Order Code RL33316
CRS Report for Congress
Received through the CRS Web
U.S.-Vietnam Relations: Background
and Issues for Congress
March 2, 2006
Mark E. Manyin
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

U.S.-Vietnam Relations: Background and Issues for
Congress
Summary
After communist North Vietnam’s victory over U.S.-backed South Vietnam in
1975, U.S.-Vietnam relations remained essentially frozen for over 15 years. Since
then, bilateral ties have expanded remarkably, to the point where the relationship in
many ways has been virtually normalized. Congress has played a significant role in
this process. Each step in improving bilateral ties has brought controversy, albeit at
diminishing levels. Some argue that improvements in bilateral relations should be
conditioned upon Hanoi improving its record on human and religious rights,
particularly in the Central Highlands region. Opposition to the pace and scope of
normalization also has come from groups arguing that Vietnam has not done enough
to account for U.S. Prisoners of War/Missing in Action from the Vietnam War,
though this argument has diminished markedly in recent years. Interests favoring
normalization have included those reflecting a strong U.S. business interest in
Vietnam’s reforming economy and American strategic interests in integrating
Vietnam more fully into East Asia and in expanding cooperation with a country that
has an ambivalent relationship with China.
The most important step toward normalization over the past decade was the
signing of a sweeping bilateral trade agreement (BTA) in 2000. Under the BTA, -
which Congress approved in 2001, the United States extended conditional normal
trade relations (NTR) to Vietnam. In return, Hanoi agreed to a range of trade
liberalization measures and market-oriented reforms. Trade — primarily imports
from Vietnam — rose to more than $6 billion in 2004, about 4½ times the level in
2001, the year before the BTA took effect. The United States is now Vietnam’s
largest export market. The next, and final, step toward full normalization would be
granting permanent NTR status to Vietnam. This step, which would require
congressional approval, normally would be considered in the context of Vietnam’s
accession to the World Trade Organization (WTO), which Vietnam hopes to join in
2006.
In recent years, clashes over Vietnam’s human rights record and trade friction
have arisen. Simultaneously, however, the two countries have expanded political and
security ties in the past three years, symbolized by the Vietnamese Prime Minister’s
visit to the United States in June 2005, the first such trip by a Vietnamese head of
state. President Bush spoke of his desire to move bilateral relations to “a higher
plane,” backed Vietnam’s bid to enter the WTO, and the two countries signed an
international military education training (IMET) agreement. The two countries share
a strategic interest in offsetting China’s increased influence in Southeast Asia, though
many argue there is little evidence that Hanoi seeks to balance Beijing’s rising power.
Vietnam is one of the largest recipients of U.S. assistance in East Asia; U.S. aid
in FY2005 surpassed $50 million. By far the largest component of the U.S. bilateral
aid program is health-related assistance, particularly spending on HIV/AIDS
treatment and prevention. The United States also has provided around $7 million to
help Vietnam battle outbreaks of the H5N1 avian influenza virus, which is believed
to be responsible for over 40 human deaths in Vietnam. This report will be updated.

Contents
Developments in Early 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S.-Vietnam Relations, 1975-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Policy Initiatives During the Carter Administration . . . . . . . . . . . . . . . . . . . 2
Developments During the Reagan and Bush Administrations . . . . . . . . . . . . 3
Developments During the Clinton Administration . . . . . . . . . . . . . . . . . . . . 4
U.S.-Vietnam Relations, 2000-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Prime Minister’s June 2005 Trip to the United States . . . . . . . . . . . . . . . . . . 6
Economic Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Bilateral Trade Agreement (BTA) . . . . . . . . . . . . . . . . . . . . . . . . . 6
Implementation of the BTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
U.S.-Vietnam Trade Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Imports of Vietnamese Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Vietnam’s Bid to Join the WTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Intellectual Property Rights (IPR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
U.S. Bilateral Economic Assistance to Vietnam . . . . . . . . . . . . . . . . . . . . . . 9
Bird Flu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Human Rights and Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Political and Security Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Agent Orange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Vietnam War Resettlement Programs . . . . . . . . . . . . . . . . . . . . . . . . . 13
POW/MIA Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Vietnam’s Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Political Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The National Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Tenth Party Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Unrest in the Central Highlands Region . . . . . . . . . . . . . . . . . . . . . . . 16
Refugees in Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Foreign Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Sino-Vietnam Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

List of Tables
Table 1. U.S.-Vietnam Merchandise Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

U.S.-Vietnam Relations: Background and
Issues for Congress
Developments in Early 20061
In January 2006, the United States sent a large delegation of officials to Vietnam
to hold the latest round of bilateral negotiations regarding Vietnam’s bid to join the
World Trade Organization (WTO). Following the meetings, Assistant U.S. Trade
Representative Dorothy Dwoskin said she was “pleased” with the progress made
“across all areas” and that she believed the meetings “have injected new momentum
and energy into the negotiations.” Dwoskin singled out Vietnam’s National
Assembly’s efforts to pass much of the implementing legislation that would be
required if Vietnam joins the WTO2. Just before the trade meeting, Assistant
Secretary of State for East Asia Christopher R. Hill traveled to Vietnam for three
days as part of an extended trip through the region.
In November 2005, Vietnam was re-designated a “country of particular concern”
(CPC) in the State Department’s report on international religious freedom. Vietnam
was first designated a CPC in 2004. In the spring of 2005, the country signed an
agreement on religious freedom with the United States. The agreement has not been
released.
Introduction
U.S. relations with Vietnam are gradually returning to normal as the end of the
Cold War has erased the need for the United States to attempt to isolate the
communist government that defeated the U.S.-backed South Vietnam in 1975.
Currently, factors generating interest in the relationship include growing trade and
investment flows, the large ethnic Vietnamese community in the United States, the
legacy of the Vietnam War, increasing interaction through multilateral institutions,
and shared concern over the rising strength of China. U.S. goals with respect to
Vietnam include developing more amicable relations, bringing the country more into
the mainstream of nations, opening markets for U.S. trade and investment, furthering
human rights and democracy within the country, and maintaining U.S. influence in
Southeast Asia. The array of policy instruments the United States employs in
1 Information for this report not otherwise sourced came from a variety of news articles,
scholarly publications, government materials, and interviews by the author.
2 January 18, 2006, United States Trade Representative’s Office Press Release, “Statement
of Dorothy Dwoskin Assistant U.S. Trade Representative for WTO and Multilateral Affairs
Regarding Negotiations for Vietnam’s Accession to the World Trade Organization (WTO).”

CRS-2
relations with Vietnam includes trade incentives, foreign assistance, cooperation in
international organizations, diplomatic pressures, and educational outreach.
Throughout the process of normalizing relations with Vietnam, Congress has
played a significant role. Not only has Congress provided oversight and guidance,
but it has shaped the interaction by imposing constraints, providing relevant funding,
or by its approval process for agreements.
This report provides an overview of U.S. relations with Vietnam, policy issues,
the economic and political situation in Vietnam, and a list of pertinent legislation.
The key issues in the relationship include whether to extend the nation permanent
normal trade relations status and approve its accession to the World Trade
Organization; how far to pursue military-to-military ties; whether to impose curbs on
surges in imports of certain items from Vietnam; how much and what types of
bilateral economic assistance to provide; what to do about tensions over human rights
and religious freedom; and how to clear up legacy issues from the Vietnam war.
U.S.-Vietnam Relations, 1975-2000
U.S.-Vietnam diplomatic and economic relations were virtually nonexistent for
more than 15 years following communist North Vietnam’s victory in 1975 over U.S.
ally South Vietnam. During that time, the United States maintained a trade embargo
and suspended foreign assistance to unified Vietnam.
Policy Initiatives During the Carter Administration
Early in his term, President
Carter’s Administration took several
Vietnam Country Data
steps to improve relations with
Population: 83.5 million (July 2005 est.)
Vietnam. In 1977, the United States
Median Age: 25.5 years (U.S. = 36.3 years)
dropped its veto of Vietnam’s
Area: 329,560 km2 (slightly larger than New
application for U.N. membership,
Mexico)
and the United States proposed that
Life Expectancy: 70.61 years (2005)
diplomatic relations quickly be
Per Capita GDP: $3,000 (2005) purchasing power
parity basis
established between the United
Primary Export Partners: U.S. 20.2%, Japan
States and Vietnam, after which the
13.6%, China 9%, Australia 7% (2004)
United States would lift export and
Primary Import Partners: China 13.7%, Taiwan
asset controls on Vietnam. The
11.3%, South Korea 10.8%, Japan 10.5%,
Vietnamese responded that they
Singapore 10.5% (2004)
Dong:Dollar Exchange Rate: 15,855 (2005),
would neither agree to establish
15,746 (2004), 15,510 (2003), 15,280 (2002).
relations nor furnish information on
U.S. POW/MIAs until the United
Source: CIA World Factbook, January 10, 2006.
States pledged to provide several
billion dollars in postwar
reconstruction aid, which they claimed had been promised by the Nixon
Administration. Subsequently, they modified this position and provided some
limited information on MIAs, even though the United States provided no aid. In

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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.
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 in 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 in
1987 by General John Vessey, President Reagan’s Special Emissary for POW-MIA
Issues, 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 more than 300 Americans. Virtually all U.S.
analysts agree that the Vietnamese “warehoused” several hundred remains and
tactically released them in increments.
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). The U.S. office began operation in mid-1991. 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.
That year, the United States provided $3 million of humanitarian aid (mainly
prosthetics and aid to abandoned or orphaned children) for Vietnam; restored direct
telecommunications with Vietnam; allowed U.S. commercial sales to meet basic
human needs in Vietnam; and lifted restrictions on projects carried out in Vietnam

CRS-4
by U.S. nongovernmental organizations. The United States provided aid to
Vietnamese flood victims and provided additional aid for combating malaria
problems.
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 ever undertaken. The committee, chaired by
John Kerry and vice-chaired by Bob Smith, operated from August 1991 to December
1992. In early 1993, the committee issued its report, which concluded that there was
“no compelling evidence” that POWs were alive after the U.S. withdrawal from
Vietnam, 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 arguably helped lay the
domestic political foundation for the incremental breakthroughs in U.S.-Vietnam
relations that followed.
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: (1) facilitate
emigration from Vietnam of relatives of Vietnamese-Americans or permanent
Vietnamese residents of the United States; (2) regulate the flow of Vietnamese
immigrants to the United States and other countries under the so-called Orderly
Departure Program (ODP) managed by the U.N. High Commissioner for Refugees;
(3) resolve the issue of the estimated several thousand Amerasians (whose fathers are
Americans and whose mothers are Vietnamese) who reportedly wished to immigrate
from Vietnam to the United States; and (4) 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 also
disclosed that U.S. consular officials would henceforth be stationed in Hanoi.
President Clinton’s September 13, 1993 renewal of his authority to maintain trade
embargoes included a less restrictive 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. Members of Congress played an important behind-the-scenes role in

CRS-5
encouraging the Clinton Administration to take many of these, and subsequent,
steps.3
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 on 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 of the 103rd Congress). The language was
controversial in the House, but H.R. 2333 passed Congress and was signed into law
(P.L. 103-236) in April 1994.
On January 25, 1995, the United States and Vietnam settled bilateral diplomatic
and property claims and opened liaison offices in Washington and Hanoi. In early
August 1995, the two countries opened embassies in Washington and Hanoi. The
following month, an attempt in the Senate to restrict trade ties with Vietnam failed.
The FY1996 State Department Appropriations bill (H.R. 2076 of the 104th Congress)
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
in December 1995. Controversy continued in 1995 and 1996 over provisions in
legislation (H.R. 1561 of the 104th Congress) 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 was
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 the landmark U.S.-Vietnam bilateral trade agreement (BTA) in 2000
(see below). While visiting Vietnam in late June 1997, Secretary of State Madeleine
Albright urged greater economic reform and better human rights. In December 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 the 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 each subsequent year of his term, President Clinton
granted a Jackson-Vanik waiver to Vietnam. In November 1999, OPIC signed its first
financing agreement for an American business in Vietnam since the end of the
Vietnam War, a $2.3 million loan to Caterpillar Inc.’s authorized dealership in
Vietnam.
3 2001 conversations with senior congressional staffers involved in the normalization
debates of the 1990s.

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U.S.-Vietnam Relations, 2000-2005
Prime Minister’s June 2005 Trip to the United States
Vietnamese Prime Minister Phan Van Khai traveled to the United States in June
2005, the first such visit to the United States by a Vietnamese Prime Minister since
the end of the Vietnam War. President Bush and Prime Minister Khai issued a joint
statement expressing their “intention to bring bilateral relations to a higher plane.”
President Bush expressed “strong support” for Vietnam’s accession to the World
Trade Organization (WTO), pledged to attend the November 2006 Asia Pacific
Economic Cooperation (APEC) summit in Hanoi, and welcomed Vietnam’s efforts
on human rights and religious freedom issues, about which the two leaders agreed to
continue “an open and candid dialogue.”4 The two countries signed an agreement on
implementing a bilateral International Military Education Training (IMET) program
to send two Vietnamese officers to the United States for training, reportedly in
English or medical procedures. The two sides also announced an agreement to
resume U.S. adoptions of Vietnamese children, which Hanoi halted in 2002.
Protesters, mainly Vietnamese-Americans, appeared at every stop on Khai’s trip.
Economic Ties
The Bilateral Trade Agreement (BTA). 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 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 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 June
1, 2005, 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. From 1998 to 2002, resolutions
disapproving the waivers failed in the House. Disapproval resolutions were not
introduced in 2003, 2004, or 2005. 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. Ex-Im Bank to support U.S. businesses
exporting to and/or operating in Vietnam.
4 White House Office of the Press Secretary, “Joint Statement Between the United States of
America and the $6,522.3 $1,151.3 Socialist Republic of Vietnam,” June 21, 2005.

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Table 1. U.S.-Vietnam Merchandise Trade
(millions of dollars)
U.S. Imports
U.S. Exports
Trade
Total Trade
from Vietnam
to Vietnam
Balance
1994
50.5
172.2
222.7
121.7
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
-1,839.8
2003
4,472.0
1,291.1a
5,763.1
-3,180.9
2004
5,161.1
1,121.9a
6,283.0
-4,039.2
2005
6,522.3
1,151.3
7,673.6
-5,371.0
Major Imports
clothing, footwear, wooden furniture, frozen shrimp, petroleum
from Vietnam
products, cashew nuts, coffee
Major Exports
aircraft, mining equipment, electronic machinery, steel wire, raw
to Vietnam
cotton, plastics
Source: U.S. International Trade Commission. Data are for merchandise trade on a customs basis.
a. U.S. exports from 2003 include Vietnam Airlines’ $700 million purchase of several Boeing 777s.
U.S. aircraft exports to Vietnam totaled over $360 million in 2004 and nearly $170 million in
the first half of 2005.
Implementation of the BTA. In the first three years after the BTA was
signed, Hanoi apparently implemented most of its initial commitments. Some
observers have expressed concern that the government has not implemented in law
and/or in practice many of the concessions that were due to be phased in by
December 2004, particularly in the services sector, though many critics have tended
to accept the argument that the slippages often are due more to weak governmental
capacity rather than to protectionist intentions.5 This belief may also explain why the
Bush Administration appears not to have harshly criticized Vietnam in those areas
where implementation has been poor or incomplete, with the exception of intellectual
property rights (see below).
U.S.-Vietnam Trade Flows. The BTA led to a sharp rise in U.S.-Vietnam
trade, which in 2005 was worth over $7.6 billion, more than five times the level in
2001 (the year before the BTA came into effect), and nearly thirty times the level
when relations were normalized in 1994. (see Table 1) The United States is now
Vietnam’s largest export market, and taken together, U.S. firms constitute the single-
largest source of foreign direct investment in Vietnam. Rising imports have led to
trade disputes over imports of Vietnamese clothing, catfish, and shrimp.

Imports of Vietnamese Clothing. Most of the increase in U.S.-Vietnam
trade since 2001 has come from a sharp rise in clothing imports from Vietnam, which
were over $2.6 billion in 2004, up from the $45 million - $50 million range that
Vietnam recorded in 2000 and 2001. By dollar value, clothing is now the largest
item the United States imports from Vietnam. In 2003 and 2004, Vietnam provided
5 Conversations with U.S. government and business officials, particularly those held during
a March 2005 trip to Vietnam.

CRS-8
about 3.5% of total U.S. clothing imports (up from 1.4% in 2002 and 0.1% in 2001,
before the BTA went into effect). The BTA contains no restrictions on Vietnamese
clothing exports to the United States, but a 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. In
April 2003 the United States and Vietnam signed a bilateral agreement that places
quotas on 38 categories of Vietnam’s clothing exports. January 1, 2005 saw the
expiration of the global system of import quotas on textile and apparel products for
WTO members. Because Vietnam is not a WTO member, its clothing industry
generally is considered to be at a disadvantage compared with its competitors that
operate under quota-free trade in textiles and apparel.6
Vietnam’s Bid to Join the WTO. The final step toward full legal
normalization between the United States and Vietnam would be granting permanent
NTR (PNTR) status to Vietnam. This step, which would require congressional
approval, is likely to be considered in the context of negotiating Vietnam’s accession
to the WTO. Vietnamese leaders have said they hope to join by mid-2006.
Originally, they had set a goal of early 2005. The delay in joining the WTO appears
to have frustrated some Vietnamese leaders. In late 2005, high-ranking Vietnamese
officials publicly criticized the United States for making “impossible” demands on
their country, including raising the standards for WTO membership. Vietnam has
concluded bilateral accession agreements with 22 of the 28 WTO members who have
requested bilateral consultations, including the European Union, Japan, and China.
To avoid a repeat of the experience with China, which many observers contend has
not implemented all measures as required in its WTO accession agreements, the
United States and other trading partners are insisting that Vietnam show progress on
and present drafts of implementing legislation before they will conclude accession
negotiations.
Upon completion of a bilateral WTO accession agreement, President Bush likely
will ask Congress to extend PNTR status to Vietnam, much as President Clinton did
after completing WTO accession negotiations with China in November 1999.7
Intellectual Property Rights (IPR). Since 2002, the Bush Administration
has placed Vietnam on its “Special 301 watch list” for poor protection of intellectual
property rights, particularly in the areas of music recordings and trademark
6 However, for 2005, the value of Vietnamese clothing imports increased by just over 6%
compared with 2004, despite the competitive disadvantage Vietnamese clothing
manufacturers have faced since the January 1, 2005 end of quotas on clothing imports from
WTO members. Imports of clothing into the United States from all countries has increased
by around 6.8% since the quota system ended. (Figures were computed using the
Harmonized Tariff System codes 61, 62, 63, and 65)
7 WTO members must extend reciprocal PNTR treatment to one another. If Vietnam
becomes a WTO member and the United States does not grant Vietnam PNTR, it would
force the United States to invoke the nonapplication Article XIII of the WTO agreement that
would prevent the application of the entire WTO agreement, including all concessions
between the United States and Vietnam. For a fuller explanation, see CRS Report RL31558,
Normal-Trade-Relations (Most-Favored-Nation) Policy of the United States.

CRS-9
protection.8 The BTA requires Vietnam to make its IPR regime WTO-consistent in
2003. Although it has made numerous regulatory and legal changes to this end, the
Vietnamese government’s IPR enforcement has been widely faulted.
U.S. Bilateral Economic Assistance to Vietnam
(For more on U.S. aid to Vietnam, see CRS Report RL32636, U.S. Assistance
to Vietnam.) As the normalization process has proceeded, the U.S. has eliminated
most of the Cold War-era restrictions on U.S. aid to Vietnam, and U.S. assistance has
increased markedly since around $1 million was provided when assistance was
resumed in 1991. U.S. aid reached an estimated $60 million in FY2005, about three
times the level in FY2000. By far the largest component of the current U.S. bilateral
aid program is health-related assistance, which amounted to nearly $40 million in
FY2005. Spending on HIV/AIDS treatment and prevention in Vietnam has risen
since President Bush’s June 2004 designation of Vietnam as a “focus country”
eligible to receive increased funding to combat HIV-AIDS under the President’s
Emergency Plan for AIDS Relief (PEPFAR).9 The United States provided $10
million in PEPFAR funds in FY2004 and over $27 million the following year. Other
sizeable assistance items include food assistance, de-mining activities, educational
exchanges, and programs assisting Vietnam’s economic reform efforts. In recent
years, some Members of Congress have attempted to link increases in non-
humanitarian aid to progress in Vietnam’s human rights record. (See the “Human
Rights and Religious Freedom” section.)
In May 2004, Vietnam was not selected as one of the first 16 countries eligible
for the Millennium Challenge Account (MCA), President Bush’s major new foreign
aid initiative that links U.S. assistance to governance as well as economic and
political freedoms. Vietnam was deemed ineligible, despite meeting the technical
requirements for MCA eligibility, because it scored very low on some of the
indicators used to measure political freedom. For FY2005 and 2006, Vietnam again
received low scores on the indicators of political and civil liberties maintained by the
Millennium Challenge Corporation to determine eligibility for the MCA.
Bird Flu. Since late December 2003, there have been over 90 confirmed cases
— including over 40 deaths — of avian influenza in Vietnam. According to USAID,
8 “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 CRS Report 98-454, Section 301 of the Trade Act
of 1974, As Amended: Its Operation and Issues Involving Its Use by the United States, by
Wayne Morrison.
9 Vietnam qualified for the designation in part because of its demonstrated commitment to
fighting the epidemic on its own and because of the competency of its medical institutions.
Vietnam is estimated to have about 100,000 people living with the HIV-AIDS virus, a
number that is projected to grow significantly.

CRS-10
the H5N1 virus is believed to be endemic in Vietnam’s waterfowl population, which
is estimated to be around 250 million birds, including 20 million to 60 million ducks
and geese. In 2005, the Vietnamese government began intensifying its response to
the disease, including expanded cooperation with international health agencies and
foreign aid donors. Vietnam has begun a mass poultry vaccination program to try to
halt the disease’s spread. The FY2005 wartime and tsunami supplemental, H.R.
1268, which was signed into law (P.L. 109-13) in May 2005, included approximately
$7 million to be used to combat avian influenza in Vietnam. During an October 2005
visit to Vietnam, Health and Human Services Secretary Michael Leavitt and
Vietnamese officials signed a bilateral health cooperation agreement, and Vietnam
agreed with a number of U.N. agencies to conduct a joint prevention program. (For
more, see CRS Report RL33219, U.S. and International Responses to the Global
Spread of Avian Flu.
)
Human Rights and Religious Freedom
In recent years, tensions between the United States and Vietnam over human
rights issues have increased. It is difficult to make country-wide generalizations about
the state of human rights in Vietnam, a one-party, authoritarian state ruled by the
Vietnamese Communist Party (VCP). For the past several years, the VCP appears to
have followed a strategy of permitting most forms of personal and religious
expression while selectively repressing individuals and organizations that it deems
a threat to the party’s monopoly on power. On the one hand, the gradual loosening
of restrictions since Vietnam’s doi moi (“renovation”) economic reforms were
launched in 1986 has opened the door for Vietnamese to engage in private enterprise,
has permitted most Vietnamese to observe the religion of their choice, and has
allowed a moderately vibrant press to sprout, so long as it keeps criticism of the
government to “safe” issues like corruption, economic policy, nature conservation
and environmental pollution, and the trafficking of women and children.
On the other hand, the government in recent years reportedly has cracked down
harshly on anti-government protests by various ethnic minority groups, most
prominently the Montagnards in the country’s Central Highlands, where clashes
between protestors and government security forces have flared periodically since
2001. Furthermore, in its effort to control the Internet, the central government has
stepped up repression of so-called “cyber dissidents” for alleged offenses such as
criticizing the signing of land-border agreements with China and calling for greater
political accountability and political competition. During his meeting with Prime
Minister Khai in June 2005, President Bush reportedly raised human-rights concerns,
particularly Hanoi’s controls over religious groups and repression of ethnic groups
in the Central Highlands.10
“Country of Particular Concern” Designation. In September 2004, for
the first time Vietnam was designated as a “country of particular concern” (CPC) in
the State Department’s International Religious Freedom Report. On May 5, 2005,
the State Department announced it had reached an agreement on religious freedom
10 Murray Hiebert, “Bush Backs Vietnam’s WTO Bid,”The Asian Wall Street Journal, June
22, 2005.

CRS-11
with Vietnam. The agreement, which has not been released, enabled Vietnam to
avoid punitive consequences, such as sanctions, associated with its CPC designation.
According to a public briefing by Ambassador Hanford, under the agreement, the
Vietnamese government committed to fully implement new legislation on religious
freedom and render previous contradictory regulations obsolete, instruct local
authorities to strictly and completely adhere to the new legislation and ensure their
compliance, facilitate the process by which religious congregations are able to open
houses of worship, and give special consideration to prisoners and cases of concern
raised by the United States regarding the granting of prisoner amnesties.11
The State Department’s announcement cited a number of steps taken in 2004
and early 2005 by the Vietnamese government, notably the release of several
prominent religious prisoners, the issuance of a new law streamlining the application
process for religious groups registering with the government, and the issuance of
prime ministerial directives prohibiting forced renunciations of faith and allowing
Protestant “house churches” in ethnic minority provinces to operate if they renounce
connections to certain expatriate groups, particularly the Montagnard Foundation,
which is based in the United States. According to the information provided by the
State Department, the agreement did not appear to carve out new ground but instead
focused on committing Vietnam to fully implement its new laws and regulations and
to ensuring the compliance of local officials, a goal that often has proved elusive in
the past.12 The agreement has been faulted by human rights groups on a number of
grounds, including the following: the Vietnamese government still retains for itself
the right to decide which religious organizations and activities are legal; the
government’s recent announcements do not list punishments for violators of religious
freedoms; the agreement does not deal with issues concerning non-Christian groups
that claim to have been repressed by the government; and religious persecution
continues in the Central Highlands despite the agreement. In the 2005 International
Religious Freedom Report
, Vietnam was redesignated a CPC despite “some very
significant efforts to improve religious freedom,” primarily due to “prisoners and
continuing implementation problems at the local level and the lack of normalized
relations with several religious groups.”
The Vietnam Human Rights Act. In large measure due to Vietnam’s
crackdowns in the Central Highlands, attempts have been made in the 108th and 109th
Congresses to link U.S. aid to the human rights situation in Vietnam. The most
prominent example, the Vietnam Human Rights Act (H.R. 1587/S. 2784 in the 108th
Congress, H.R. 3190 in the 109th Congress), proposes capping existing non-
humanitarian U.S. assistance programs to the Vietnamese government at FY2005
levels (FY2004 for H.R. 1587) if the President does not certify that Vietnam is
making “substantial progress” in human rights, including religious freedom. At
present, the newly signed bilateral IMET agreement is the only current aid program
that would be affected, because it is the only U.S. non-humanitarian assistance that
is given directly to the government of Vietnam. The act also would require the
executive branch to produce annual reports on Vietnam’s human rights situation and
11 State Department Daily Press Briefing, May 5, 2005.
12 May 5, 2005 State Department briefing and State Department Press Statement, “United
States-Vietnam Religious Freedom Agreement,” May 5, 2005.

CRS-12
would authorize funds to promote democracy in Vietnam and to overcome the
jamming of Radio Free Asia. Critics argue that the bill could chill the recent
warming of bilateral political and security ties. On July 19, 2004, by a vote of
323-45, the House passed H.R. 1587. In the Senate, it was not reported out of
committee, and attempts to include an abbreviated version in an omnibus
appropriation bill did not succeed. In the 109th Congress, another stripped-down
version of the act was included in the House-passed version of the Foreign Relations
Authorization Act of FY2006/FY2007 (H.R. 2601), which has yet to receive action
in the Senate. Unlike previous versions of the Vietnam Human Rights Act, the
language in H.R. 2601 does not contain provisions for a presidential waiver. The act
also would authorize $2 million to assist organizations that promote democracy and
human rights in Vietnam.
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 three years, however, Vietnam’s leadership appears to have
decided to expand their country’s ties to the United States, as shown by a number of
indicators: the signing of an IMET agreement in June 2005; since late 2004 the
Vietnamese government has responded positively to many U.S. human rights
demands; in August 2004, drug enforcement officials from various U.S. agencies
held a week-long training session in Vietnam, the first such joint counternarcotics
training session; three U.S. naval vessels have made calls in Vietnamese ports since
November 2003; there have been several meetings between senior military officials,
including Vietnamese Defense Minister Pham Van Tra’s visit to Washington in
November 2003; Vietnamese military officers increasingly participate in U.S.-led
conferences and academic programs.
There are a number of possible reasons Vietnam seeks to upgrade its
relationship with the United States. Vietnam has an interest in facilitating its
application to join the World Trade Organization (WTO), a move that would require
U.S. (and congressional) approval and could occur in 2006. At the strategic level,
Vietnam may be seeking to offset China’s increased economic, political, and cultural
influence in Southeast Asia. Additionally, the Vietnamese hope to smooth the way
for President Bush’s expected trip to Hanoi in 2006, when Vietnam hosts the
Asia-Pacific Economic Cooperation (APEC) forum summit.
Agent Orange. Vietnamese leaders have pressed the United States for
compensation for Agent Orange victims and for assistance locating the remains of
Vietnam’s soldiers who are still missing from fighting with the United States.
During President Bill Clinton’s five-day trip to Vietnam in 2000, the United States
took some small steps toward meeting these demands, including agreeing to set up
a joint research study on the effects of dioxin/Agent Orange and the provision of
materials to help locate the estimated 300,000 Vietnamese troops missing from the
Vietnam War. Over three million Vietnamese suffering from the alleged effects of
Agent Orange were part of a class action suit filed in U.S. Federal District Court in
Brooklyn against the chemical companies that manufactured the defoliant. The case
was dismissed in March 2005, in a ruling that was widely publicized in Vietnam. In
April 2005, the Bush Administration discontinued funding of a grant to conduct

CRS-13
research in Vietnam on the possible relationship between Agent Orange and birth
defects. The justification for the decision was that the Vietnamese Ministry of Health
had not given its approval for the study.13
Human Trafficking. On June 3, 2005, the State Department issued its fifth
annual report on human trafficking, Trafficking in Persons Report. Vietnam was
listed as a “Tier 2” country that “does not fully comply with the minimum standards
for the elimination of trafficking”; however, it was removed from its 2004 listing as
a “Tier 2 Watch-list” country because “it is making significant efforts” to combat
trafficking.
Vietnam War Resettlement Programs. In November 2005, the United
States and Vietnam announced the reopening of certain categories of the Orderly
Departure Program (ODP), under which over 550,000 Vietnamese were resettled in
the United States between 1979 and 1999. During this time, another 300,000
Vietnamese came to the United States through other programs. The reopening is
limited to those who were unable to apply or who were unable to complete the
application process before the ODP closed in 1994.
POW/MIA Issues
In the mid-1990s, the United States and Vietnam 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 have 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 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 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)
13 Conversations in 2005 with State Department and U.S. Health and Human Services
Department officials.

CRS-14
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 (FDI).
Economic Developments
For most of the past twenty years since the doi moi reforms were launched,
Vietnam has been one of the world’s fastest-growing countries, generally averaging
around 7%-8% annual gross domestic product (GDP) growth. Agricultural
production has soared, transforming Vietnam from a net food importer into the
world’s second-largest exporter of rice and the second-largest producer of coffee.
The move away from a command economy also helped reduce poverty levels from
58% of the population in 1992 to less than 30% in 2002. 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 less than 5% in 1999. The decision in 2000 to sign the BTA, however,
appears to have broken the policymaking logjam by fashioning a new consensus in
favor of a new reformist push that was effectively endorsed by the leadership changes
in 2001. In short order after signing the BTA, the government enacted a series of
measures, including passing a new Enterprise Law, passing a constitutional
amendment giving legal status to the private sector, reducing red tape, and creating
unprecedented transparency rules requiring the publication of many types of new
rules and regulations before they are implemented. Adhering to the BTA’s
implementation deadlines and achieving the government’s goal of joining the WTO
have helped galvanize the Vietnamese bureaucracy toward implementing many of
these steps. Vietnam’s economy appears to have responded to these moves. GDP
growth has rebounded to the 7% level for the past several years, and FDI inflows
have increased. Demographic pressure is a major impetus for the renewed emphasis
on economic reforms; with more than half of the population under the age of 25,
Vietnamese leaders must find a way to provide jobs for an estimated 1 million new
entrants to the workforce annually.
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 domestically owned
private firms employ around a quarter of the workforce.

CRS-15
Vietnam remains a poor country; about one-third of Vietnamese children under
five years of age suffer from malnutrition.14 Per capita GDP in 2004 was less than
$600, equivalent to $2,700 when measured on a purchasing power parity basis.
Economists point to Vietnam’s failure to tackle its remaining structural economic
problems — including unprofitable state-owned enterprises (SOEs), a weak banking
sector, massive red tape, and bureaucratic corruption — as major impediments to
continued growth. Some economists have criticized the government’s latest five year
development plan, issued in 2005, that focuses on the development of heavy
industries such as electricity, energy, steel, and mining. The previous plan
emphasized lighter industries such as foodstuffs, textiles, and electronics. Most of
Vietnam’s SOEs are functionally bankrupt, and require significant government
subsidies and assistance to continue operating. Although around 2,500 SOEs
officially have been partially privatized since 1990 under the government’s
“equitization” program, most of these are small and medium-sized firms, and the
government still owns substantial stakes in them. In a sign that reforms are cutting
deeper into the state-owned sector, the government has announced that in 2006 it will
begin the gradual equitization of Vietcombank, one of the four state-owned banks
that dominate domestic banking activity, providing an estimated 70% of all loans.
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 Vietnamese Communist Party (VCP) in politics and society, and
Vietnam remains a one-party state. In practice, the VCP sets the general direction for
policy while the details of implementation generally are left to the four lesser pillars
of the Vietnamese polity: the state bureaucracy, the legislature (the National
Assembly), the Vietnamese People’s Army (VPA), and the officially sanctioned
associations and organizations that exist under the Vietnamese Fatherland Front
umbrella. The Party’s major decision-making bodies are the Central Committee,
which has 150 members, and the Politburo, which currently has 15 members. In
recent years, membership on the Politburo generally has been decided based upon
maintaining a rough geographic (north, south, and central) and factional
(conservatives and reformers) balance. The three top leadership posts are the VCP
General Secretary, followed by the Prime Minister, and the President. Since the
death of Vietnam’s last “strong man” Le Duan in 1986, decision-making on major
policy issues typically has been arrived at through consensus within the Politburo, a
practice that often leads to protracted delays on contentious issues.
The National Assembly. Over the past 15 years, Vietnam’s legislative
organ, the National Assembly, has slowly and subtly increased its influence to the
point where it is no longer a rubber stamp. Although more than 90% of
parliamentarians are VCP members and the VCP carefully screens all candidates
before elections are held, in recent years the Assembly has vetoed Cabinet
appointments, forced the government to revise major commercial legislation, and
successfully demanded an increase in its powers. These include the right to review
each line of the government’s budget, the right to hold no-confidence votes against
14 World Bank, “Vietnam at a Glance,” September 12, 2005.

CRS-16
the government, and the right to dismiss the president and prime minister (though not
the VCP general secretary).
The Tenth Party Congress. In the spring of 2006, Vietnam’s ruling
Communist Party is expected to have its 10th Party Congress. These events, held
every five years, are often occasions for major leadership realignments and set the
direction for Vietnam’s economic, diplomatic, and social policies. At the 9th Party
Congress in 2001, for instance, the VCP endorsed the acceleration of economic
reforms that apparently had been stalled by policymaking paralysis. The former VCP
general secretary, an ideological conservative, was ousted in favor of the current
secretary, Nong Duc Manh, who generally is considered a more pragmatic figure.
Significantly, Manh’s selection reportedly was made possible when the Party’s
Central Committee rejected — an unprecedented move — the Politburo’s decision
to endorse Manh’s predecessor.
At the 10th Party Congress, it is expected that economic reformers will continue
to be in the ascendancy. A major issue of debate is expected to be whether to
officially allow party members to own their own businesses. It is also rumored that
the reformist prime minister Phan Van Khai, who is 71, will step down.15 If this
occurs, the selection of his successor could be an important indicator of the country’s
future policy direction. Also, China’s economic and diplomatic resurgence in
Southeast Asia is believed to be driving some soul-searching in Hanoi on foreign
policy issues. Some in Hanoi are wondering how much additional utility Vietnam
would gain from continuing its “omnidirectional foreign policy,” which has
successfully restored cordial relations with the rest of the world but has left Vietnam
without truly warm relations with any one country or grouping of countries. In this
context, Vietnam’s relationship with the United States could be a significant topic of
debate.
Vietnam’s leadership is trying 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, though there
are some signs this may be changing. A key issue for the VCP leadership is
combating official corruption. Vietnam regularly is ranked near the bottom of surveys
of foreign executives on corruption in various countries. Under Manh’s leadership,
the government appears to have attacked corruption in a much more systemic fashion
than in the past, including passage in November 2005 of a new anti-corruption law
that aims at increasing government transparency.
Unrest in the Central Highlands Region. Over the past several years,
there have been reports of protests and riots by ethnic minorities in the Central
Highlands provinces against local government corruption, repression of church
activity, and encroachment on their ancestral lands by ethnic Vietnamese settlers,
many of whom moved under government-sponsored resettlement programs. In
February 2001, thousands of minorities, primarily from Montagnard groups,
protested in the Central Highlands, the largest-scale social unrest in years.
Government security forces, including the military, reportedly carried out harsh
15 Economist Intelligence Unit, Vietnam Country Report, October 2005, p.13.

CRS-17
reprisals against the protesters. The government has continued its crackdown and
maintained tight restrictions on travel and organized activity in the region. In April
2004, thousands of protesting Montagnards reportedly clashed violently with police
and local authorities. Speaking before Vietnam’s National Assembly, a deputy prime
minister accused the Montagnard Foundation, a U.S.-based group of Montagnard
exiles, for organizing the demonstrations, but acknowledged that the government’s
“inefficiency and weaknesses” have contributed to the continued protests in the
Central Highlands.16 In August 2004, the government reportedly decided it
temporarily would stop sending people to resettle in new economic zones in the
Central Highlands. There have been reports — denied by Hanoi officials — that the
Vietnamese government arrested scores of Montagnard Christians in the Central
Highlands in December 2004, at the same time that Cambodia reportedly closed its
border to asylum seekers from Vietnam. In February 2005, the government declared
it would allow outlawed “house churches” to operate provided they have no
connection to FULRO, the United Front for the Liberation of Oppressed Races, the
Montagnard guerrilla group that fought alongside the United States during the
Vietnam War. A former FULRO leader, Kok Ksor, is the president and founder of
the Montagnard Foundation.
Refugees in Cambodia. Since 2001, hundreds of Montagnards have crossed
into Cambodia, to escape continuing unrest in the Central Highlands region. In 2002,
Cambodia accepted an offer from the United States to resettle the more than 900
Montagnards who remained following the 2001 protests and crackdown. More than
700 Montagnards have fled to Cambodia since then, particularly after a wave of
unrest in April 2004. The United Nations High Commissioner for Refugees
(UNHCR) has found the majority of the border-crossers to be refugees and therefore
entitled to asylum. While most of these are being resettled in the United States,
Canada, or Finland, over 30 have returned to Vietnam following a January 2005
agreement between UNHCR, Cambodia, and Vietnam in which Hanoi agreed that
those returning to Vietnam would not be punished, discriminated against, or
prosecuted for fleeing to Cambodia. Vietnam also agreed to drop its refusal to allow
UNHCR to monitor the returnees’ well-being, though some human rights groups
have criticized UNHCR’s monitoring visits, as well as its process for screening
border crossers in Cambodia. More than 200 individuals, including many who have
been recognized as refugees by UNHCR, have refused offers to be resettled in third
countries outside Southeast Asia. In the past, Cambodia has been accused of abiding
by Vietnamese requests to close its borders and repatriate individuals forcibly.
Foreign Policy
Since the mid-1980s, Vietnam essentially has pursued a three-pronged national
strategy: (1) prioritize economic development through market-oriented reforms; (2)
pursue good relations with Southeast Asian neighbors that provide Vietnam with
economic partners and diplomatic friends; and (3) repair and deepen its relationship
16 Dow Jones Newswires, “Vietnam Govt Takes Some Responsibility For Central Unrest,”
May 11, 2004.

CRS-18
with China, while simultaneously buttressing this by seeking a great power
counterweight to Chinese ambition.17
Sino-Vietnam Relations. Since the late 1990s, when China began espousing
its “new security concept” of cooperation with its neighbors, improvements in
Sino-Vietnamese relations have accelerated, most notably with the signings of a land
border treaty in 1999 and a sea border treaty for the Gulf of Tonkin in 2000. For
Vietnamese leaders, this process has been fraught with ambivalence. On the one
hand, maintaining stable, friendly relations with its northern neighbor is critical for
Vietnam’s economic development, and Hanoi does not undertake large-scale
diplomatic moves without first calculating Beijing’s likely reaction. China’s ruling
communist party is an ideological bedfellow, as well as a role model for a country
that seeks to marketize its economy without threatening the communist party’s
dominance. China also is Vietnam’s largest trading partner. During Chinese
President Hu Jintao’s October 2005 visit to Vietnam, the two countries agreed to
demarcate their sensitive land and maritime borders and to deepen their economic
integration, particularly the development of a Vietnam-China economic corridor
stretching from Kunming (China) to Hai Phong (Vietnam). China also agreed to
increase its foreign aid to Vietnam, and a Chinese electric company has agreed to
provide power to Vietnam.18
On the other hand, many Vietnamese are believed to be wary of China’s
increased influence in Southeast Asia. Beijing’s outreach to Cambodia and Laos in
recent years has rekindled internal battles between pro-Hanoi and pro-Beijing camps
in both countries, and has spurred counter-moves by Hanoi. Vietnam and China still
have overlapping claims to the Spratly Island chain in the South China Sea,
differences that led to military clashes in the late 1980s. In 2002, ASEAN and China
signed a Declaration on the Conduct of Parties in the South China Sea, a non-binding
agreement to resolve disputes diplomatically, exercise restraint, and respect the
freedom of navigation and overflight. Significantly, Vietnam did not succeed in its
efforts to have the agreement specifically include the Paracel Islands, claimed by both
Vietnam and China. Instead, the declaration is vague on its geographic scope. Like
other countries in the dispute, Vietnam has continued to expand its presence in the
island chain. China also represents an economic rival, as both compete for foreign
direct investment and for markets in many of the same low-cost manufacturing
products. During President Hu’s October 2005 visit to Hanoi, Vietnamese leaders
reportedly expressed their concern about Vietnam’s rising trade deficit with China.
Another sign that Hanoi is seeking regional counterweights to China is that Vietnam,
along with Indonesia and Singapore, supported efforts to include Australia and New
Zealand in the East Asia Summit that was held in Kuala Lumpur, Malaysia, in
December 2005. China and some Southeast Asian countries favored excluding
countries outside of North and Southeast Asia.
17 Marvin Ott, “The Future of US-Vietnam Relations,” Paper presented at The Future of
Relations Between Vietnam and the United States, SAIS, Washington, DC, October 2-3,
2003.
18 “Vietnam, China Sign Various Economic Cooperation Agreements in Hu Jintao’s Trip,”
Hanoi VNA, Oct 31, 2005, posted on the Open Source Center, SEP20051101023006.

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Legislation
P.L. 109-102 (H.R. 3057). FY2006 Foreign Operations Act. The conference
committee report directs $2 million for programs and activities in the Central
Highlands; requires the State Department to report within 90 days on the situation of
Montagnard refugees who have fled to Cambodia. Introduced June 24, 2005; signed
into law November 14, 2005.
H.Con.Res. 320 (Chris Smith). Calls on the Vietnamese government to release
Dr. Pham Hong Son and other political prisoners. Introduced December 16, 2005;
referred to the House Committee on International Relations; on February 28, 2006,
referred to full committee by unanimous consent of Subcommittee on Africa, Global
Human Rights and International Operations.
H.R. 967 (Saxton). Prohibits normal trade relations (NTR) treatment from
being extended to the products of any country the government of which engages in
certain violations of human rights. Introduced February 17, 2005; referred to House
committee. Referred to the House Committee on Ways and Means Subcommittee on
Trade.
H.R. 1130 (Waters). The Jubilee Act of 2005. Provides for the cancellation of
debts owed to international financial institutions by poor countries, including
Vietnam. Introduced March 3, 2005; referred to the House Committee on Financial
Services.
H.R. 1450 (Tancredo). Requires additional tariffs be imposed on products of
any nonmarket economy country, including Vietnam, until the President certifies to
the Congress that the country is a market economy country. Introduced March 17,
2005; referred to the House Committee on Ways and Means.
H.R. 2601 (C. Smith). The Foreign Relations Authorization Act of FY2006-07.
Section 946 links increases in non-humanitarian aid to the Vietnamese government
above the FY2005 level to Vietnam’s human rights situation. The language does not
provide for a Presidential waiver. Authorizes $2 million for organizations that
promote democracy and human rights in Vietnam. Authorizes $9.1 million to
overcome Vietnam’s jamming of Radio Free Asia. Introduced May 24, 2005; passed
by the House July 20, 2005 (351-78).
H.R. 3190 (C. Smith). The Vietnam Human Rights Act of 2005. Bans
increases (over FY2005 levels) in non-humanitarian aid to the Vietnamese
government if the President does not certify that Vietnam is making “substantial
progress” in human rights. Allows the President to waive the cap on aid increases.
Authorizes funds to promote democracy in Vietnam and to overcome the jamming
of Radio Free Asia. Introduced June 30, 2005; referred to House International
Relations Committee.
H.R. 3283(English)/S. 1421 (Collins). Amends Tariff Act of 1930 to make
countervailing duties applicable to actions by nonmarket economies. H.R. 3283
introduced July 14, 2005; passed by the House July 27, 2005 (255 - 168); referred to

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Senate Finance Committee. S. 1421 introduced July 19, 2005; referred to Senate
Finance Committee.
H.Res. 415 (Sanchez). Expresses the sense of the House that Hanoi needs to
do more to resolve claims of property reportedly confiscated under the period of
communist rule. Introduced July 28, 2005; referred to House International Relations
Committee.
S. 599 (Kerry)/H.R. 2816 (Neal). Eliminates tariffs on certain types of tuna
imported from ASEAN member countries (except Burma). S. 599 introduced March
10, 2005; referred to Senate Committee on Finance. H.R. 2816 introduced June 8,
2005; referred to House Ways and Means Committee.
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