Order Code IB98033
CRS Issue Brief for Congress
Received through the CRS Web
The Vietnam-U.S.
Normalization Process
Updated November 28, 2003
Mark E. Manyin
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S.-Vietnam Relations, 1975-98
Policy Initiatives During the Carter Administration
Developments During the Reagan and Bush Administrations
Developments During the Clinton Administration
Recent U.S.-Vietnam Relations
Economic Ties — the Bilateral Trade Agreement
Implementation of the BTA
U.S.-Vietnam Trade Flows
A Bilateral Textile Agreement
The Catfish Dispute
A Dispute over Shrimp?
Intellectual Property Rights (IPR)
U.S. Bilateral Economic Assistance to Vietnam
Political and Security Ties
Anti-Terrorism Cooperation
Drug Trafficking
Human Rights
POW/MIA Issues
Vietnam’s Situation
Economic Developments
Political Trends
The 9th Party Congress
Unrest in the Central Highlands Region
Vietnam’s Response to SARS
Foreign and Defense Policy
LEGISLATION

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The Vietnam-U.S. Normalization Process
SUMMARY
U.S.-Vietnam diplomatic and economic
nam’s textile exports. In 2003, the two coun-
relations remained essentially frozen for more
tries took hesitant steps toward exploring a
than a decade after the 1975 communist vic-
new, as yet undefined, security relationship.
tory in South Vietnam. Over the past decade,
Washington and Hanoi have normalized
Until recently, each step in improving
relations incrementally. Congress has played
bilateral ties has brought controversy, albeit at
a significant role in the normalization process.
diminishing levels. U.S. opponents in Con-
gress and elsewhere have argued that Vietnam
Bilateral relations took a major step
maintains a poor record on human, religious,
forward in February 1994, when President
and labor rights. Opposition has also come
Clinton ordered an end to the 19-year old U.S.
from groups arguing that Vietnam has not
trade embargo on Vietnam. The following
done enough to account for U.S. Prisoners of
year, the United States and Vietnam settled
War/Missing in Action (POW/MIAs) from the
diplomatic and private property claims and
Vietnam War, though this argument has di-
opened liaison offices in Washington and
minished markedly in recent years.
Hanoi. In April 1997, a U.S. Ambassador was
approved by the Senate and took up his post in
Forces favoring normalization have
Hanoi. In March 1998, President Clinton
included those in Congress and elsewhere
granted
a waiver from the Jackson-Vanik
reflecting a strong U.S. business interest in
amendment that smoothed the way for Over-
Vietnam’s reforming economy and American
seas Private Investment Corporation (OPIC)
strategic interests in working with U.S. friends
and Export-Import Bank support for U.S.
and allies to promote stability and develop-
business in Vietnam.
ment by integrating Vietnam more fully into
the existing East Asian order.
On July 13, 2000, the U.S. and Vietnam
continued their normalization by signing a
The next, and perhaps final, step toward
sweeping bilateral trade agreement (BTA),
full normalization would be granting perma-
which was approved by Congress and signed
nent normal trade relations status to Vietnam.
by President Bush in 2001. Vietnam ratified
This step, which would require congressional
the agreement shortly thereafter. Under the
approval, is likely to be considered in the
BTA, the U.S. extended conditional normal
context of negotiating Vietnam’s accession to
trade relations to Vietnam. In return, Hanoi
the World Trade Organization (WTO). Viet-
agreed to a range of trade liberalization mea-
nam hopes to join the WTO in 2005, though
sures and market-oriented reforms. Imports
some analysts believe this is an overly opti-
from Vietnam have surged since the BTA was
mistic timeframe. Recently, trade friction and
signed, leading to friction over sensitive
clashes over Vietnam’s human rights record
products, such as catfish and textiles. In April
have soured relations somewhat since the
2003, the U.S. and Vietnam signed a bilateral
heady days after the BTA was signed.
textile agreement imposing quotas on Viet-
Congressional Research Service
˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
In November 2003, the United States and Vietnam took two incremental steps in
forming a new, as yet undefined, security relationship. On November 10, the Vietnamese
Defense Minister traveled to Washington. Two weeks later, in another first since the end of
the Vietnam War, a U.S. warship docked in Vietnam.
BACKGROUND AND ANALYSIS
U.S.-Vietnam Relations, 1975-98
U.S.-Vietnam diplomatic and economic relations remained essentially frozen for over
a decade after the 1975 communist victory in South Vietnam, despite a few U.S. overtures
during the Carter Administration that were controversial domestically and were ultimately
thwarted by Vietnamese actions.
Policy Initiatives During the Carter Administration
In March 1977, President Carter sent a commission to Vietnam. The United States no
longer vetoed Vietnam’s application for U.N. membership, paving the way for the July 20,
1977 U.N. Security Council recommendation — undertaken by consensus, without formal
vote — that Vietnam be admitted to the United Nations. The United States proposed that
diplomatic relations quickly be established between the United States and Vietnam, after
which the United States would lift export and asset controls on Vietnam. The Vietnamese
responded that they would neither agree to establish relations nor furnish information on U.S.
POW/MIAs until the United States pledged to provide several billion dollars in postwar
reconstruction aid. Subsequently, they modified this position and provided some limited
information on MIAs, even though the United States provided no aid.
The U.S. Congress responded unfavorably to the Carter Administration initiatives and
the Vietnamese reaction. In 1977, both houses of Congress went on record as strongly
opposing U.S. aid to Vietnam.
Vietnamese actions in 1978 in particular had a long-term negative effect on
U.S.-Vietnamese relations. Vietnam expelled hundreds of thousands of its citizens (many
of Chinese origin) who then became refugees throughout Southeast Asia; aligned itself
economically and militarily with the USSR; and invaded Cambodia, deposing the
pro-Chinese Khmer Rouge regime and imposing a puppet Cambodian government backed
by 200,000 Vietnamese troops. China conducted a one month military incursion along
Vietnam’s northern border in 1979 and kept strong military pressure on the North until 1990.
In the face of these developments, the Carter Administration halted consideration of
improved relations with Vietnam. It worked closely with the members of the Association
of Southeast Asian Nations (ASEAN — then made up of Indonesia, Malaysia, the
Philippines, Singapore and Thailand) to condemn and contain the Vietnamese expansion and
to cope with the influx of refugees from Indochina.
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Developments During the Reagan and Bush Administrations
The Reagan Administration opposed normal relations with Hanoi until there was a
verified withdrawal of Vietnamese forces from Cambodia, a position amended in 1985 to
include a verified withdrawal in the context of a comprehensive settlement. Administration
officials also noted that progress toward normal relations depended on Vietnam fully
cooperating in obtaining the fullest possible accounting for U.S. personnel listed as prisoners
of war/missing in action (POW/MIAs).
As Vietnam withdrew forces from Cambodia in 1989 and sought a compromise peace
settlement there, the Bush Administration decided on July 18, 1990, to seek contacts with
Hanoi in order to assist international efforts to reach a peace agreement in Cambodia.
Regarding the issue of the POW/MIAs, following a visit to Hanoi by a U.S. presidential
delegation in 1987, Vietnam returned hundreds of sets of remains said to be those of U.S.
MIAs. Some, but not most, were confirmed as American. Altogether, from 1974 to 1992,
Vietnam returned the remains of over 300 Americans. Virtually all U.S. analysts agree that
the Vietnamese “warehoused” several hundred remains and tactically released them in
increments. The number of such remains and whether any are still held, is not known with
any certainty. (For details, see CRS Issue Brief IB92101, POWs and MIAs: Status and
Accounting Issues.)
In April 1991, the United States laid out a detailed “road map” for normalization with
Vietnam, welcomed Vietnam’s willingness to host a U.S. office in Hanoi to handle
POW/MIA affairs, and pledged $1 million for humanitarian aid (mainly prosthetics) to
Vietnam. The U.S. office began operation in mid-1991, and the aid was transferred by the
end of FY1991. Also in 1991, the United States eased travel restrictions on Vietnamese
diplomats stationed at the United Nations in New York and on U.S. organized travel to
Vietnam.
In 1992, Vietnamese cooperation on POW/MIA matters improved, especially in the area
of allowing U.S. investigators access to pursue “live sightings” reports.
Important
developments encouraged U.S. officials, armed with evidence (including photographs of
extensive Vietnamese archival information on U.S. POW/MIAs) to request greater access
to such data.
Vietnamese representatives agreed.
The United States pledged, and
subsequently paid out, $3 million of humanitarian aid (mainly prosthetics and aid to
abandoned or orphaned children) for Vietnam; agreed to restore direct telecommunications
with Vietnam; agreed to allow U.S. commercial sales to meet basic human needs in Vietnam;
and lifted restrictions on projects in Vietnam by U.S. nongovernmental organizations. The
United States pledged and provided a disaster assistance grant to Vietnamese flood victims
and provided additional aid to help Vietnam with malaria problems. In November 1992, the
United States lifted restrictions on U.S. telephone service to Vietnam, allowing direct service
between the two countries. In December, the United States eased some restrictions on U.S.
companies doing business in Vietnam.
Coinciding with these developments, the Senate Select Committee on POW/MIA affairs
conducted what many consider the most extensive independent investigation of the
POW/MIA issue undertaken. The committee, chaired by John Kerry and vice-chaired by
Bob Smith, operated from August 1991 - December 1992. In early 1993, the committee
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issued its report, which concluded that there was some evidence that POWs were alive after
the U.S. withdrawal in 1973, and that although there was no “conspiracy” in Washington to
cover up live POWs, the U.S. government had seriously neglected and mismanaged the issue,
particularly in the 1970s. The committee’s televised hearings played a major role in defusing
much of the passion that had surrounded the POW issue.
Apart from Cambodia and the POW/MIA matter, the Reagan and Bush Administrations
concerned themselves with a third problem — humanitarian issues. Major progress in
negotiations with Vietnam resulted in plans to: facilitate emigration from Vietnam of
relatives of Vietnamese-Americans or permanent Vietnamese residents of the United States;
regulate the flow of Vietnamese immigrants to the United States and other countries under
the so-called Orderly Departure Program managed by the U.N. High Commissioner for
Refugees; resolve the issue of the estimated several thousand Amerasians (whose fathers are
Americans and whose mothers are Vietnamese) who reportedly wish to emigrate from
Vietnam to the United States; and obtain release from Vietnamese prison camps and the
opportunity to immigrate to the United States of thousands of Vietnamese who worked for
the United States in South Vietnam or were otherwise associated with the U.S. war effort.
Meanwhile, U.S. officials in Congress and the Administration expressed repeatedly their
concern about the large numbers of political prisoners said to be in Vietnam.
Developments During the Clinton Administration
Early moves to improve relations during the Clinton Administration included the
President’s announcement on July 2, 1993, that the United States would no longer oppose
arrangements supported by France, Japan, and others allowing for resumed international
financial institution aid to Vietnam; however, he said the U.S. economic embargo on
Vietnam would remain in effect. A high-level U.S. delegation visited Hanoi in mid-July to
press for progress on POW/MIAs; the delegation gave the Vietnamese leaders U.S.
documentary evidence that would help settle Vietnamese MIA cases; the delegation also
disclosed that U.S. consular officials would henceforth be stationed in Hanoi. Individual
Members of Congress played an important behind-the-scenes role in encouraging the Clinton
Administration to take many of these, and subsequent, steps.
President Clinton’s September 13, 1993, renewal of his authority to maintain trade
embargoes included an eased version of the one on Vietnam that allowed U.S. companies to
bid on development projects funded by international financial institutions in Vietnam. Also
in September, 1993, the Administration approved $3.5 million in U.S. aid to extend two
humanitarian programs (prostheses and orphans) in Vietnam.
On February 3, 1994,
President Clinton ordered an end to the U.S. trade embargo on Vietnam. The action came
after many months of high-level U.S. interaction with Vietnam in resolving POW/MIA cases,
and a January 27, 1994 vote in the Senate urging that the embargo be lifted, language that
was attached to broad authorizing legislation (H.R. 2333). The language was controversial
in the House, but H.R. 2333 passed Congress; it was signed into law (P.L. 103-236) on April
30, 1994.
On January 25, 1995, the United States and Vietnam settled bilateral diplomatic and
property claims and opened liaison offices in Washington and Hanoi on February 1, and
February 3, 1995, respectively. The Treasury Department announced on March 9, 1995, that
it was unblocking accounts in which Vietnam or its nationals had an interest. On July 11,
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1995, President Clinton announced that he would establish ambassadorial-level relations
with Vietnam. The FY1996 State Department Appropriations bill (H.R. 2076) included
language barring funding for full diplomatic relations with Vietnam until more progress was
made on POW/MIA issues. President Clinton vetoed H.R. 2076 on December 19, 1995. On
August 6, 1995, Secretary of State Christopher opened the U.S. Embassy in Hanoi, and
Vietnam’s embassy in Washington opened on August 5, 1995. An attempt in the Senate to
restrict trade ties with Vietnam failed on September 20, 1995.
Controversy continued in 1995 and 1996 over provisions in legislation (H.R. 1561) that
would place conditions on upgrading U.S. relations with Vietnam, and that would admit
additional boat people from camps in Hong Kong and elsewhere to the United States. H.R.
1561 passed Congress in March 1996, but was vetoed by the President, and the veto was
sustained on April 30, 1996. A modified version of the Vietnam provisions in H.R. 2076
was signed by President Clinton on April 26, 1996, as part of H.R. 3019, the Omnibus
Appropriations bill (P.L. 104-134). To comply with the provisions, President Clinton issued
Presidential Determination 96-28 on May 30, 1996, saying that Vietnam is cooperating in
full faith with the United States on POW/MIA issues. On April 10, 1997, the Senate
approved former Vietnam War POW and Member of Congress Pete Peterson as U.S.
Ambassador to Vietnam.
Economic relations steadily improved over the next several years, culminating in the
signing of a bilateral trade agreement in 2000. (See below) While in Vietnam in late June
1997, Secretary of State Albright urged greater economic reform and better human rights;
she signed a bilateral agreement on copyrights and said that the U.S. Trade and Development
Program would conduct business in Vietnam. On December 18, 1997, National Security
Adviser Sandy Berger said the Administration was consulting with Congress on granting
Vietnam a waiver from the Jackson-Vanik amendment that would smooth the way for
Overseas Private Investment Corporation (OPIC) and Export-Import Bank to support U.S.
business activities in Vietnam. On March 11, 1998, President Clinton granted the waiver,
and a formal agreement on OPIC was signed eight days later. In November 1999, OPIC
signed its first financing agreement — a $2.3 million loan to Caterpillar Inc.’s authorized
dealership in Vietnam — for American business in Vietnam since the end of the Vietnam
War. The U.S. Export-Import Bank announced on April 10, 1998 that it was ready to finance
sales to Vietnam. On December 9, 1999, the Ex-Im Bank signed two framework agreements
with the State Bank of Vietnam to facilitate project financing cooperation between the two
agencies.
Recent U.S.-Vietnam Relations
Economic Ties — the Bilateral Trade Agreement
On December 10, 2001, a sweeping bilateral trade agreement (BTA) between the United
States and Vietnam entered into force. (See CRS Report RL30416, The Vietnam-U.S.
Bilateral Trade Agreement.) Under the BTA, which by law required congressional approval,
the U.S. extended conditional normal trade relations (NTR) status to Vietnam, a move that
significantly reduced U.S. tariffs on most imports from Vietnam. In return, Hanoi agreed to
undertake a wide range of market-liberalization measures, including extending NTR
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treatment to U.S. exports, reducing tariffs on goods, easing barriers to U.S. services (such
as banking and telecommunications), committing to protect certain intellectual property
rights, and providing additional inducements and protections for foreign direct investment.
The agreement paved the way for President Bush to extend conditional NTR treatment
to Vietnam. NTR treatment is conditional because Vietnam’s trade status is still subject to
annual Congressional review under the U.S. Trade Act of 1974’s Jackson-Vanik provisions,
which govern trade with non-market economies. On May 29, 2003, President Bush renewed
Vietnam’s year-long waiver of Jackson-Vanik amendment restrictions on bilateral economic
activities. Vietnam has received a presidential waiver every year since 1998. In July,
H.J.Res. 64, disapproving of the waiver renewal, was introduced, but saw no floor action.
Since 1998, each time waivers have been granted to Vietnam, the House has defeated
disapproval resolutions. In addition to granting Vietnam conditional NTR treatment, the
Jackson-Vanik waiver also allows the U.S. Overseas Private Investment Corporation (OPIC)
and the U.S. Export-Import Bank to support U.S. businesses exporting to and/or operating
in Vietnam.
Implementation of the BTA. Most of Vietnam’s concessions in the BTA are due
to be phased in between 2004 and 2006. However, a number of reforms took effect upon the
BTA’s entry into force on December 10, 2001. These include according national treatment
(i.e. not discriminating between foreign and domestic enterprises) business activities,
allowing all enterprises to import and export, eliminating most non-tariff barriers,
streamlining the process for foreign investors to obtain licenses and approval, and publicizing
laws, regulations and administrative procedures pertaining to any matter covered by the
Trade Agreement. Hanoi appears to have taken steps to implement nearly all of these initial
commitments. In May 2002, senior officials from Washington and Hanoi launched a Joint
Committee on Development of Economic and Trade Relations, a consultative body called
for in the BTA.
U.S.-Vietnam Trade Flows. The BTA has led to a sharp rise in U.S.-Vietnam trade,
which in 2002 was worth over $2.9 billion, more than double the value in 2001 (see Table
1), and more than ten times the $223 million in bilateral trade when relations were
normalized in 1994. Trade — particularly imports from Vietnam — has continued to surge
in 2003; trading volume in the first three quarters of the year was two and a half times the
level for same period in 2002. Since 1997 the U.S. has run an increasingly large trade deficit
with Vietnam. Imports from Vietnam are concentrated in a handful of products: clothing,
shrimp, fuel products and footwear accounted for over three-quarters of total imports from
Vietnam in 2002. Most of the $1.4 billion increase in imports came from a sharp rise in
clothing imports, which increased to over $900 million, up from the $45-$50 million range
that Vietnam had recorded in 2000 and 2001. By dollar value, clothing is now the largest
import item from Vietnam.
A Bilateral Textile Agreement. In 2002, Vietnam accounted for 1.38% of U.S.
textile and apparel imports, while 33% of Vietnam’s textile and apparel exports went to the
U.S. market. The BTA contains no restrictions on Vietnamese textile exports to the United
States, but the safeguard provision would allow the U.S. to impose quotas on textile imports
in the event of a surge of imports. During the congressional debate over the BTA, many
Members urged the Bush Administration to negotiate a bilateral textile agreement soon after
the BTA came into effect. On April 25, 2003, the United States and Vietnam completed
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nearly three weeks of intense negotiations by signing a bilateral textile agreement that places
quotas on 38 categories of Vietnam’s clothing exports, including cotton pants and cotton knit
shirts/blouses, the two most important items. The deal was reached after the U.S. side
threatened to unilaterally impose more restrictive quotas if the Vietnamese did not agree to
U.S. demands. On labor rights, the agreement calls for Vietnam to reaffirm its commitments
to and cooperate with the International Labor Organization, and to continue its bilateral
programs with the U.S. Labor Department. These provisions are far less detailed and
comprehensive than the labor provisions included in the U.S.-Cambodia textile agreement,
which several Members of Congress had said should be used as a model for a U.S.-Vietnam
agreement.
Table 1. U.S.-Vietnam Trade, 1994-2003
(millions of dollars)
U.S. Imports from
U.S. Exports
Total Trade
Trade Balance
Vietnam
to Vietnam
1998
553.4
274.2
827.6
-279.2
1999
601.9
277.3
879.2
-324.6
2000
827.4
330.5
1,157.9
-496.9
2001
1,026.4
393.8
1,420.2
-632.6
2002
2,391.7
551.9
2,943.6
-1839.8
Jan-Sept 2002
1,548.0
343.5
1,891.5
-1204.5
Jan-Sept 2003
3,557.1
1,137.4a
4,694.5
-2419.7
Major Imports
clothing, frozen shrimp, petroleum products, footwear, coffee
from Vietnam
Major Exports
aircraft, industrial & electronic machinery, raw cotton
to Vietnam
Source: U.S. International Trade Commission. Data are for merchandise trade on a customs basis.
a. U.S. exports in 2003 include Vietnam Airlines’ purchase of four Boeing 777s, worth over $700 million total.
The Catfish Dispute. The first significant potential post-BTA trade dispute surfaced
in 2001, when American catfish farmers and their supporters charged that imports of
Vietnamese catfish varieties (also known as basa and tra, from the pangasius family of
catfish) — which have increased sharply in recent years — were improperly labeled as
“catfish” and sold at a lower price than the North American varieties, which are of the
ictaluridae catfish family.
The 2002 U.S. Farm Act (P.L. 107-171) prohibited non-
ictaluridae fish from being marketed as “catfish” in the United States. On June 28, 2002,
the American Catfish Farmers Association filed an anti-dumping petition against imports of
Vietnamese frozen fish fillets. In June and July 2003, the Commerce Department and
International Trade Commission issued rulings that found Vietnamese catfish exporters had
dumped their product on the U.S. market, causing injury to the U.S. industry. As a result of
the rulings, most Vietnamese catfish exports will be assessed a punitive tariff between 37%
and 64%.
The Vietnamese industry has appealed the decision to the U.S. Court of
International Trade. Vietnam’s exports of catfish increased from over 3 million metric tons
(MT) in 1999 to nearly 22 million MT in 2002, capturing almost 20% of the U.S. market.
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A Dispute over Shrimp? There are reports that in the near future U.S. shrimpers
may initiate their own anti-dumping petition against imports of shrimp from several
countries, including Vietnam. Foreign shrimp accounts for over 85% of the U.S. market.
In 2002, Vietnam was the fourth-largest foreign supplier of shrimp.
Intellectual Property Rights (IPR). In April 2002, the Bush Administration placed
Vietnam on its “Special 301 watch list” for allegedly poor protection of intellectual property
rights, particularly in the areas of music recordings and trademark protection.1 The BTA
requires Vietnam to make its IPR regime WTO-consistent in 2003.
U.S. Bilateral Economic Assistance to Vietnam. U.S. aid to Vietnam has
increased in recent years.
Programs administered by the United States Agency for
International Development (USAID), for instance, rose from under $2 million in 1996 to
over $8 million in 2001. In November 2000, USAID officially opened an office in Hanoi,
its first presence in Vietnam since the end of the Vietnam War. In FY2002, total U.S.
assistance to Vietnam — which includes USAID programs — exceeded $28 million. The
United States has pledged at least $28 million in bilateral assistance for 2003. Major aid
initiatives in Vietnam include HIV/AIDS care and aid to children, educational exchange
programs, food assistance, and trade promotion programs to help Vietnam prepare for and
implement the U.S.-Vietnam bilateral trade agreement.
Table 2 shows a breakdown of estimated U.S. aid to Vietnam from fiscal year 2000
through fiscal year 2003. The highlighted rows indicate aid likely to be affected by certain
“Vietnam Human Rights Act” provisions of the House-passed version of the Foreign
Relations Authorization Act of 2003 (H.R. 1950). These provisions would cap existing non-
humanitarian U.S. assistance programs at FY2003 levels if the President does not certify that
Vietnam is making “substantial progress” in human rights. The shaded programs would
likely be affected because they meet all three of the following criteria: 1) the aid program is
authorized under the Foreign Assistance Act of 1961 (the Vietnam Human Rights Act
defines non-humanitarian assistance as any assistance under the 1961 act); 2) the legislation
authorizing the aid program does not have “notwithstanding” language, that would exempt
the program from restrictions in other legislation; and 3) the aid program does not appear on
the Vietnam Human Rights Act’s list of exempted categories.
Political and Security Ties
Vietnam and the United States gradually have been expanding their political and
security ties, though these have lagged far behind the economic aspect of the relationship.
In the past year, however, Vietnam’s leadership appears to have decided to expand their
country’s ties to the United States. These efforts culminated in November 2003, when
1 “Special 301” refers to Section 182 of the Trade Act of 1974. Since the start of the Special 301
provision in 1989, the USTR has issued annually a three-tier list of countries judged to have
inadequate regimes for IPR protection, or to deny access: 1) priority foreign countries are deemed
to be the worst violators, and are subject to special investigations and possible trade sanctions; 2)
priority watch list countries are considered to have major deficiencies in their IPR regime, but do
not currently warrant a Section 301 investigation; and 3) watch list countries, which maintain IPR
practices that are of particular concern, but do not yet warrant higher level designations. See Wayne
Morrison, Section 301 of the Trade Act of 1974, CRS Report 98-454.
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Vietnamese Defense Minister Pham Van Tra visited Washington and the guided missile
frigate USS Vandergrift and its 200 soldiers made a four-day call at the port of Saigon. Both
events were firsts since the end of the Vietnam War. It is still unclear how far, how fast, and
in what form any new security relationship will develop.
Table 2. U.S. Assistance to Vietnam, Fiscal Years 2000-2003
($ million)
FY2003 FY2002 FY2001 FY2000
Demining
NADR (State)
n.a.
4.00
3.50
3.15
Equipment Transfer
n.a.
1.50
n.a.
1.75
Demining Survey
n.a.
1.00
n.a.
1.40
Export Control and Border Security (EXBS)
n.a.
n.a.
n.a.
n.a.
Humanitarian Demining (HD)
1.54
1.50
1.65
1.00
DoD Demining Management Software
n.a.
0.00
0.70
0.00
DoD OHDACA
n.a.
0.12
0.10
0.45
MSTI System - database of ordnance deployed in
n.a.
0.00
0.45
0.00
V.War
Total Demining
1.54
4.12
4.75
3.60
Disaster Assistance
Early Storm Warning System (USAID-DA)
0.48
n.a.
0.96
0.00
Early Flood Warning System (USAID-DA)
0.25
n.a.
0.00
0.94
Emergency Disaster Assistance - Floods (USAID-DA)
0.25
n.a.
0.47
0.70
Urban Disaster Mitigation Program (USAID-DA)
n.a.
n.a.
0.25
0.00
Total Disaster Assistance
0.98
0.77
1.68
1.64
Economic Growth
Trade Promotion: BTA Implementation (USAID)
2.00
4.10
3.64
1.50
Private Sector Strengthening
3.60
n.a.
n.a.
n.a.
Non-profit organization legal promotion
0.35
n.a.
n.a.
n.a.
Total Economic Growth
5.60
4.10
3.64
1.50
Education
Fulbright Program (State Dept)
4.00
4.00
4.00
4.00
Vietnam Education Foundation (In committee —
5.00
0.00
0.00
0.00
projected)
Other
0.00
0.00
2.00
2.00
Total Education
9.00
4.00
6.00
6.00
Environment
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FY2003 FY2002 FY2001 FY2000
US-Asia Environmental Partnership (USAID)
1.00
0.56
0.85
0.64
East Asia & Pacific Environmental Initiative (State)
n.a.
0.40
0.00
0.00
Other
n.a.
0.00
0.00
0.28
Total Environment
1.00
0.96
0.85
0.92
Food Assistance
Food for Progress (USDA)
n.a.
1.00
0.00
0.00
416 B (USDA)
n.a.
3.68
9.18
3.00
Total Food Assistance
n.a.
4.68
9.18
3.00
Health and Aid to Children
HIV/AIDS total
5.76
5.20
4.35
1.76
Leahy War Victims, Displaced Children & Orphans
2.40
3.00
3.00
3.00
(USAID)
Maternal-Child Health (USAID)
n.a.
0.50
0.00
0.00
Safe Vietnam initiative (USAID)
0.00
0.00
0.25
0.00
Other Vulnerable Children (USAID)
0.51
0.00
0.00
0.00
Accident and Injury Projects (CDC)
n.a.
n.a.
n.a.
n.a.
Total Health and Aid to Children
8.67
8.70
7.60
4.76
IMET
0.10
0.05
0.00
0.00
Labor Cooperation (Labor Dept)
Social Insurance
0.75
n.a.
n.a.
n.a.
Employment Service Centers
0.55
n.a.
n.a.
n.a.
People with Disabilities
0.33
n.a.
n.a.
n.a.
Child Labor
0.20
n.a.
n.a.
n.a.
approx
Social Accountability
0.38
n.a.
n.a.
n.a.
Total Labor
2.20
1.50
4.30
0.00
OPIC
n.a.
0.00
0.00
0.00
Trafficking (Regional Women’s Issues - State)
0.12
0.00
0.23
0.00
TOTAL
28.21
28.88
38.23
21.43
Sources: Compiled by CRS from USAID, State Dept., USDA, CDC, Labor Dept. data.
Note: Acronyms: CDC = Centers for Disease Control; DA = Development Assistance; DoD = Department of
Defense; IMET = International Military Education and Training; NIH = National Institutes of Health; NADR
= Non-proliferation, Demining, Anti-Terrorism & Related Programs; OHCADA = Overseas Humanitarian,
Disaster, and Civic Aid; USAID = United States Agency for International Development; USDA = United States
Department of Agriculture
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President Clinton visited Vietnam from November 16-20, 2000, the first trip by a U.S.
President since Richard Nixon went to Saigon (now Ho Chi Minh City) in July 1969. The
purpose of the trip was largely symbolic, to highlight the degree to which the U.S. and
Vietnam have normalized their relations since the Vietnam War. The visit was notable for
the unexpected enthusiasm expressed by ordinary Vietnamese, who thronged by the thousand
to greet or catch a glimpse of the President and the First Lady. These spontaneous outbursts,
combined with the President’s public and private remarks about human rights and
democratization, triggered rhetorical responses from conservative Vietnamese leaders.
During the visit, Vietnamese leaders pressed the U.S. for compensation for Agent Orange
victims, for assistance locating the remains of Vietnam’s soldiers who are still missing from
fighting with the U.S., and for an increase in the United States’ bilateral economic assistance
program (the U.S. pledged $21.9 million in bilateral aid to Vietnam in 2000). During
Clinton’s trip, the U.S. took some small steps toward meeting these demands.
Anti-Terrorism Cooperation. Vietnam has given the U.S. modest support in the
anti-terrorism campaign. Hanoi has twice granted overflight rights to U.S. military planes,
provided $300,000 in supplies to the Afghanistan reconstruction effort, and instituted name
and asset checks on suspected terrorists and terrorist organizations. Vietnam also supported
the U.S.-ASEAN Counterterrorism Declaration issued in Brunei in July 2002, though
Vietnam joined with Indonesia to oppose any reference to the use of U.S. forces into the
region. Part of Vietnam’s motivation for cooperating on counterterrorism may be to try to
secure U.S. support for what Hanoi describes as “terrorist” groups that operate within
Vietnam — such as the Montagnard tribes in the Central Highlands — and expatriate groups
in U.S. that have been giving the Montagnards assistance, occasionally through violent
means.
Drug Trafficking. Drug trafficking through Vietnam has risen dramatically in recent
years, due to the country’s proximity to heroin-producing areas in Laos and Burma, and to
methyl-amphetamine producing regions in southern China. In February 2000, the U.S. Drug
Enforcement Agency opened an office in Hanoi in February 2000.
Human Rights
On humanitarian issues, U.S. law (P.L. 105-277, signed October 21, 1998), requires
the Administration report annually on Vietnam’s release of political and religious prisoners
and on Vietnam’s cooperation with the United States to obtain full and free access to persons
of humanitarian interest to the United States for interviews and possible transfer to the
United States.
The U.S. State Department and human rights groups have reported that Vietnam’s
human rights situation has worsened over the past year, particularly with regard to the
treatment of ethnic minorities, unregistered religious groups, and individual citizens
criticizing the government. There were reports that several prominent dissidents were
harassed and/or detained. Hanoi also retains strict controls over the Vietnamese press.
During his July 2001 trip to Vietnam, Secretary of State Powell reportedly raised the issues
of human and religious rights in his conversations with Vietnamese leaders, though he
refrained from raising the issue in his public appearances. During the last annual “human
rights dialogue” with Vietnam, U.S. officials reportedly raised a number of specific issues
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of concern, while Vietnam urged the U.S. to do more to alleviate the continued suffering
caused during the Vietnam War. (For a discussion of the Montagnard/Central Highlands
refugee issue, see “Unrest in the Central Highlands” below.)
On the matter of religious freedom, U.S. law (P.L. 105-292, signed October 27, 1998),
requires the State Department to report to Congress annually on the state of religious freedom
in other countries. Vietnam’s respect for the freedom of worship appears to varies by region.
In some areas — particularly around Ho Chi Minh City, where there is a large concentration
of Roman Catholics — local officials are relatively tolerant, and Vietnamese religious
officials have reported an increase in religious activity and observance. In August 1999, for
example, authorities allowed approximately 200,000 Catholics to attend a special Mass in
central Vietnam, in what was thought to be the largest event not arranged by the Communist
Party in its 24 years in power. The Catholic Church claims eight million followers out of
Vietnam’s 76 million, predominantly Buddhist, population.
However, the State Department report noted that in other regions — particularly those
populated by ethnic minorities — authorities allow Vietnamese little discretion in practicing
their faith.
Indeed, according to Western human rights watch groups and the State
Department officials, over the past several months the government has increased its
repression of unofficial religious organizations, particularly those in rural areas populated by
ethnic minorities. Throughout the country, the government requires religious groups to
register, and uses this process to monitor and restrict the operations of religious groups.
Local officials reportedly continue to detain and imprison Vietnamese citizens for their
religious beliefs. Recently, Western news sources have uncovered evidence of police raids
on unofficial Christian groups, and in October 2001, a prominent Catholic priest, Father
Nguyen Van Ly, was sentenced to 15 years in prison for anti-government activities. On April
3, 2003, the Vietnam Human Rights Act of 2003 (H.R. 1587) was introduced. The measure
would ban increases (over FY2003 levels) in non-humanitarian aid to the Vietnamese
government if the President does not certify that Vietnam is making “substantial progress”
in human rights. The act allows the President to waive the cap on aid increases. Vietnamese
officials have criticized the bill, arguing that U.S.-Vietnam ties must be based upon non-
interference in each other’s affairs.
POW/MIA Issues
In recent years, the United States and Vietnam have devoted increased resources to
POW/MIA research and analysis. By 1998 a substantial permanent staff in Vietnam was
deeply involved in frequent searches of aircraft crash sites and discussions with local
Vietnamese witnesses throughout the country. The Vietnamese authorities also had allowed
U.S. analysts access to numerous POW/MIA-related archives and records. The U.S. Defense
Department has reciprocated by allowing Vietnamese officials access to U.S. records and
maps to assist their search for Vietnamese MIAs. The increased efforts have led to
substantial understanding about the fate of several hundred of the over 2,000 Americans still
unaccounted for in Indochina. On September 21, 1998, U.S. Ambassador to Vietnam
Peterson told the media in reference to Americans still listed as missing from the Vietnam
War that “...it is very, very, very unlikely that you would expect to see any live Americans
discovered in Vietnam, Cambodia, or Laos.” Official U.S. policy, however, does not remove
a name from the rolls of those unaccounted for unless remains are identified. (For more on
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the POW/MIA issue, see CRS Issue Brief IB92101, POWs and MIAs: Status and Accounting
Issues.)
Vietnam’s Situation
Ever since communist North Vietnamese forces defeated U.S.-backed South Vietnam
in 1975, reunified Vietnam has been struggling with how to maintain a balance between two
often contradictory goals — maintaining ideological purity and promoting economic
development. For the first decade after reunification, the emphasis was on the former. By
the mid-1980s, disastrous economic conditions led the country to adopt a more pragmatic
line, enshrined in the doi moi (renovation) economic reforms of 1986. Under doi moi, the
government gave farmers greater control over what they produce, abandoned central state
planning, cut subsidies to state enterprises, reformed the price system, and opened the
country to foreign direct investment.
Economic Developments
For the first decade after the doi moi reforms were launched, Vietnam became one of
the world’s fastest-growing countries, averaging around 8% annual GDP growth from 1990
to 1997. Agricultural production doubled, transforming Vietnam from a net food importer
into the world’s second-largest exporter of rice and third-largest producer of coffee. The
move away from a command economy also helped reduce poverty levels from 58% of the
population in 1992 to 37% in 1997.2 A substantial portion of the country’s growth was
driven by foreign investment, primarily from Southeast Asian sources, most of which the
government channeled into the country’s state-owned sector.
By the mid-1990s, however, the economic reform movement had stalled, as
disagreement between reformers and conservatives paralyzed economic decision-making.
The economy staggered after the 1997 Asian financial crisis, as real GDP growth fell to 5.8%
in 1998, and 4.8% in 1999. Foreign direct investment (FDI) plummeted to $600 million in
1999, the lowest level since 1992.
Over the last two years, Vietnam’s economic situation has improved somewhat.
Growth rebounded to 6.7% in 2000 and 6.8% in 2001, and 7% in 2002. FDI commitments
have increased, to the moderate level of $2.3 billion in 2001. However, Vietnam remains an
overwhelmingly poor country; about one-third of Vietnamese children under 5 years of age
suffer malnutrition.
Per capita gross domestic product (GDP) is estimated at $370,
equivalent to $1,850 when measured on a purchasing power parity basis. Growth continues
to be impeded by Vietnam’s failure to tackle its remaining structural economic problems —
including unprofitable state-owned enterprises, a weak banking sector, massive red tape, and
bureaucratic corruption — as major impediments to continued growth. In recent months,
there have been signs that the government has redoubled its commitment to economic
reforms.
2 Vietnam Development Report 2000: Attacking Poverty (Draft), Joint Report of the Vietnam
Government-Donor-NGO Working Group, November 15, 1999, p. ii.
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Rapid growth has transformed Vietnam’s economy, which has come to be loosely
divided into three sectors: the state-owned, the foreign-invested, and the privately owned,
which make up roughly 50%, 30%, and 20% of industrial output, respectively. For much of
the 1990s, Vietnam’s foreign-invested enterprises (FIEs) were among the country’s most
dynamic. Since the 1997 Asian financial crisis, the private sector has also made impressive
gains, to the point where privately owned firms employ nearly a quarter of the workforce.
Most of the giant state-owned enterprises (SOEs), meanwhile, are functionally bankrupt, and
require significant government subsidies and assistance to continue operating. In 1990, 2.5
million people were employed by state firms. In 2001, this figure was down to 1.6 million.
Political Trends
Vietnam’s experiments with political reform have lagged behind its economic changes.
A new constitution promulgated in 1992, for instance, reaffirmed the central role of the
Communist Party in politics and society, and Vietnam remains a one-party state. Although
personal freedoms have increased dramatically, Hanoi still does not tolerate signs of
organized political dissent. In subtle ways, however, the decision to prioritize economic
development above ideological orthodoxy has led the Party to slowly loosen its former
stranglehold on political power. Recognizing that Party cadres often were ill-suited to
administering its own policy directives, for instance, the Party created a more powerful and
professionalized executive branch in the 1992 constitution. The new constitution also gave
more influence to the legislative branch, the National Assembly, in part because the Party
realized it needed to make the organs of government more responsive at the grass-roots level.
Over the past decade, the Assembly has slowly and subtly increased its influence. In
December 2001, constitutional amendments were passed allowing the Assembly to hold no-
confidence votes against the government, and to dismiss the president and prime minister
(though not the general secretary of the Party).
Rapid economic growth, increased integration with the global economy, and weak
domestic institutions have caused a rise in corruption and a decline in the Vietnamese
Communist Party’s (VCP) authority, alarming many Party hard-liners.
As a result,
Vietnamese policy-making in recent years has been virtually paralyzed, as reformist and
conservative elements within the Party have battled to a stalemate over how to deal with the
major economic and demographic forces transforming the country. The former group calls
for a steady roll-out of new reforms and increased integration into the global economy. The
latter fears that economic reform will lead to the loss of government control over the
economic means of production and financial and monetary levers; they also fear the possible
infiltration of heterodox outside ideas. Vietnam’s consensus-based decision-making style,
combined with the absence of any paramount leader, has meant that these divisions have
produced only piecemeal economic reforms, though implementing the BTA may force more
significant changes.
The 9th Party Congress. Vietnamese Communist Party Congresses, which are held
every five years, often are the occasions for major leadership realignments and set the
direction for Vietnam’s economic, diplomatic, and social policies. At its ninth Party
Congress that ended on April 22, 2001, Vietnam’s Communist Party selected Nong Duc
Manh as its Secretary General, the Party’s top post. Manh (60) is generally considered to
be more moderate than his predecessor, Le Kha Phieu (69), a conservative who was ousted
after a heated struggle. Significantly, Manh’s selection was made possible when the Party’s
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Central Committee rejected — an unprecedented move — the Politburo’s decision to endorse
Phieu for another term. Manh, the former speaker of Vietnam’s National Assembly, is an
ethnic Tay, making him the first member of an ethnic minority to head Vietnam’s
Communist Party. In other significant moves, the 9th Party Congress reduced the size of the
Politburo (from 19 to 15 members), retired seven Politburo members, and shrunk the Central
Committee from 170 to 150 members.
Manh’s selection as Secretary General is but the latest in a long string of seemingly
contradictory personnel shifts and policy moves that Vietnam-watchers have been struggling
to interpret for signs that the economic reformers or hard-liners have gained the upper hand.
Manh’s selection has not yet resulted in the expected acceleration of reforms, as he has
devoted most of his attention to an anti-corruption campaign that features greater local
supervision of local authorities and the dismissal of some senior party leaders. A sign that
Manh may have begun to try to revive the doi moi (economic renovation) process occurred
in January 2002, when he directed the Party to begin considering how to develop the private
sector and whether Party members should be allowed to start their own businesses.
Vietnam’s new leadership will have to confront the problem of how to reverse the
Communist Party’s declining legitimacy. Attracting new recruits into the Party has become
increasingly difficult, particularly among young Vietnamese — a major problem since more
than half of the population is under the age of 25. Some prominent retired military leaders,
including war hero General Vo Nguyen Giap, have publicly called for the Party to become
more democratic.
Unrest in the Central Highlands Region. Additionally, over the past several
years, there have been reports of protests and riots by peasants in the Central Highlands
provinces against local government corruption and by ethnic minorities against encroachment
on their ancestral lands by recent settlers. In February 2001, thousands of minorities,
primarily from Montagnard groups, protested in the Central Highlands, the largest-scale
social unrest in years. The Vietnamese government dispatched military troops and local
police to quell the unrest, and in the spring of 2001 launched a crackdown against the
protesters. There are reports that the government has continued its crackdown into early
2003.
Vietnam has accused U.S. groups of providing financial and logistical support to the
protestors. Hanoi has also criticized the United States for granting asylum to 24 Vietnamese
refugees, all members of the Central Highlands minority groups that protested, who fled into
Cambodia following the unrest. Some refugees reported that the Vietnamese government
has imprisoned and tortured many protestors. Hundreds of asylum seekers from Vietnam
remain in Cambodia.
A repatriation agreement signed in January 2002 by Vietnam,
Cambodia, and the United Nations High Commissioner for Refugees (UNHCR) crumbled
after Vietnam refused to abide by its agreement to allow the UNHCR access to the Central
Highlands to monitor refugee returns. To settle the dispute, Cambodia in late March 2001
accepted an offer from the United States to resettle the more than 900 Montagnards that
remained in Cambodia. There is speculation that Vietnam’s acquiescence to the plan was
obtained by Cambodia’s pledge to close its borders to future asylum-seekers from Vietnam.
Vietnam’s Response to SARS. On April 28, 2003, Vietnam became the first
country to be declared by the World Health Organization (WHO) to contain and eliminate
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Severe Acute Respiratory Syndrome (SARS), which apparently was first spread to Vietnam
in February 2003 by an American businessman traveling from Hong Kong. The disease
infected at least 63 people, five of whom died. Most of the victims were hospital workers.
On April 29, the U.S. Center for Disease Control downgraded its traveler’s notification for
Vietnam from a travel advisory to a travel alert, not advising against travel, but informing
travelers of a health concern and advising them to take certain precautions. The Vietnamese
government has been praised for its quick and relatively transparent response to the SARS
outbreak. After consulting with the WHO in early March, Hanoi mobilized virtually the
entire government to identify and isolate infected individuals. A task force was formed that
reported to the prime minister. Information gathering was centralized. Infected buildings
and individuals were quarantined. And an immigration screening system has been set up.
Foreign and Defense Policy
For many years, a major impediment to Vietnam’s development was the strong
international sanctions imposed in response to Vietnam’s 1978 invasion and subsequent 11-
year occupation of Cambodia. Faced with a cutoff of much aid from the Soviet bloc, the
Vietnamese in the early 1990s increased their flexibility on a Cambodian settlement, moved
to accommodate China on sensitive issues, and stepped up action on the POW/MIA and
other humanitarian issues with the United States. In the mid-1990s, Hanoi continued the
process of rejoining the world political community by joining the regional political group,
the Association of Southeast Asian Nations (ASEAN), the regional security forum, the
ASEAN Regional Forum (ARF), and the regional economic group, the Asian Pacific
Economic Cooperation (APEC) forum.
Vietnam has had periodic spats with its neighbors over the islands in the South China
Sea. In 1974, China seized the Paracel island chain from Vietnam. In 1988, the Vietnamese
and Chinese navies clashed over conflicting claims to the Spratly Islands, parts or all of
which are also claimed by Taiwan, Malaysia, the Philippines, and Brunei. Although most
of the Spratlys are low-lying reefs and rocky outcrops, the sea bed beneath them is thought
to contain massive oil and gas reserves, and the 155,000 square miles of surrounding waters
are home to rich fishing grounds. Hanoi’s latest flare-up in the Spratlys occurred in October
1999, when Vietnamese troops on Tennent Reef fired at a Filipino reconnaissance plane
flying low over a suspected Vietnamese military installation.
In recent years, Hanoi has improved ties with many of its neighbors, the October 1999
incident with Manila notwithstanding. Most significantly, Vietnam has moved to fully
normalize relations with mainland China. Following Chinese Prime Minister Zhu Rongji’s
four-day visit to Vietnam in early December, for instance, the two sides signed a long-elusive
land border treaty on December 30, 1999. In late December 2000, Vietnamese President
Tran Duc Long travelled to Beijing, where he signed an agreement establishing the two
countries’ sea border in the Gulf of Tonkin.
The two countries, however, still have
overlapping claims to the Spratly Island chain in the South China Sea, differences that led
to military clashes in the late 1980s. Along with other Southeast Asian nations, Vietnam has
tried — thus far unsuccessfully — to convince China to agree to a multilateral code of
conduct for the South China Sea. Vietnam did not push the issue in 2001 during its tenure
as chair of the standing committee of the Association of Southeast Asian Nations (ASEAN).
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11-28-03
Shortly after assuming the ASEAN chair, Vietnam rebuffed United Nations Secretary
General Kofi Annan’s suggestion that it convene a troika of ASEAN ministers to help start
a dialogue between Myanmar’s military government and dissident Aung San Suu Kyi. A
Vietnamese official said that Hanoi had rejected the idea because it constituted an
unwarranted “interference” in Myanmar’s affairs. During the 2000 annual meeting of
ASEAN Foreign Ministers, participants had agreed that the organization should form a troika
of officials to resolve political and security problems of common concern in the region.
In 1999 and 2000, Vietnam improved its historically troubled relations with Cambodia,
sending a high-level delegation to Phnom Penh, strongly supporting Cambodia’s entry into
ASEAN in early 1999, and pledging to resolve outstanding border disagreements by the end
of 2000. On November 26, 1999, Vietnam signed a cross-border agreement with Laos and
Thailand to harmonize and simplify regulations governing flows of goods, vehicles, and
people. The deal is part of the proposed $350 million, 240 mile East-West Transport
Corridor highway project designed to link areas of Laos and Thailand to the port of Da Nang
in central Vietnam. There have been reports that Vietnamese troops have assisted the
Laotian regime in combating an insurgency by ethnic minorities. In March 2001, Russian
President Vladimir Putin visited Vietnam, where the two countries signed a new strategic
partnership agreement, and restructured Vietnam’s Soviet-era debt to Russia. In the summer
of 2001, the Russian Defense Minister announced that Moscow would not renew its lease
of the Cam Ranh Bay military base on Vietnam’s southeast coast. The lease, which the
Soviet Union and Russia had held since the late 1970s, expires in 2004.
LEGISLATION
H.R. 1950 (Hyde)
Foreign Relations Authorization Act of 2003. Division E bans increases (over FY2003
levels) in non-humanitarian aid to the Vietnamese government if the President does not
certify that Vietnam is making “substantial progress” in human rights. The act allows the
President to waive the cap on aid increases. The original version of Division E was
introduced as the Vietnam Human Rights Act, April 3, 2003. H.R. 1950 passed the House
July 16, 2003. It has yet to receive committee action in the Senate.
H.R. 2799 (Wolf)
Commerce, Justice, and State Departments Appropriations Act. Introduced July 21,
2003; passed by the House July 23, 2003. The House Appropriations Committee report
directs the Commerce Department to report on the effect of Vietnam’s currency valuation
policies and includes hortatory language supporting the expansion of Radio Free Asia
broadcasts into Vietnam. Section 610 prohibits the use of funds to pay for expansion of
diplomatic operations in Vietnam unless the President certifies within 60 days that Vietnam
is cooperating in full faith with the U.S. on POW/MIA issues.
H.R. 1019 (Royce)
Authorizes $17 million to overcome Vietnam’s jamming of Radio Free Asia and of the
Internet.
Introduced February 27, 2003; referred to House International Relations
Committee.
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