it had ever negotiated with a foreign country. The signing was set for last summer. It never happened.

"It just seemed to disappear," said one dejected local American entrepreneur. "We’ve worked for years, invested all our money in Vietnam, and now the deal is dead," he said. "It’s tragic."

It’s a recurring theme on the front lines of trade in this communist country. "For all it’s beauty, Vietnam can be a mighty formidable place to do business," said an American based in Vietnam for four years. "I’d thought I’d seen everything out here. But this nonsense over the trade deal really takes the cake."

U.S. BAFFLED AT PULLBACK
It was supposed to be the icing on the cake. But last winter, word came that the Vietnamese weren’t happy with the terms on the table. Nobody ever said why, and analysts are baffled. "The whole thing was a good deal for Vietnam, it’s almost one-sided in their favor," said an European diplomat in Hanoi.

"There is a pervasive misconception, however, on the Vietnamese side that somehow the trade agreement would not be good for Vietnam," said American attorney Fred Burke, head of Baker & McKenzie’s Vietnam offices and a former chamber president.

Few can understand Vietnam’s about-face on a deal that does seem to be in its best interests. Trade between the old adversaries, which started after the embargo was lifted in 1995, remains minuscule by U.S. standards — a total of $800 million last year. In 1997, the total was a bit higher, but represented a mere .0004 percent of U.S. imports. 

Yet the United States is the eighth-largest trading partner of this impoverished nation of 80 million people.

Under the trade agreement, Vietnam would gain access to the vast American market under terms previously-known as Most Favored Nation. Tariffs would drop, in some cases by 40 percent to 80 percent.

One businessman ships tiles to California, paying duties of more than 56 percent. "With the BTA, it would drop to 6 percent," he said. "I could ship tiles from Vietnam and beat those from Mexico by a bundle." The World Bank estimates that Vietnamese exports to America should quickly triple.

"They were betting on the jobs that would have been created, the foreign exchange that would have been generated, and the improvements to the legal system that would have resulted," said Burke. "For the time being, at least, it looks like those who bet on Vietnam doing what seemed to be in its own best interests have lost."

Or, as one U.S. observer close to the negotiations said, "They never seem to miss an opportunity to miss an opportunity."

NEW HOPE FOR AGREEMENT
That’s why the letter to the embassy sent new hope through the American business community. Compaq dominates the computer market, along with Dell and IBM. Ford, Nike and Proctor and Gamble are all here in force. U.S. businessman Walter Blocker is director of Consumer Products for Gannon, which represents Maybelline, Mars/M&M Candy, Cross Pen and Rubbermaid.

In many ways, he’s typical of many long-term Vietnam businessmen. He was only 27 when he arrived from Kentucky in 1995, and was filled with excitement for a land that had figured greatly in his history.

Kentucky sent more soldiers to Vietnam than any other state, except Alabama. "In 1994 and ’95, Vietnam was the fastest-rowing economy in the world. There were 70 million consumers here that had an appetite for U.S. products," he said.

"Back in 1995, people would ask, ‘Why do you think you can do business in Vietnam?’ and I would always say that I knew about as much as anyone else here since it was so new. The reality was, none of us knew much, and business here proved to be infinitely more complicated than anyone dreamed."

That’s the refrain across Vietnam, where many are praying that Cohen’s visit will pave a path to renewed trade talks. "For the Vietnamese, it was a face-saving way of reinitiating contact," said one. Others fear it may be another false start. "There is little chance now that this deal will be finalized in an election year," notes one. "We just feel like Vietnam blew it, and we’re off the radar now."

Yet others take heart at improving U.S.-Vietnamese ties. Ambassador Peterson noted that Cohen’s visit stimulated talk about shared weather forecasting, search-and-rescue work, demining, "all things Vietnam needs."

"It’s too soon to say what will happen in the future," he said. "But we’re already seeing a mutual benefit. The Vietnamese reacted positively to Secretary Cohen’s visit. They were impressed by his candor and grasp of the issues."

Time will tell, of course, but his silence on the trade issue may have been just the message the Vietnamese wanted to hear.