Establishing Normal Trade Relations with Vietnam & Laos--.

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. But Laos's new trade status will be permanent from the beginning. Another impact of Vietnam's Jackson-Vanik status is that Congress cannot amend its trade agreement, whereas it can make changes to the Lao BTA.

Both the Vietnamese and Lao agreements are part of President Bush's trade agenda, introduced by U.S. Trade Representative (USTR) Robert Zoellick in May. The USTR originally hoped to package the entire agenda together, including fast-track or "trade promotion authority," in an omnibus bill. Following the defection of Sen. James Jeffords, however, Senate Democrats clarified that they prefer to act on each item of the trade agenda separately. President Bush formally submitted the Vietnamese BTA on June 8, giving both houses of Congress 75 working days to respond. The Lao agreement has not yet been submitted, but may well be added as an amendment to other legislation. For instance, the proposals for NTR for Kyrgyzstan and Georgia were attached to the 2000 Miscellaneous Trade and Tariffs Bill once a consensus was reached to go ahead with these agreements.

Approval of the Vietnamese BTA should have a smoother ride through Congress than the Lao agreement. NTR with Vietnam enjoys clear bipartisan support from war veterans such as Sens. John Kerry (D-MA), Chuck Hagel (R-NE), and John McCain (R-AZ). President Clinton's landmark visit to Vietnam last year further raised the profile of emerging relations between the former enemies. And there is considerable interest among American businesses in investment in Vietnam's 80 million-person consumer market. Laos attracts much less attention from either the political or business standpoint, owing both to its small size and the still-unacknowledged realities of the secret U.S. war against large portions of the country. Nevertheless, according to Ted Posner, counsel to Sen. Max Baucus (D-MT), there is "no visible opposition" to the Lao agreement in the Senate Finance Committee; its passage is merely a matter of time and consensus building.

Some members of the House and Senate may still be tempted to attach a nonbinding "sense of Congress" resolution to either agreement or to add explicit conditions in the case of Laos. Changes in the Senate make passage of hostile amendments less likely, but the danger still exists of old-line conservatives once again blocking a change in U.S. policy. As normal relations between the U.S. and Southeast Asia continue to develop, however, cold war thinking resonates less and less, even among veterans and Asian-Americans.

Andrew Wells-Dang <[e-mail]> currently works as the resident director of CET Academic Programs, Inc., in Ho Chi Minh City (Saigon), Vietnam. The views expressed in this brief are his own.