VIETNAM - U.

S
BILATERAL TRADE
AGREEMENT
 Nguyen Quoc Thang
#BABAIU20248

Pham Nguyen Phuong Thuy

#BABAIU20257

Nguyen Ngoc Hong Nhi

#BABAIU20583

Le Quang Thang
#BABAIU20132
Dang Tran Minh Quan
#BABAIU20594
I. BACKGROUND

III. PROSPECTS OF VIETNAM - U.S BTA:

Signed in Washington on July 13, 2000 and en-
tered into force on December 10, 2001.

A vital step in normalizing and developing Viet-

nam's comprehensive commercial relationship
with the United States.
CONGRESS'S ROLE
IN THE NORMALIZATION
OF U.S.-VIETNAM
TRADE RELATIONS
The need to normalize
two-country relations

In 1975, the US ended all economic ties with Vietnam with

lots of commercial constraints and sanctions.

→ The need to reconcile the relationship

between two country

On July 12 of 1995, President Bill Clinton declared the nor-

malization of diplomatic relations with Vietnam, becoming
a historic milestone in Vietnam - US relations.
Rehabilitation of Temporary
Most Favoured Nations Status
to Vietnam

After World War II, the United States granted most

favored nation (MFN) status to all trading part-
ners, except all Communist countries.

Moreover, the appearance of Jackson - Vanik

amendment prevent the normalization of Vietnam
- US in a bilateral trade agreement. Figure 3: House Votes on Vietnam’s JacksonVanik
Waiver, 1998-2002
In 1998, President Bill Clinton granted Vietnam its
first exception from the Jackson-Vanik amend-
ment's criteria with 260 support votes and 163
against votes.

However, the MFN status to Vietnam is just grant-

ed temporarily.
After the Bilateral Trade Agreement:
Extending Permanent MFN Treatment
to Vietnam:

The Permanent normal trade relations or (PNTR)

status is very important in the context that Viet-
nam joined the World Trade Organization (WTO)

Therefore, Congress had implemented legisla-

tion to terminate the applied effect of Article IV
of the Trade Act 1974, and on December 29,
2006, the permanent most favoured nation for
Vietnam was declared.
U.S. AND VIETNAMESE
EXPECTATIONS IN
A BILATERAL TRADE
AGREEMENT
U.S. Interests
in a Bilateral BTA

Trade and investment flow between the United States

and Vietnam were severely low from 1994 to 2002.

US’s Expectations Vietnam makes more broad and

thorough concessions in the areas of services, invest-
ment, and market access
The requirement of enhancing Vietnam’s environment
for foreign investors in the short to medium term.

The necessity to have significant changes in laws,

rules, and administrative procedures.

→ US exports to Vietnam climbed by 26% in 2002

despite a drop in overall US exports and world
commerce in general.

U.S.-Vietnam Bilateral Merchandise Trade

Vietnam’s Interests
in a BTA

Vietnam's economy was devastated by the 1997-99 Asian fi-

nancial crisis.
Vietnam's interests:
- gained MFN access to the US market immediately;
- US tariffs on Vietnamese imports are cut drastically and
promptly;
- the Vietnamese business environment is improved;
- gained admission to the World Trade Organization (WTO).

Figure: Impacts of a reduction in the tariff on

→ Vietnamese exports to the US reached 90.8 Vietnam's exports to the USA.
billion USD in 2019, an increase of 19.8%.
→ In 2021, the US continued to be Vietnam's
largest export market with a turnover of $53.7
billion, up 37.7%
OVERVIEW

The Vietnam - US BTA is a significant step in normalizing

and developing comprehensive commercial relations:
access to the US market under the same conditions as
other nations; average tariffs reduced from 40% to 3%.

→ Market access, trade in services, intellectual

property rights, and investment are the four
components of the trade agreement.
 Market Acess

Vietnam has agreed to take the following market-opening steps;

Most-favored-nation (MFN) treatment is given to U.S. goods;

Imported goods should be treated the same as domestically produced goods;

Quotas on all imports are phased out over a three to seven-year period;

The transparency of the government procurement process is increased;

For the first time, all Vietnamese businesses are permitted to

trade in all goods;

US companies and companies with US investments are permit-

ted to import and export most products;

WTO rules in applying customs, import licensing, technical stan-

dards, and sanitary and phytosanitary measures are adhered to.

Trade in Services
Vietnam pledged to follow WTO principles
such as MFN, national treatment, and do-
mestic regulatory discipline.

Vietnam’s commitments in three of the most

important service industries include bank-
ing, insurance, and telecommunications.

Banking Services

Vietnam allows US banks and financial institutions to:

Open branches or joint ventures with 30% to 49% capital rates and

minimum capitals of $15 million and $10 million, respectively;

Get a mortgage on foreign investment enterprises' land use rights;

Use collaterals to liquidate if they default;

Provide credit cards based on national salaries;

Set up ATMs in Vietnamese banks with permission.

Telecommunications Insurance

Only commercial partners with Vietnamese firms can de-
liver cross-border services:
For value-added services, within 2 years, create joint ven-
ture businesses with a capital ceiling of 50%.
U.S. companies will be free to:
In 3 years, form joint ventures in "mandatory" insurance sec-
tors (automotive, construction-related, etc.) with no limits on
equity participation.

For basic services, within 4 years, create joint venture After 3 years, participate in the life insurance and other
businesses with a capital ceiling of 49%. "non-mandatory" insurance sectors.

For landline telephone service, within 6 years, form a joint

venture business with a capital ceiling of 49%.

Within 3 years since implementation, all US-owned busi-

nesses must exclusively provide services to foreign-invest-
ed businesses.

Trade in Services
Investment

The Vietnam-US BTA guarantees MFN treatment, nation-

al treatment, transparency, and expropriation protection.
Vietnam also vowed to reform its investment regime in
the following ways:

Investment screening: most sectors will be exempt from

investment screening.

Profit repatriation: US firms have the same profit repatria-

tion rights as Vietnamese businesses.

Capital contribution floors: eliminate all the requirements.

Joint venture personnel requirements: within three years,

allow US companies to recruit senior executives regard-
less of nationality.

Trade-related investment measures (TRIMs): abolish any

TRIMs that violate WTO rules within five years.
Vietnam's The US was uncertain if the Vietnamese

implementation
government could carry out the extensive
reforms mandated, since the BTA

of the BTA Needed collaboration at the local government

level, where central oversight was lacking and
corruption was endemic.

Necessitate unprecedented levels of coordina- US’s view: “Hanoi appears to have made
tion across government ministries. steps to put nearly all of these original
commitments into action thus far.”

In May 2002, the Joint Committee on the

In three to five years, the majority of Viet-
nam's BTA agreements will enter into force.
However, it brought with it several reforms:
Development of Economic and Trade Rela-
tions, a BTA-mandated advisory organiza-
tion was formed.

Permitting all businesses to import and export;

Eliminating most non-tariff obstacles;

Expediting the licensing and approval process

for foreign investors;

Making all laws, rules, and administrative pro-

cesses public.

https://bom.so/20UO6q
MILESTONES
Trade Highlights

The bilateral relationship between Vietnam and the United

States has evolved swiftly, yielding numerous positive achieve-
ments in a variety of sectors.

In order to strengthen Vietnam's resilience, the US strived to:

Encourage additional growth and trade competitiveness,

battle pandemic risks, promote renewable energy, solve war
legacy economic concerns, etc.;

Achieve long-term economic development while fostering

good governance and the rule of law;

Deepen regulatory reforms, strengthen the competency and

independence of Vietnam's judicial and legislative authorities;

Encourage more effective public engagement in law-making → The signing of the Bilateral
and regulatory processes. Trade Agreement (in 2000)
marked a major step in the two
Assist the Vietnamese government in putting its laws and
procedures in line with international labor standards.
countries' economic relationship.
The US and Vietnam have built a
framework for trade and investment:

Machinery, computers and electronics, fabric, agri-

cultural goods, cars, etc. are exported by the United
States to Vietnam.

Clothing, footwear, furniture and bedding, agricul-

tural products, seafood, electrical machinery, etc.
are imported into the United States from Vietnam.

Achievements:

Bilateral trade has expanded from 451 million USD

in 1995 to more than 90 billion USD in 2020.

In 2020, US goods exports to Vietnam exceeded

$10 billion USD, while US imports totaled $79.6 bil-
lion USD.

Bilateral trade turnover has expanded more than

250 times since 1995, rising from $450 million in
1995 to more than $111 billion in 2021.
https://bom.so/Q5bg5l https://bom.so/oI7ByG https://bom.so/4Klths

→ The United States surpassed Vietnam as the

country's second-largest trading partner. The
United States is Vietnam's largest export market,
and Vietnam has become the United States'
ninth-largest trading partner.
During the Covid-19 pandemic:

Vietnam, in collaboration with the US,

performed well in providing a compre-
hensive intervention to this pandemic.

The US gave roughly $4.5 million to

Vietnam and helped fulfill procedures
in response to the pandemic.
How U.S-China Trade war
strengthen the VN - US BTA?

Vietnam's exports are benefiting greatly from

the trade war as:

Many US businesses move production away

from China.

US companies move factories or find supplies from

low-cost countries.

Vietnam has a large population, stable political sit-

uation, and proximity to China.

China raised tariffs to 25% on some US imports,

worth up to $3 billion.

Vietnam increased production, attracted interna-

tional investors, and increased exports to the US.

→ 9 months of 2019, exports to the US

increased by 34.8% year on year.
PROSPECTS OF
VIETNAM - U.S BTA
In 2021, the two-way turnover exceeded 100 billion
USD for the first time:

Vietnam exports components, electronic machinery,

textiles, footwear, agricultural products, and seafood.

The US exports raw materials.

The US economy shows good signs

of recovery from the pandemic.

→ Vietnamese exports have the opportunity

to increase sharply

Vietnam's good control of the

COVID-19 pandemic.

→ Ensure production activities and the con-

tinuity of the supply chain to the US.
As of March 2022, direct investment of the US in Vietnam
reached 10.3 billion USD, ranking 11/141 countries and territo-
ries investing in Vietnam.

Vietnam is shaping economic and trade policies with the US in

a harmonious and sustainable direction

→ The US is always a leading trading partner

of Vietnam.
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