The US and Vietnam agreed last week to initiate talks for a bilateral investment treaty during a visit to Washington by Vietnamese Premier Nguyen Tan Dung. When concluded, the investment deal would provide US investors in Vietnam additional legal protections and enhanced market access. Some consider the potential accord a prelude to a free trade agreement between the two former enemies.
In addition to the investment treaty, several business deals that focus on expanding US access to Vietnam’s growing market were concluded during the state visit. Aluminium giant Alcoa, electronic communications manufacturer Motorola, and travel technology firm Sabre Holdings were among the companies that signed contracts with their Vietnamese counterparts.
Dung’s recent stop in Washington marked the third time that a high-level Vietnamese official has visited the US capital since the former enemies established normal trade relations in 1995, two decades after the end of the Vietnam War. The countries have since forged strong economic ties, particularly with the signing of a US-Vietnam bilateral trade agreement in 2000.
Since that deal took effect, trade between the two countries has grown by more than 700 percent, with a rise of 30 percent recorded from 2006 to 2007, according to US government statistics. Vietnam represents one of the fastest-growing markets for US exports; for its part, the US is Vietnam’s third-largest trade partner and its largest export market. US foreign direct investment in Vietnam nearly doubled between 2001 and 2006, the most recent year for which data are available.
Vietnam, which joined the WTO at the end of 2006, has been enforcing new trade regulations to help facilitate foreign investment.
ICTSD reporting; “US Vietnam launch talks for an investment treaty,” BILATERALS, 25 June 2008; “US, Vietnam: Trade ties and a China buffer,” BILATERALS, 22 June 2008; “U.S. - Vietnam development, trade and investment,” SCOOP, 24 June 2008.