Order Code RL33316
U.S.-Vietnam Relations: Background
and Issues for Congress
Updated June 15, 2007
Mark E. Manyin
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

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 has
been virtually normalized. Congress played a significant role in this process, and
continues to influence the state of bilateral relations. Some argue that improvements
in bilateral relations should be conditioned upon Vietnam’s authoritarian government
improving its record on human rights, particularly in the Central Highlands region.
Voices favoring improved relations have included those reflecting U.S. business
interests in Vietnam’s reforming economy and U.S. strategic interests in expanding
cooperation with a populous country — Vietnam has around 85 million people —
that has an ambivalent relationship with China.
For Vietnam, the United States has loomed large in the three-pronged national
strategy that Hanoi essentially has adopted since the mid-1980s: prioritize economic
development through market-oriented reforms; pursue good relations with Southeast
Asian neighbors; and repair and deepen relations with China, while simultaneously
buttressing this by seeking a great power counterweight to Chinese ambition. In
recent years, Vietnamese leaders have sought to upgrade relations with the United
States, perhaps because of worries about China’s expanding influence in Southeast
Asia and the need for U.S. support for Vietnam’s ultimately successful bid to enter
the World Trade Organization (WTO). Many argue, however, that there is little
evidence that Hanoi seeks to balance Beijing’s rising power. Also, some Vietnamese
remain suspicious that the United States’ long-term goal is to end the Vietnamese
communist party’s monopoly on power through a “peaceful evolution” strategy.
Economic ties are perhaps the most mature aspect of the bilateral relationship.
Since the United States extended conditional normal trade relations (NTR) to
Vietnam in 2001, bilateral trade — primarily imports from Vietnam — has increased
more than sixfold, to the point where the United States is now Vietnam’s largest
export market. The final step toward full economic normalization was accomplished
in December 2006, when Congress passed and President Bush signed H.R. 6111
(P.L. 109-432), extending permanent normal trade relations (PNTR) status to
Vietnam. For years, the United States has supported Vietnam’s economic reforms,
which many credit with Vietnam’s extraordinary economic performance; annual
gross domestic product (GDP) growth has averaged over 7% for the past twenty
years. Since the early 1990s, poverty levels have been halved, to less than 30%.
In the past four years, the United States and Vietnam have expanded political
and security ties, 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. Both leaders
spoke of their desire to move bilateral relations to “a higher plane” and President
Bush reciprocated by traveling to Vietnam in November 2006. In 2005, the United
States and Vietnam signed an international military education training (IMET)
agreement. Vietnam is one of the largest recipients of U.S. assistance in East Asia;
U.S. aid in FY2006 surpassed $75 million, much of it for health-related activities.

Contents
Developments in the Winter and Spring of 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . 1
June 2007 Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A Wave of Arrests of Vietnamese Dissidents . . . . . . . . . . . . . . . . . . . . 1
Military Ties Expand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Vietnam’s Bid for a U.N. Security Council Seat . . . . . . . . . . . . . . . . . . 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S.-Vietnam Relations, 1975-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Policy Initiatives During the Carter Administration . . . . . . . . . . . . . . . . . . . 3
Developments During the Reagan and Bush Administrations . . . . . . . . . . . . 4
Developments During the Clinton Administration . . . . . . . . . . . . . . . . . . . . 5
U.S.-Vietnam Relations, 2000-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reciprocal Summits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
President Bush’s Trip to Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Economic Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PNTR/WTO Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
U.S.-Vietnam Trade Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Imports of Vietnamese Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Intellectual Property Rights (IPR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
U.S. Bilateral Economic Assistance to Vietnam . . . . . . . . . . . . . . . . . . . . . 13
Bird Flu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Human Rights and Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Political and Security Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Signs of Vietnamese Cooperation on North Korea . . . . . . . . . . . . . . . 17
Agent Orange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Vietnam War Resettlement Programs . . . . . . . . . . . . . . . . . . . . . . . . . 18
POW/MIA Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Vietnam’s Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Political Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
The National Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Tenth Party Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Foreign Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Sino-Vietnam Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Refugees in Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
List of Figures
Figure 1. Map of Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

List of Tables
Table 1. U.S.-Vietnam Merchandise Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

U.S.-Vietnam Relations: Background and
Issues for Congress
Developments in the Winter and Spring of 20071
June 2007 Summit. Vietnamese
Vietnam Country Data
President Nguyen Minh Triet is scheduled
Area: 329,560 km2 (slightly larger than New
to meet with President Bush in
Mexico)
Washington on June 22, 2007, the first
such trip by a Vietnamese head of state
Population: 84.4 million (July 2006 est.)
since the end of the Vietnam War.
Population Growth Rate: 1.02% (U.S. =
Economic ties and human rights are
0.91%)
Median Age: 25.9 years (U.S. = 36.5 yrs.)
expected to be the dominant issues. For
Life Expectancy: 70.9 years (U.S. = 77.9
weeks, the meeting reportedly had been in
yrs.)
jeopardy because of U.S. concerns over
Ethnic Groups: Kinh (Viet) 86.2%
Vietnamese authorities’ arrest of a number
of Vietnamese dissidents since late 2006.
Per Capita GDP: $2,800 (2005)
purchasing power parity basis (U.S. =
According to one report, the United States
$41,600)
extended a formal invitation to Triet only
Primary Export Partners: US 21.2%,
in early June 2007, after Vietnam agreed
Japan 13.3%, Australia 8.4%, China 7.5%
to release some of the dissidents.
(2005)
Primary Import Partners: China 16.3%,
Vietnam and the United States are
Singapore 12.8%, Taiwan 11.7%, Japan
expected to sign a Trade and Investment
10.4%, South Korea 9.9% (2005)
Framework Agreement (TIFA) during
Dollar:Dong Exchange Rate: 16,037 (2006
President Triet’s visit. President Triet
est.), 15,855 (2005), 15,746 (2004).
also may ask the United States to provide
Sources: CIA World Factbook, December
medical assistance to Vietnamese believed
19, 2006; 2006 exchange rate estimate is
to be victims of dioxin (“Agent Orange”)
from the Economist Intelligence Unit.
from U.S. use of the chemical defoliant
during the Vietnam War.
A Wave of Arrests of Vietnamese Dissidents. Vietnam is 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. For instance,
those who call for multi-party democracy are arrested and/or harassed, and in 2006
a number of groups appeared and publicly called for peaceful democratic change.
Since late 2006, the government has responded by arresting hundreds of participants
in these groups. The arrests, which appear to have peaked between March and April
2007 and appear to have subsided, may have been part of a strategy to decapitate the
1 Information for this report not otherwise sourced came from a variety of news articles,
scholarly publications, government materials, and interviews by the author.

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dissident organizations, some of which have connections to Vietnamese Americans.
It is unclear how much support these groups have within the broader population or
to what extent the groups reflect and influence ongoing debates that are believed to
be taking place within the VCP. The White House and the State Department have
criticized the arrests, most notably by President Bush and Vice President Cheney’s
45-minute meeting in late May with a group of Vietnamese-American human rights
activists. Many Members of Congress also have spoken out, including through the
House’s passage (by a vote of 404-0) of H.Res. 243, calling on Hanoi to release
political prisoners.
Military Ties Expand. In early April 2007, the United States modified
International Traffic in Arms Regulations (ITAR) regarding Vietnam by allowing
licenses for trade in certain non-lethal defense items and services to Vietnam. Such
transactions will be reviewed on a case-by-case basis. In May 2007, U.S. Pacific
Command Deputy Commander, Lieutenant General Dan Leaf, led a military
delegation to Hanoi and the Vietnamese Air Force Academy in Nha Trang. The two
sides discussed possible joint search and rescue exercises, possible Vietnamese
attendance at U.S. military academies, future military medicine and information
technology training programs, and Vietnam’s request for replacement parts for
existing equipment.2
Vietnam’s Bid for a U.N. Security Council Seat. In the fall of 2006, the
Asian group in the United Nations selected Vietnam to be its candidate as a non-
permanent member of the U.N. Security Council in the 2008-2009 term. If Vietnam
is elected by the U.N. General Assembly, there will be numerous opportunities for
the United States and Vietnam to engage one another on a range of strategic issues,
including sensitive ones such as Burma.
Introduction
Since the early 1990s, U.S.-Vietnam relations have gradually been normalizing,
as the end of the Cold War 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
relations with Vietnam includes trade incentives, foreign assistance, cooperation in
international organizations, diplomatic pressures, and educational outreach.
2 David Griesmer, “Vietnam Visit Strengthens Military Ties,” U.S. Pacific Command
Public Affairs, May 16, 2007.

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For Vietnam’s part, since the mid-1980s, Hanoi essentially has pursued a three-
pronged national strategy, in which the United States has loomed large: (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 with China, while
simultaneously buttressing this by seeking a great power counterweight to Chinese
ambition.3 There are a number of possible reasons Vietnam has sought to upgrade
its relationship with the United States. Vietnam had an interest in facilitating its
application to join the World Trade Organization (WTO), a move that required U.S.
(and congressional) approval and was accomplished in 2007. At the strategic level,
Vietnam may be seeking to offset China’s increased economic, political, and cultural
influence in Southeast Asia. Additionally, the Vietnamese undoubtedly hoped to
smooth the way for President Bush’s trip to Hanoi in 2006, when Vietnam hosted the
Asia-Pacific Economic Cooperation (APEC) forum summit. With the summit out
of the way and WTO accession secured, it will be interesting to see if Vietnam
continues its outreach to the United States.
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, including
policy issues, the economic and political situation in Vietnam, and a list of pertinent
legislation. The key issues in the relationship include how far to pursue strategic and
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; whether and how to try to improve the human rights situation in Vietnam;
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 steps to
improve relations with Vietnam. In 1977, the United States dropped its veto of
Vietnam’s application for U.N. membership, and 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
3 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.

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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, 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 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.

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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
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

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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
encouraging the Clinton Administration to take many of these, and subsequent,
steps.4
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
4 2001 conversations with senior congressional staffers involved in the normalization
debates of the 1990s.

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Vietnam War, a $2.3 million loan to Caterpillar Inc.’s authorized dealership in
Vietnam.
U.S.-Vietnam Relations, 2000-2006
Reciprocal Summits
In the future, Vietnamese Prime Minister Phan Van Khai’s June 2005 trip to the
United States may be viewed as a landmark in the improvement of relations between
the two countries. Not only was the trip the first such visit to the United States by
a Vietnamese Prime Minister since the end of the Vietnam War, but also it —
combined with President Bush’s November 2006 visit to Vietnam — appeared to
focus the attention of the leaders in Washington and Hanoi upon how they could
improve the overall relationship. While Khai was in Washington, he and President
Bush 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 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.”5 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, under which two
Vietnamese officers attend English classes at the U.S. Air Force’s Defense Language
Institute at Lackland Air Force Base in San Antonio. 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.
President Bush’s Trip to Vietnam. From November 17-20, 2006,
President Bush visited Hanoi and Ho Chi Minh City Vietnam. While in Hanoi, in
addition to meeting various APEC leaders, the President met with Vietnam’s
leadership troika: President, Prime Minister, and General Secretary of the
Vietnamese Communist Party. President Bush also visited an ecumenical church and
the Joint P.O.W./M.I.A. Accounting Command, which searches for the remains of
Americans still listed as missing in the Vietnam War. In Ho Chi Minh City,
Vietnam’s economic and financial capital, the President met with business leaders
at the country’s stock exchange and toured a Vietnamese government-run Pasteur
Institute to highlight work on avian flu and AIDS prevention and treatment.
President Bush’s visit appears to have generated little in the way of tangible
developments in U.S.-Vietnam relations, with the exception of the Administration’s
decision to remove Vietnam from the list of the world’s worst violators of religious
freedom (see below). Throughout his visit, the President praised Vietnam’s
economic development and “reiterated his firm support for the earliest possible
Congressional approval of Permanent Normal Trade Relations.”
5 White House Office of the Press Secretary, “Joint Statement Between the United States of
America and the Socialist Republic of Vietnam,” June 21, 2005.

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The visit was markedly more low-key than President Clinton’s six-day trip in
2000. President Bush made few public outings and no public speeches. In contrast,
President Clinton gave a nationally televised address at Vietnam National University
and made several public outings, during which thousands of ordinary Vietnamese
thronged to greet or catch a glimpse of the President. These spontaneous outbursts,
combined with Clinton’s public and private remarks about human rights and
democratization, were sufficiently large that they triggered criticism from
conservative Vietnamese leaders. Unlike the 2006 presidential trip, the 2000 visit
did not coincide with a major international conference and unlike President Bush,
President Clinton was not preoccupied with a major regional crisis such as the North
Korean nuclear situation. President Bush’s traveling team also was confronted with
questions about parallels between the Iraq and Vietnam Wars, a comparison
Administration officials said was not apt.6
Economic Ties
Economic ties are perhaps the most mature aspect of the bilateral relationship.
PNTR/WTO Membership. The final step toward full economic
normalization between the United States and Vietnam was accomplished in
December 2006, when Congress passed and President Bush signed H.R. 6111 (P.L.
109-432), extending permanent normal trade relations (PNTR) status to Vietnam.
Previously, Vietnam had conditional NTR status, in that it was subject to annual
Presidential and congressional review under the U.S. Trade Act of 1974’s Jackson-
Vanik provisions, which govern trade with non-market economies.7
The decision to extend PNTR status to Vietnam was debated in the context of
Vietnam’s bid to enter the World Trade Organization (WTO), which occurred in
January 2007. Under WTO rules, it was necessary for the United States to extend
PNTR in order for it to enjoy the benefits of the trade concessions that Vietnam
grants to all WTO members. The United States was a major player in Vietnam’s
accession process; Hanoi’s bilateral WTO accession agreement with Washington was
the last — and according to most observers, the most difficult — of the 28 bilateral
agreements Vietnam completed. Vietnam’s entry into the WTO did not establish any
new obligations on the part of the United States, only on the part of Vietnam.
However, Vietnam’s accession to the WTO requires the United States and Vietnam
to adhere to WTO rules in their bilateral trade relations, including not imposing
unilateral measures, such as quotas on textile imports, that have not been sanctioned
6 David Sanger and Helene Cooper, “Unlike Clinton, Bush Sees Hanoi in Bit of a Hurry,”
New York Times, November 19, 2006; Press Gaggle by Tony Snow Aboard Air Force One
en route to Hanoi, White House Office of the Press Secretary, November 16, 2006.
7 Every year between 1998 and 2006, Vietnam received a presidential waiver from the
restrictions of the Jackson-Vanik provisions. From 1998 to 2002, congressional resolutions
disapproving the waivers failed in the House. Disapproval resolutions were not introduced
from 2003-2006. The passage of H.R. 6111 effectively “graduated” Vietnam from the list
of countries affected by the Jackson-Vanik provisions. See CRS Report RS22398, The
Jackson-Vanik Amendment and Candidate Countries for WTO Accession: Issues for
Congress
, by William Cooper.

CRS-9
by the WTO.8 Thus Vietnam’s accession required the United States to terminate the
quota program it negotiated with Vietnam in 2003, under which quotas were placed
on 38 categories of Vietnam’s clothing exports. For more on the legislative history
of the PNTR legislation, see “Congressional Debate Over PNTR,” below.
U.S.-Vietnam Trade Flows. U.S.-Vietnam trade flows have soared since
December 2001, when a landmark bilateral trade agreement (BTA) between the two
countries went into effect.9 Under the BTA, both sides extended normal trade
relations (NTR) to one another, thereby lowering tariff levels on the other country’s
imports. Total merchandise trade flows in 2006 was $9.4 billion, more than six times
the level before the BTA came into effect (see Table 1). Over 80% of the increase
in trade since 2001 has come from the growth in imports from Vietnam. The United
States is now Vietnam’s largest export market and according to one study, U.S. firms
constitute the single largest source of foreign direct investment (FDI) in Vietnam.10
Rising imports have led to trade disputes over imports of Vietnamese clothing,
catfish, and shrimp. Additionally, some in the United States also have complained
about Vietnam’s currency policies, under which the Vietnamese dong does not float
freely against the U.S. dollar and other currencies. Instead, the State Bank of
Vietnam maintains a “managed float” via a daily trading band limiting the fluctuation
of the dong to plus or minus 0.5%, a spread that was doubled in early 2007 and is up
from the 0.1% that was maintained in 2001.11 Under the terms of its entry into the
WTO, Vietnam will retain its designation as a “nonmarket economy” until 2019,
making it procedurally easier in many cases for U.S. companies to initiate and
succeed in bringing anti-dumping cases against Vietnamese exports. Since 2002,
Vietnam has run an overall current account deficit with the rest of the world.
8 For more information on the issues of PNTR for Vietnam and accession to the WTO, see
CRS Report RL33490, Vietnam PNTR and WTO Accession: Issues and Implications for the
United States
, by Mark E. Manyin, William H. Cooper, and Bernard A. Gelb.
9 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. For more,
see CRS Report RL30416, The Vietnam-U.S. Bilateral Trade Agreement, by Mark Manyin.
10 Vietnamese Ministry of Planning and Investment, The Impact of the U.S.-Vietnam
Bilateral Trade Agreement on Overall and U.S. Foreign Direct Investment in Vietnam
,
(Hanoi: National Political Publisher, 2005). USAID provided funding and technical
support for the development of the Vietnamese report. Economist Intelligence Unit,
Vietnam Country Report, April 2006; USTR, 2006 National Trade Estimate Report on
Foreign Trade Barriers
, March 31, 2006.
11 Catherine McKinley, “Vietnam Widens Forex Band, But Dong Won’t Rise,” Dow Jones
Newswires
, January 3, 2007.

CRS-10
Table 1. U.S.-Vietnam Merchandise Trade
(millions of dollars)
Total Trade
U.S. Imports
U.S.
Trade
from
Exports to
Change
Balance
Vietnam
Vietnam
Volume
from
prior yr.
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
23%
-632.6
2002
2,391.7
551.9
2,943.6
107%
-1,839.8
2003
4,472.0
1,291.1a
5,763.1
96%
-3,180.9
2004
5,161.1
1,121.9a
6,283.0
9%
-4,039.2
2005
6,522.3
1,151.3
7,673.6
22%
-5,371.0
2006
8,463.4
988.4
9,451.8
23%
-7,475.0
Jan - Mar 2006
1,791.2
191.0
1,982.2

-1,600.2
Jan - Mar 2007
2,254.6
307.3
2,561.9
29%
-1,947.3
Major Imports
clothing, petroleum products, footwear, wooden furniture, frozen
from Vietnam
shrimp, coffee, electrical machinery
Major Exports
machinery and office equipment, plastics, electrical machinery,
to Vietnam
wood, motor vehicles, raw cotton, concentrated milk
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.
Subsequently, U.S. aircraft exports to Vietnam were around $350 million in 2004 and 2005, and
dropped to around $6 million in 2006.
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 2005, up from the $45 million-$50 million range that
Vietnam recorded in 2000 and 2001. For the first eight months of 2006, clothing
imports from Vietnam were up by over 20% compared with the same period a year
earlier. By dollar value, clothing is the largest item the United States imports from
Vietnam. In 2005, Vietnam was the sixth largest exporter of clothing to the United
States, providing about 4.3% of total U.S. clothing imports (up from 1.4% in 2002
and 0.1% in 2001, before the BTA went into effect). In 2006, clothing and textile
products were Vietnam’s second-largest export item by value (after crude oil),
generating around $5.8 billion.12
The BTA contained no restrictions on Vietnamese clothing exports to the United
States, but a safeguard provision allowed the United States to impose quotas on
textile imports in the event of a surge of imports. Similarly, Vietnam’s WTO
accession agreement does not contain a special safeguard provision. However,
criticism of the deal from textile interests led the Administration to establish a
mechanism to monitor imports of textiles from Vietnam and have the Commerce
12 “Vietnam’s Trade Deficit Rises Before WTO Entry,” International Herald Tribune,
January 3, 2007.

CRS-11
Department self-initiate antidumping investigations when warranted. There are
reports that some U.S. retailers and importers have cut back on their orders from
Vietnam in anticipation of antidumping and countervailing duty challenges from the
United States later in 2007.
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
protection.13 The BTA required 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. In November
2005, Vietnam’s National Assembly passed a new, comprehensive IPR law.
13 “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.

CRS-12
Congressional Debate Over PNTR
The Administration’s proposal to extend PNTR to Vietnam generated
controversy in both chambers. Opposition primarily came from human rights
advocates, Members sympathetic to the concerns of U.S. textile and clothing
manufacturers, and those who argued that Vietnam has not done enough to account
for U.S. prisoners of war/missing in action from the Vietnam War. On November
13, 2006, these groups succeeded in mustering enough votes in the House to
prevent passage of the original PNTR bill (H.R. 5602); under suspension of the
rules, the House voted 228-161 (Roll no. 519) in favor of H.R. 5602, short of the
two-thirds vote necessary for passage. The vote came days before President
Bush’s trip to Vietnam and occurred on the first day of Congress’ return from a
recess for mid-term elections. Many observers and proponents of extending PNTR
to Vietnam were critical of the way the bill was managed in the House.

In the Senate, Senators Elizabeth Dole (NC) and Lindsey Graham (SC) placed
holds on the original Senate version of the PNTR bill, S. 3495, because of
concerns about the potential impact of Vietnamese imports on the U.S. textile
industry. The Bush Administration responded by establishing a mechanism to
monitor imports of textiles from Vietnam and have the Commerce Department
self-initiate antidumping investigations when warranted. However, other Senators,
including Dianne Feinstein (CA) and Gordon Smith (OR), objected to this move
because of its expected impact on U.S. clothing importers and retailers. They
placed holds of their own on S. 3495, and removed their objections only in the
days before the final PNTR bill was passed in December.

Human rights cases also played a role in Senate consideration of PNTR. The
arrest of one Floridian, Thong Nguyen Foshee, was raised by Secretary of State
Condoleezza Rice with her Vietnamese counterparts and led Florida Senator Mel
Martinez to temporarily place a hold on the Senate version of the PNTR bill (S.
3495). Foshee and several other individuals, including two other Vietnamese
Americans, were arrested in September 2005 while visiting family members in
Vietnam on charges of plotting violence against the Vietnamese government.
After U.S. concerns were raised, Vietnamese authorities announced that Foshee
and the six other individuals would be brought to trial, ending their indefinite
detention. On November 10, Foshee and the others were tried, found guilty, and
sentenced to 15 months in prison, with credit given for their time in detention
before the trial. This put the seven defendants in a position to be released in
December 2006. On November 12, however, Foshee’s daughter reported that
Vietnamese authorities had released and deported her mother for “humanitarian
reasons.” The following day, Martinez lifted his hold.

In a similar case, a California Vietnamese-American, Cong Thanh Do, was
arrested in August 2006 on similar charges by Vietnamese authorities before being
released after 38 days of detention. As in the Foshee case, Vietnamese authorities
were criticized not only for the detentions themselves, but for their procedural
slowness in handling the cases, such as detailing the charges against those arrested.

CRS-13
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 was over $75 million in FY2006, about three-and-a-half
times the level in FY2000, and is projected to surpass $80 million in FY2007.14
During President Bush’s November 2006 visit, Vietnamese leaders “urged” the U.S.
side to increase humanitarian assistance.
By far the largest component of the current U.S. bilateral aid program is health-
related assistance, which amounted to around $40 million in FY2006. In particular,
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).15 The United States provided $34 million in
PEPFAR funds in FY2006. FY2007 funding levels are estimated at $59 million.
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 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
human cases — including over 40 deaths — of avian influenza in Vietnam.
According to USAID, the H5N1 virus is believed to be endemic in Vietnam’s
waterfowl population, which was estimated to be around 250 million birds, including
20 million to 60 million ducks and geese before the outbreak. In 2005, the
Vietnamese government began intensifying its response to the disease, including
expanded cooperation with international health agencies and foreign aid donors.
14 Foreign Operations programs are currently operating under the terms of a continuing
appropriations resolution (H.R. 5631/P.L. 109-289, as amended) which provides funding at
the FY2006 level or the House-passed FY2007 level, whichever is less. The continuing
appropriations resolution expires on February 15, 2007.
15 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-14
Vietnam has begun a mass poultry vaccination program to try to halt the disease’s
spread. In FY2006, the United States provided $5 million for avian influenza-related
programs in Vietnam. No funds have been requested for FY2007. 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.16
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.
On the other hand, the government in recent years reportedly has cracked down
harshly on anti-government activity, as shown by the wave of arrests of political
dissidents in the winter and spring of 2007. The government also has periodically
targeted 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.17
After the United States and Vietnam reestablished relations in the mid-1990s,
the Clinton and early Bush Administrations generally appeared to assign human
rights, including religious freedom, a lower priority than improving economic ties
and securing a full accounting for U.S. personnel listed as prisoners of war/missing
in action (POW/MIAs). In 2003, the Bush Administration began to take a more
assertive position, after determinating that the previous approach had “yet to translate
the increased recognition of problems into tangible steps to improve the human rights
16 For more, see CRS Report RL33349, International Efforts to Control the Spread of the
Avian Influenza (H5N1) Virus
, coordinated by Emma Chanlett-Avery.
17 Murray Hiebert, “Bush Backs Vietnam’s WTO Bid,”The Asian Wall Street Journal, June
22, 2005.

CRS-15
situation.”18 The Administration chose not to hold a human rights dialogue with
Vietnam in 2003 and 2004, and in 2004 designated Vietnam as a “country of
particular concern” (CPC) in the State Department’s International Religious Freedom
Report.
Since 2004, according to several reports, there have been indications that human
rights conditions have improved for most Vietnamese, including those in the Central
Highlands and Northwest Highlands regions. But given continued reports of
repression and harassment, there is considerable disagreement about how significant
and how pervasive the improvements are, not to mention how lasting they will be.
For years, the State Department and the U.S. Agency for International
Development (USAID) have discussed ways to take advantage of the Vietnamese
government’s new approach toward ethnic minority areas by crafting a small-scale
aid initiative in the Central Highlands.19 Both agencies are acting in response to the
FY2006 Foreign Operations Appropriations Act (P.L. 109-102), in which Congress
appropriated $2 million for programs and activities in the region.
“Country of Particular Concern” Designation and Un-designation.
In 2004, the State Department for the first time designated Vietnam as a “country of
particular concern” (CPC), principally because of reports of worsening harassment
of certain ethnic minority Protestants and Buddhists. When the Vietnamese
responded by negotiating with the Bush Administration and adopting internal
changes, the two sides reached an agreement on religious freedom, in which Hanoi
agreed to take steps to improve conditions for people of faith, particularly in the
Central Highlands. The May 2005 agreement enabled Vietnam to avoid punitive
consequences, such as sanctions, associated with its CPC designation. The
agreement was faulted by human rights groups on a number of grounds, including the
charge that religious persecution continues in the Central Highlands. Vietnam was
redesignated a CPC in the 2005 and 2006 Religious Freedom Reports.
On November 13, 2006, the State Department announced that because of “many
positive steps” taken by the Vietnamese government since 2004, the country was no
longer a “severe violator of religious freedom” and had been removed from the CPC
list. The announcement, which came two days before President Bush was due to
depart to Hanoi for the APEC summit, cited a dramatic decline in forced
renunciations of faith, the release of religious prisoners, an expansion of freedom to
organize by many religious groups, and the issuance of new laws, regulations, and
stepped up enforcement mechanisms.20 Over the course of 2006, as part of the
bilateral U.S.-Vietnam human rights dialogue, Vietnam released a number of
prominent dissidents the Bush Administration had identified as “prisoners of
concern.” Vietnam also reportedly told the United States in October that it would
18 State Department, Supporting Human Rights and Democracy 2003-04 Report.
19 Fall 2005 and winter 2006 correspondence with State Department and USAID officials.
20 State Department Special Briefing, “Ambassador-at-Large for International Religious
Freedom John V. Hanford III on the Release of the State Department’s 2006 Designations
of Countries of Particular Concern for Severe Violations of Religious Freedom,” November
13, 2006.

CRS-16
repeal its administrative decree allowing detention without trial.21 The U.S.
Committee on International Religious Freedom, among others, has disputed the
Administration’s factual basis of the decision to remove Vietnam from the CPC list,
arguing that abuses continue and that lifting the CPC label removes an incentive for
Vietnam to make further improvements.22
Vietnam’s willingness from 2004 through at least 2006 to negotiate human
rights issues with the United States surprised many observers, who suggest several
possible motivations for the change in tone, including:
! an apparent belief by central government leaders that their previous
heavy-handed approach toward ethnic minorities in the Central
Highlands and Northwest Highlands had worsened the situation;
! pressure from the United States and other outside actors;
! a stated desire to upgrade diplomatic and security relations with the
United States;
! their wish to pave the way for then-Prime Minister Khai’s historic
visit to the United States in June 2005, as well as President Bush’s
trip to Vietnam in November 2006;
! the wish to secure U.S. approval of Vietnam’s accession to the
World Trade Organization (WTO) and permanent normal trade
relations (PNTR) with the United States;

The Vietnam Human Rights Act. In large measure due to Vietnam’s
crackdowns in the Central Highlands earlier in the decade, attempts were 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), proposed 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. The
bilateral IMET agreement is the only current aid program that would have been
affected, because it is the only U.S. non-humanitarian assistance that is given directly
to the government of Vietnam. The act also would have required the executive
branch to produce annual reports on Vietnam’s human rights situation and would
have authorized funds to promote democracy in Vietnam and to overcome the
jamming of Radio Free Asia. Critics argued that the bill could have chilled 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 did not receive action in
the Senate.
21 P. Parameswaran, “Vietnam to Abolish Detention without Trial ahead of Bush Visit:
Official,” Agence France Presse, October 31, 2006.
22 “USCIRF Disappointed About Removal of Vietnam from U.S. Government’s List of
Religious Freedom Violators,” USCIRF Press Release, November 13, 2006.

CRS-17
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 four years, however, Vietnam’s leadership appears to have
decided to expand their country’s ties to the United States. Most dramatically, in
2005 the two countries signed an IMET agreement, which reportedly had been
blocked for years by the Vietnamese military. In June 2006, then-Secretary of
Defense Donald Rumsfeld visited Vietnam and agreed with his Vietnamese
counterpart to increase military-to-military cooperation and exchanges. According
to Rumsfeld, the two sides discussed additional medical exchanges, an expansion of
U.S. demining programs, and additional English language training for troops taking
part in international peacekeeping missions.23 According to one report, the
Vietnamese inquired about acquiring certain U.S. military equipment and spare
parts.24 U.S. naval vessels have made a number of calls on Vietnamese ports, and
Vietnamese military officers increasingly participate in U.S.-led conferences and
academic programs. Joint counter-narcotics training programs also have been
established.
Signs of Vietnamese Cooperation on North Korea. At the request of
the United States, Vietnamese state-run banks appear to be closing accounts linked
to North Korea. In September 2006, U.S. Treasury Secretary Hank Paulson
reportedly thanked Vietnam for co-operating with the U.S. scrutiny of North Korean
financial activities by investigating North Korean bank accounts.25 Vietnam
maintains relations with North Korea.
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
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
23 Office of the Assistant Secretary of Defense (Public Affairs), “Press Availability with
Secretary Rumsfeld in Vietnam,” June 5, 2006.
24 Michael R. Gordon, “Rumsfeld, Visiting Vietnam, Seals Accord To Deepen Military
Cooperation,” New York Times, June 6, 2006.
25 Anna Fifield and Amy Kazmin, “Vietnam Bank Tightens Screw on Pyongyang,”
Financial Times, December 28, 2006.

CRS-18
had not given its approval for the study.26 During President Bush’s November 2006
trip to Vietnam, the two sides rhetorically agreed that it would be beneficial to jointly
clean contamination from former dioxin (“Agent Orange”) storage sites.27
Human Trafficking. In June 2007, the State Department issued its seventh
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.” As recently as 2004, it was included on the “Tier
2 Watch-list,” but was upgraded to “Tier 2” in the 2005 report. The 2007 report
judges the government to be making “significant efforts” to combat trafficking,
including establishing partnerships with Cambodia and China and passing a new
Export Labor Law to better regulate enterprises that recruit and send Vietnamese
workers overseas.
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. During Secretary of Defense
Rumsfeld’s June 2006 trip to Vietnam, the two countries discussed expanding their
cooperation on recovering remains, including the possibility of using more advanced
technology to locate, recover, and identify remains located under water.28
26 Conversations in 2005 with State Department and U.S. Health and Human Services
Department officials.
27 “Joint Statement Between the Socialist Republic of Vietnam and the United States of
America,” White House Office of the Press Secretary, November 17, 2006.
28 Office of the Assistant Secretary of Defense (Public Affairs), “Press Availability with
(continued...)

CRS-19
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 and
diplomatic isolation 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 (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. According to one
source, Vietnam’s real GDP growth in 2005 was an estimated 8.4%.29 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, and the government has set
a goal of becoming a middle-income country by 2020. A substantial portion of the
country’s growth was driven by foreign investment, much of which the government
channeled into the country’s state-owned sector.
Economic growth and the reform movement, however, have not always
advanced smoothly. In the mid-1990s, the momentum behind continued economic
reforms 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, 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
28 (...continued)
Secretary Rumsfeld in Vietnam,” June 5, 2006. For more on the POW/MIA issue, see CRS
Report RL33452, POWs and MIAs: Status and Accounting Issues, by Charles A. Henning.
29 Economist Intelligence Unit, Vietnam Country Report, April 2006.

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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.
Despite the impressive macroeconomic advances, Vietnam remains a poor
country; about one-third of Vietnamese children under five years of age suffer from
malnutrition.30 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 January 2007, Vietnam’s Finance Minister said that the privatization of SOEs
would be accelerated, with the goal of completing the process by 2009. The target for
2007 is to privatize 550 SOEs, including some of the large state-owned commercial
banks, which dominate domestic banking activity.
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 in recent years has had 15
members. Membership on the Politburo generally is decided based upon maintaining
a rough geographic (north, south, and central) and factional (conservatives and
30 World Bank, “Vietnam at a Glance,” September 12, 2005.

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reformers) balance. The three top leadership posts are, in order of influence, the VCP
General Secretary, followed by the Prime Minister, and the President. Since the
death in 1986 of Vietnam’s last “strong man,” Le Duan, 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 80% 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
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 held 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.
The 10th Party Congress reportedly resulted in few if any major changes to
current policy direction of the country — an indication that the economic reformers
remain in the ascendency — with the ultimate goal remaining creating a “socialist-
oriented market economy.” During his opening address, Manh outlined the party’s
five-year development strategy, including accelerating the doi moi reforms, further
integrating Vietnam into the world economy, and laying the foundations for
becoming an industrialized country by 2020. The Congress also outlined specific
targets, such as maintaining average annual GDP growth of 7.5-8%, creating 8
million jobs, and reducing urban unemployment to below 5%.31
There were some major personnel changes. As expected, the sitting Prime
Minister (Phan Van Khai) and President (Tran Duc Luong) resigned their Politburo
positions, effectively ending their official political careers. Both had served two
terms. Changes in their government posts will be confirmed by the National
Assembly, either in its ninth session in May or its tenth session later this year. In
May 2006, Khai endorsed Vietnam’s deputy premier, Nguyen Tan Dung (56) as his
successor. Dung is a southerner and widely considered to be an economic reformer.
During the 10th Party Congress, he was elevated to the third-highest post in the
31 “Party Faces the Future,” Economist Intelligence Unit - Business Asia, May 1, 2006.

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Politburo. Luong’s successor as President is another southerner, Nguyen Minh
Triet
(64), formerly the party secretary in Ho Chi Minh City. Triet also is widely
considered an economic reformer and is known for fighting corruption and criminal
gangs in Ho Chi Minh City.
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, which was a major topic during the Party Congress.
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. However, pervasive and high-level corruption
is widely considered to be endemic, as revealed by the breaking of a major scandal
in the winter and spring of 2006, in which top officials in the Transportation Ministry
apparently embezzled more than $7 million in foreign assistance funds. The deputy
minister was arrested for his suspected involvement in the case, and the transport
minister resigned to take responsibility for the scandal.
Foreign Policy
Prior to the 10th Party Congress, there was some speculation that China’s
economic and diplomatic resurgence in Southeast Asia was 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. It is unclear whether these debates over foreign policy took
place during the congress.
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

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increase its foreign aid to Vietnam, and a Chinese electric company has agreed to
provide power to Vietnam.32
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 Chinese President Hu Jintao’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.
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, 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.
32 “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 in the 110th Congress
H.Res. 243 (Chris Smith). Calls on the Government of the Socialist Republic
of Vietnam to immediately and unconditionally release Father Nguyen Van Ly and
other political prisoners. Introduced March 14, 2007; passed in the House May 2,
2007 (404-0, roll call no. 286).
H.Res. 447 (Blumenauer). Condemns the recent convictions and sentencing
of Vietnamese pro-democracy activists. Introduced May 24, 2007; referred to House
Foreign Affairs Committee.
H.R. 571 (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 January 18,
2007; referred to House Ways and Means Committee.


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Figure 1. Map of Vietnam
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