U.S., Vietnam resolve final differences, sign landmark trade deal

WASHINGTON - The United States and Vietnam signed a landmark trade agreement Thursday, marking what President Clinton hailed as ''another historic step in the process of normalization, reconciliation and healing between our two nations.''

The deal was signed by U.S. Trade Representative Charlene Barshefsky and Vietnam's Trade Minister Vu Khoan shortly before a Rose Garden ceremony attended by Clinton and a number of former Vietnam War veterans who are now serving in Congress, including Sen. John McCain, R-Ariz.

''From the bitter past, we plant the seeds of a better future,'' Clinton said. ''This agreement is one more reminder that former adversaries can come together to find common ground in a way that benefits all their people, to let go of the past and embrace the future, to forgive and reconcile.''

The trade agreement, the subject of four years of tortuous negotiations, will provide Vietnam with access to the U.S. market on the same terms granted to most other nations.

In return, Vietnam agreed to sharply lower tariffs and other trade barriers on a wide range of American manufactured products, farm goods and services such as banking, according to the Clinton administration.

A year ago, the two countries reached an agreement in principle that covered the same areas only to see it collapse when Vietnam's communist government balked at the market-opening provisions its negotiators had reached.

The trade agreement is the last major step in normalizing relations between the two nations which had been disrupted by the Vietnam War, in which 58,000 Americans lost their lives.

Clinton lifted the trade embargo against Vietnam in 1994, restored diplomatic relations in 1995 and reopened the U.S. embassy in Hanoi in 1996. The president said that all of his actions had been taken in response to increased cooperation by Vietnam in helping search for the remains of Americans servicemen killed in the war.

The trade deal, if approved by Congress, would reduce U.S. tariffs on Vietnamese products from the current average of about 40 percent to less than 3 percent, the same rate Washington extends to most other nations.

In return, Vietnam would lower its tariffs on American products, provide copyright protection to U.S. companies and reduce restrictions on investment by American companies in Vietnam. The World Bank has estimated the deal would boost Vietnam's exports by $800 million annually.

''I think you will see a quick pickup in trade going both ways once the deal is approved,'' said Franklin Vargo, vice president for international affairs at the National Association of Manufacturers.

Because Vietnam is communist, its trade relationship with the United States would be subject to an annual renewal vote in Congress until Hanoi won membership in the World Trade Organization, which could take many years.

Some U.S. companies, including Cargill, Caterpillar and Nike, have invested in Vietnam and analysts believe operations such as Nike's likely would move to increase production once the tariffs dropped.

The deal is expected to face opposition from many of the same foes of the administration's effort to grant China permanent normal trade relations, ending the annual congressional review.

Labor unions oppose market-opening deals with low-wage countries like China and Vietnam because they fear the loss of U.S. manufacturing jobs, especially in the shoe and textile industries.

Analysts said that Vietnam's decision to withdraw from last year's agreement reflected the intense debate between reformers and conservatives over whether to commit Hanoi to a free-market economy that would remove barriers protecting inefficient state-run enterprises.

The administration's deal with China was seen by analysts as a major reason the Vietnamese decided to resume negotiations. Vietnam fears it could be overshadowed by the larger Chinese economy, which manufactures many of the same goods Vietnam would want to sell to the United States.

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On the Net: U.S. Trade Representative: http://www.ustr.gov/

State Department background on Vietnam: http://www.state.gov/www/background-notes/vietnam-899-bgn.html