Order Code RL33316
U.S.-Vietnam Relations:
Background and Issues for Congress
Updated October 31, 2008
Mark E. Manyin
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

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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 until the mid-1990s. Since
then, bilateral ties have expanded remarkably, to the point where the relationship has
been virtually normalized. Indeed, since 2002, overlapping strategic and economic
interests have compelled the United States and Vietnam to improve relations across
a wide spectrum of issues. Congress played a significant role in the normalization
process and continues to influence the state of bilateral relations. 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 over 85 million people — that has an
ambivalent relationship with China. Others argue that improvements in bilateral
relations should be conditioned upon Vietnam’s authoritarian government improving
its record on human rights. The population of over 1 million Vietnamese Americans,
as well as legacies of the Vietnam War, also drive continued U.S. interest.
Economic ties are the most mature aspect of the bilateral relationship. The
United States is 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 market-oriented economic reforms, which many credit with
Vietnam’s extraordinary economic performance; from 1987-2007, annual gross
domestic product (GDP) growth has averaged over 7%. Since the early 1990s,
poverty levels have been halved, to less than 30%. In 2008, the two countries
launched bilateral investment treaty (BIT) talks and the Bush Administration
announced that it would explore whether to add Vietnam to the Generalized System
of Payments (GSP) program, which extends duty-free treatment to certain products
that are imported from designated developing countries.
Since 2002, the United States and Vietnam have expanded political and security
ties, symbolized by reciprocal summits that have been held annually since 2005.
Vietnam is one of the largest recipients of U.S. assistance in East Asia; estimated
U.S. aid in FY2008 surpassed $100 million, much of it for health-related activities.
In September 2007, the House passed the Vietnam Human Rights Act, H.R. 3096,
which would freeze some non-humanitarian U.S. assistance programs at existing
levels if Vietnam does not improve its human rights situation. Since 2006, arrests
of dissidents and other developments have increased concerns about human rights.
Vietnamese leaders have sought to upgrade relations with the United States due
in part to worries about China’s expanding influence in Southeast Asia and the desire
for continued U.S. support for their economic reforms. 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.

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Contents
Major Developments in 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
June 2008 Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GSP and Other Bilateral Economic Developments . . . . . . . . . . . . . . . . 2
Expanding Security Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Human Rights Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Economic Difficulties in Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Renewed Sino-Vietnamese Tensions over South China Sea Claims . . . 4
Vietnam’s Security Council Membership . . . . . . . . . . . . . . . . . . . . . . . 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S.-Vietnam Relations, 1975-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Policy Initiatives During the Carter Administration . . . . . . . . . . . . . . . . . . . 7
Developments During the Reagan and Bush Administrations . . . . . . . . . . . . 7
Developments During the Clinton Administration . . . . . . . . . . . . . . . . . . . . 9
U.S.-Vietnam Relations, 2000-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reciprocal Summits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
June 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
November 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
June 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Economic Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PNTR/WTO Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U.S.-Vietnam Trade Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Imports of Vietnamese Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Intellectual Property Rights (IPR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
U.S. Bilateral Economic Assistance to Vietnam . . . . . . . . . . . . . . . . . . . . . 15
Human Rights and Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A Wave of Arrests of Vietnamese Dissidents . . . . . . . . . . . . . . . . . . . 17
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Vietnam Human Rights Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Political and Security Ties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Military-to-Military Ties Expand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Agent Orange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Vietnam War Resettlement Programs . . . . . . . . . . . . . . . . . . . . . . . . . 23
POW/MIA Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Vietnam’s Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Political Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The National Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Tenth Party Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Foreign Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Sino-Vietnam Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Refugees in Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

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List of Figures
Figure 1. Map of Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
List of Tables
Table 1. U.S.-Vietnam Merchandise Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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U.S.-Vietnam Relations:
Background and Issues for Congress
Major Developments in 20081
June 2008 Summit. Against a backdrop of the expanding and deepening of
U.S.-Vietnam relations, in late June, Vietnamese Prime Minister Nguyen Tan Dung
traveled to Washington, DC, to meet with President Bush. Since 2005, the United
States and Vietnam have held annual visits between President Bush and either the
Vietnamese President (the official head of state) or the Prime Minister (the head of
government). The White House appears to be using these top-level meetings to try
to encourage economic and political reforms inside Vietnam. Dung also became the
highest level Vietnamese official since the Vietnam War to visit the Pentagon, where
he met with Secretary of Defense Robert Gates.
Dung’s trip was notable for the number and range of agreements the two
governments came to, as well as the new steps they took to deepen their level of
engagement. Major developments included:2
! the announcement of a formal “Security Dialogue” on
political-military issues, a process that the United States has with
four other Southeast Asian countries;
! the launch of bilateral investment treaty (BIT) negotiations;
! the Bush Administration’s announcement that it would begin the
process of exploring whether to add Vietnam to the Generalized
System of Payments (GSP) program, which extends duty-free
treatment to certain products that are imported from designated
developing countries;
! an agreement in principle to introduce a Peace Corps program in
Vietnam;
! the launch of a “high-level” bilateral Education Task Force;
! the announcement of new initiatives on adoptions, nuclear safety,
aviation, climate change, food safety, and other issues.
In another high-level visit, Deputy Secretary of State John Negroponte traveled to
Vietnam from September 11-14, 2008. It was his first trip to Vietnam since 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.
2 Sources Include: “Joint Statement Between The United States of America and The
Socialist Republic of Vietnam,” June 25, 2008; “President Bush Meets with Prime Minister
Dung of Vietnam,” White House Press Secretary, June 24, 2008; “Fact Sheet: The United
States and Vietnam: Expanding Relations,” State Department Fact Sheet, June 24, 2008.

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CRS-2
signing of the Paris Peace Accords in 1973 that ended direct U.S. military actions in
Indochina.
GSP and Other Bilateral Economic Developments. The week before
Dung’s visit, the Bush Administration announced it would begin a review of whether
Vietnam meets the eligibility criteria for designation as a beneficiary country under
the Generalized System of Preferences (GSP) program. The program extends duty-
free treatment to certain products that are imported from designated developing
countries. The primary purpose of the program, which the United States and other
industrial countries initiated in the 1970s, is to promote economic growth and
development in these countries by stimulating their exports.3 S. 3678, the Senate
version of the Vietnam Human Rights Act, would prohibit Vietnam’s entry into the
GSP program unless Vietnam’s labor rights regime is certified as making
improvements in certain areas.
In March 2008, United States and
Vietnam Country Data
Vietnamese trade officials held their
second meeting under the bilateral Trade
Area: 329,560 km2 (slightly larger than New
and Investment Framework Agreement
Mexico)
(TIFA) that was signed in June 2007. In
Population: : 86.1 million (July 2008 est.)
the first TIFA meeting, in December
Population Growth Rate: 0.99% (U.S. =
2007, the two sides reportedly discussed
0.88%)
Vietnam’s compliance with its WTO
Median Age: 26.9 years (U.S. = 36.7 yrs.)
commitments in distribution and other
Life Expectancy: 71.3 years (U.S. = 78.1
yrs.)
service sectors, as well as other issues.
Literacy Rate: 90.3%
The U.S. urged Vietnam to improve
Ethnic Groups: Kinh (Viet) 86.2%; Hill
enforcement of intellectual property
Tribes & others (13.8%)
protection, a perennial point of friction.4
Per Capita GDP: $2,600 (2007) purchasing
power parity basis (U.S. = $45,800)
These diplomatic initiatives have
Primary Export Partners*: US 21.2%,
occurred against a backdrop of rapidly
Japan 12.3%, Australia 9.4%, China 5.7%
expanding bilateral trade and investment
(2006)
flows. In the year after Vietnam joined
Primary Import Partners*: China 17.7%,
the World Trade Organization (WTO) in
Singapore 12.9%, Taiwan 11.5%, Japan
9.8%, South Korea 8.4% (2006)
January 2007, U.S.-Vietnam trade rose
Dong:Dollar Exchange Rate (avg.): 16,119
more than 30%, to over $12.3 billion. For
(2007), 15,983 (2006), 15,746 (2005)
the first eight months of 2008, year-on-
year trade was up by 30%. U.S. firms
Sources: CIA World Factbook, June 10,
2008.
continue to be among the largest sources
* figures represent commodity trade
of foreign direct investment in Vietnam,
as symbolized by Intel Corp’s $1 million
manufacturing plant, due to open in 2010.
3 For more, see CRS Report RL34702, Potential Trade Effects of Adding Vietnam to the
Generalized System of Preferences Program, by Michael Martin and Vivian C. Jones.
4 United States Trade Representative, “United States and Vietnam Hold First Meeting Under
Trade and Investment Framework Agreement,” December 17, 2007.

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CRS-3
Expanding Security Ties. In October 2008, the United States and Vietnam
held their first Security Dialogue on Political, Security, and Defense Issues. At the
Hanoi meeting, the Vietnamese military reportedly asked the United States to supply
spare parts for its American-made Huey helicopters that are leftovers from the
Vietnam War. The two governments also discussed integrating Vietnamese soldiers
into United Nations peacekeeping operations, and American military help with
disaster relief in Vietnam.5 The Bush Administration’s FY2009 budget request
included a request for $500,000 in foreign military financing (FMF) for Vietnam, the
first time Hanoi would be included in this program.
Human Rights Developments. Vietnam’s human rights record continues
to be a persistent thorn in the side of the relationship. 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. Although since
2004 Vietnam generally has been more willing to discuss and take action on some
U.S. criticisms of human rights conditions inside Vietnam, many contend that since
early 2007, Vietnamese authorities have adopted a harsher policy of cracking down
upon signs of dissent — including criticisms of the government that formerly were
tolerated — more quickly and more aggressively than had been the case for much of
in the mid-2000s. Vietnamese Americans have been among those arrested for aiding
groups that have called for peaceful democratic change.
In May 2008, many Vietnam watchers were disturbed by the arrest of two
reporters who were charged with “abusing their position” for previous reporting on
corruption at high levels in the government. One of the men, Thanh Nien journalist
Nguyen Viet Chien, eventually was sentenced to jail for two years. Attention also
has been drawn to an escalating land dispute between the Catholic archdiocese of
Hanoi and the Hanoi People’s Committee (Hanoi’s communist party organ), in which
the Hanoi authorities have broken up sit-ins by Catholics protesting the city’s plans
to redevelop land that the church was forced to turn over to the government decades
ago. (S. 3678, the Vietnam Human Rights Act, would establish the return of such
property as a condition for expanding some forms of U.S. non-humanitarian
assistance to Vietnam.)
These cases may also be worrisome for other reasons. Not only might this
development signal the government is ending its encouragement of the press to play
an active role in rooting out corruption, it also has been interpreted by some as
indicating that Prime Minister Dung and other reform-minded leaders are losing
ground in the ongoing battles they reputedly have with more ideologically minded
conservatives.6
Economic Difficulties in Vietnam. Over the past several months,
Vietnam’s economy has been buffeted by soaring inflation and downward pressure
5 “US, Vietnam Hold First Political-Military Dialogue,” Voice of America, October 7, 2008.
6 Carlyle Thayer, “Hanoi Party Tricks,” The Wall Street Journal Asia, June 19, 2008;
Economist Intelligence Unit (EIU), Vietnam Country Report, October 2008.

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CRS-4
on the country’s currency, the dong, both of which have raised investors’ concerns
about the country’s economic stability. Consumer prices rose by over 8% in 2007 and
have soared to the double digit level in 2008, including a 27% year-on-year increase
in July, the highest in years. The proximate cause for the increase has been a double-
digit rise — over 50% in some cases — in the price of food items, leading workers
in a number of factories to go on strike demanding higher wages. Though inflation
is still running over 20%, tightened monetary policy and falling food prices appear
to have stabilized the situation since August. The government has taken steps that
appear to indicate that it has returned to its longstanding policy of promoting growth,
which has led some analysts to worry about overinvestment in Vietnam.
Though Vietnamese entities have few if any direct investments in U.S. and
European financial institutions or the real estate sectors, Vietnam is expected to
suffer from two indirect economic effects from the global financial crisis. The first
is an anticipated slowdown in exports, particularly to the United States, which
constitutes about 20% of Vietnam’s exports by value. Secondly, the crisis may lead
to a sharp decline in foreign direct investment, which has helped fuel and finance a
significant portion of Vietnam’s growth over the past decade.7 Some analysts have
speculated that if economic problems worsen and lead to increased social unrest, the
position of the reform-minded members of the VCP could be weakened. A contrary
line of thinking, however, posits that a slowdown in growth — so long as it is not
precipitous — is likely to lead Vietnamese policymakers to redouble their reform
efforts.8
In March, Vietnam, the world’s second-largest exporter of rice, imposed
restrictions on rice exports in order to lower prices in its domestic market. The U.S.
Secretary of Agriculture criticized this move by Vietnam and other commodity
exporters, saying they were exacerbating the global rise in food prices.9 In June,
Vietnam relaxed the export restrictions.
Renewed Sino-Vietnamese Tensions over South China Sea Claims.
In late May, the General Secretary of the ruling Communist Party, Nong Duc Manh,
made a four-day visit to China. In October, Prime Minister Dung made a week-long
trip. The summitry led to agreements to set up a hotline and to complete the
demarcation of their land border, which has been delayed for years. Hanoi and
Beijing continue to deal with the resurfacing of disputes over the Paracel and Spratly
Islands. Most notably, in December 2007, the Vietnamese government allowed
anti-Chinese demonstrations outside the Chinese embassy in Hanoi and consulate in
Ho Chi Minh City. The protestors were angered by reports that Beijing had created
a new municipality in Hainan Province that would have jurisdiction over three islets
7 “How Will Vietnam’s Economy Be Impacted?” Tien Phong, October 1, 2008, Vietnam
Press Clips, Produced by U.S. State Department Hanoi and Ho Chi Minh City Public Affairs
Sections; Oxford Analytica (OA), “Vietnam/Cambodia/Laos: Crisis Could Spur Reforms,”
October 24 2008.
8 For these contrasting views, see EIU, Vietnam Country Report, October 2008, and OA,
“Vietnam/Cambodia/Laos: Crisis Could Spur Reforms,” October 24 2008.
9 “Schafer Criticizes GMA, Says Ethanol Contributes Little To Food Prices,” Inside U.S.
Trade, May 23, 2008.

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CRS-5
claimed by Vietnam. China also has told international oil companies - including
Exxon-Mobil - they will be excluded from the Chinese market if they fulfill contracts
to participate in Vietnamese exploration projects in or near the disputed waters.10
Following the June 2008 Bush-Dung summit, some observers speculated that the two
leaders may have been sending China a message by including in their joint statement
that President Bush “reiterated U.S. government’s support for Vietnam’s national
sovereignty....” During Dung’s visit to China in October, the two sides agreed to try
to resolve their maritime disputes.
Vietnam’s Security Council Membership. In the fall of 2007, the U.N.
General Assembly elected Vietnam to be the Asian group’s non-permanent
representative on the U.N. Security Council (UNSC) for the 2008-2009 term.
Vietnam chaired the UNSC during the month of July. After Cyclone Nargis slammed
into Burma in early May, killing tens of thousands, Vietnam reportedly joined fellow
UNSC members China, Russia, and South Africa in opposing calls for the Council
to invoke a “responsibility to protect” that would have permitted the international
community to bypass Burma’s ruling junta in providing humanitarian assistance.11
Vietnam traditionally has taken a supportive public stance toward the Burmese
regime. In other UNSC issues, Vietnam has argued that Kosovo’s declaration of
independence — which was recognized by the United States — was a breach of
international law that could encourage other secessionist movements around the
world.12 Also, in March 2008 Vietnam voted to impose new and tighten existing
sanctions on Iran, though the Vietnamese representative expressed reservations,
including calling for the “…cessation of hostile policies against Iran....”13 In July,
Vietnam voted with China, Russia, Libya, and South Africa to oppose a
U.S.-supported Security Council measure intended to impose sanctions against
Zimbabwe’s President Robert Mugabe and many of his senior associates.14
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
10 Greg Torode, “Oil Giant is Warned over Vietnam Deal; Beijing Asserts S China Sea
Claims,” South China Morning Post, July 20, 2008; Roger Mitton, “Vietnam Sees Second
Weekend of Anti-China Protests,” Straits Times, December 17, 2007.
11 Mary Vallis, “UN Urged to Bypass Burmese Junta,” National Post, May 13, 2008.
12 United Nations Security Council SC/9268, 5848th Meeting (PM), March 3, 2008.
13 United Nations Security Council SC/9252, 5839th Meeting (PM), February 18, 2008.
14 United Nations Security Council SC/9396, 5933rd Meeting (PM), 11 July 2008.

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CRS-6
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.
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.15
There are a number of strategic and tactical reasons behind Vietnam’s efforts
to upgrade its relationship with the United States. Some speculate that Vietnamese
policymakers seek counterweights to Chinese ambitions in Southeast Asia. Vietnam
also needs a favorable international economic environment — for which it sees U.S.
support as critical — to enable the country’s economy to continue to expand.
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. Finally, Vietnam had an interest in facilitating
its application to join the World Trade Organization (WTO), a move that required
U.S. approval. Vietnam joined the WTO in January 2007. The 2005-2006 period
also marked a time of positive bilateral discussions of human rights issues.
Ultimately, the pace and extent of the improvement in bilateral relations likely
is limited by several factors, including Hanoi’s concerns about upsetting Beijing,
U.S. scrutiny of Vietnam’s human rights record, Vietnamese conservatives’ historical
wariness of working with the United States, and Vietnamese suspicions that the
United States’ long-term goal is to end the Vietnamese Communist Party’s (VCP)
monopoly on power through a “peaceful evolution” strategy.
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.
15 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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CRS-7
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
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

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CRS-8
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
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

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CRS-9
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
encouraging the Clinton Administration to take many of these, and subsequent,
steps.16
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,
16 2001 conversations with senior congressional staffers involved in the normalization
debates of the 1990s.

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CRS-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.
U.S.-Vietnam Relations, 2000-2008
Reciprocal Summits
At some point in the mid-2000s, leaders in Hanoi and Washington, DC,
appeared to have made a decision to seek ways to upgrade the bilateral relationship.
One manifestation of this goal has been annual summits. The White House appears
to be using these top-level meetings to try to encourage economic and political
reforms inside Vietnam.
June 2005. 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.”17 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
17 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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CRS-11
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.
November 2006. 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.
June 2007. On June 22, 2007, Vietnamese President Nguyen Minh Triet met
with President Bush in Washington on June 22, 2007. It was the first such visit by
a Vietnamese head of state since the end of the Vietnam War. Triet also met with
some Members of Congress. As expected, economic ties and human rights were the
dominant issues. The two countries signed a trade and investment framework
agreement (TIFA) to expand trade and resolve outstanding disputes. President Triet,
who traveled with a contingent of Vietnamese business officials, visited the New
York Stock Exchange and the U.S. Chamber of Commerce, and oversaw the signing
of billions of dollars worth of private commercial deals.
On human rights, during the leaders’ joint public appearance, President Bush
stated that he and Triet had “frank and candid” discussions, and stated that “in order
for relations to grow deeper ... it’s important for our friends to have a strong
commitment to human rights and freedom and democracy.” President Triet said that
he and Bush had a “direct and open exchange of views” on human rights, and stated
that “we are also determined not to let those differences afflict our overall, larger
interest.” In comments to reporters during his trip to the United States, President
Triet defended Vietnam’s human rights record and legal regime.18 Protestors
criticizing Vietnam’s human rights record followed President Triet during his visit.
For weeks, the meeting reportedly had been in jeopardy because of U.S.
concerns over Vietnamese authorities’ arrest of a number of Vietnamese dissidents
since late 2006. According to one report, the United States extended a formal
invitation to Triet only in early June 2007, after Vietnam agreed to release some
dissidents.
Economic Ties
Economic ties are the most mature aspect of the bilateral relationship.
18 Foster Klug, “Vietnamese President Discounts Criticism,” Associated Press, June 23,
2007.

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CRS-12
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.19
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
by the WTO.20 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.21 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 were $9.4 billion, more than six
times the level before the BTA came into effect (see Table 1). Bilateral trade flows
19 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.
20 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.
21 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.

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CRS-13
likely exceeded $12 billion in 2007. 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.22 In the ten
months after Vietnam joined the WTO, year-on-year bilateral trade flows increased
by over 25%, including a 75% increase in U.S. exports and a 22% increase in U.S.
imports.
Table 1. U.S.-Vietnam Merchandise Trade
(millions of dollars)
Total Trade
U.S. Imports
U.S. Exports
Change
Trade
from Vietnam
to Vietnam
Volume
from
Balance
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
1,291.1
5,763.1
96%
-3,180.9
2004
5,161.1
1,121.9
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
2007
10,541.2
1,823.3
12,364.5
31%
-8,717.9
Jan - Aug 2007
6,686.2
993.1
7,679.3
—
-5,693.1
Jan - Aug 2008
8,039.7
1,954.6
9,994.3
30%
-6,085.1
Major Imports
clothing, petroleum products, footwear, wooden furniture, frozen shrimp,
from Vietnam
coffee, electrical machinery
Major Exports to
passenger cars, machinery and office equipment, plastics, electrical
Vietnam
machinery, wood, motor vehicles, raw cotton, concentrated milk
Source: U.S. International Trade Commission. Data are for merchandise trade on a customs basis.
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 0.75%, a spread that is up from the 0.1% that was
maintained in 2001.23 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
22 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.
23 “Vietnam Widens Trading Band for Dong,” South China Morning Post, 25 December
2007.

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CRS-14
cases against Vietnamese exports. Since 2002, Vietnam has run an overall current
account deficit with the rest of the world.
Imports of Vietnamese Clothing.24 Much of the increase in U.S.-Vietnam
trade since 2001 has come from a sharp rise in clothing imports from Vietnam, which
were about $4.3 billion in 2007, up from the $45 million-$50 million range that
Vietnam recorded in 2000 and 2001.25 By dollar value, clothing is the largest item
the United States imports from Vietnam. In 2007, Vietnam was the third largest
exporter of clothing to the United States, providing nearly 6% of total U.S. clothing
imports (up from about 1.4% in 2002 and 0.1% in 2001, before the BTA went into
effect). In 2007, clothing and textile products were Vietnam’s second-largest export
item by value (after crude oil), generating around $7.8 billion.26
The BTA contained no restrictions on Vietnamese clothing exports to the United
States, but it did allow 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 and some Members of Congress led the Administration to establish an
“import monitoring program” for certain clothing and textiles from Vietnam which
allows the Commerce Department to self-initiate antidumping investigations when
warranted. The import monitoring program expires with the end of the Bush
Administration.
On October 26, 2007, the Commerce Department announced the completion of
its first six-month review of the monitoring data, finding that there was insufficient
evidence to warrant the self-initiation of an antidumping investigation.27 On May 6,
2008, the Commerce Department announced the completion of its second six-month
review, and once again determined that there was insufficient evidence to warrant
self-initiating an antidumping investigation.28 The Department also announced it
would continue the monitoring program and plans on conducting its third six-month
review beginning in September 2008.
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
24 This section was written by Michael Martin, Analyst in Asian Trade and Finance. For
more, see CRS Report RL34262, U.S. Clothing Imports from Vietnam, also authored by
Michael Martin.
25 For purposes of this report, clothing imports include all products imported under chapters
61 and 62 of the Harmonized Tariff System.
26 General Statistics Office of Vietnam, “Socio-economic Statistical Data, 2007,” press
release, January 7, 2008.
27 “Commerce Completes First Review of Vietnam Import Data,” press release, U.S.
Department of Commerce, October 26, 2007.
28 “Commerce Completes Second Review of Vietnam Import Data,” press release, U.S.
Department of Commerce, May 6, 2008.

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CRS-15
protection.29 The BTA required Vietnam to make its IPR regime WTO-consistent in
2003, and as part of its efforts to accede to the WTO, Vietnam passed a new IPR law
in late 2005. Despite this and other legal and regulatory changes, the Vietnamese
government’s IPR enforcement has been widely faulted.
U.S. Bilateral Economic 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 estimated to have surpassed $90 million in FY2007, making
Vietnam one of the largest recipients of U.S. aid in East Asia. For FY2008, the Bush
Administration requested nearly $100 million, including $89 million for HIV/AIDS
treatment and prevention programs.
By far the largest component of the current U.S. bilateral aid program is health-
related assistance, which is projected to have totaled more than $70 million in
FY2007. 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).30 Other sizeable assistance
items include educational exchanges, de-mining activities, dioxin (“Agent Orange”)
remediation programs, food assistance, 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. Since then, Vietnam consistently has been deemed ineligible despite
meeting the technical requirements for MCA eligibility because it has scored very
low on some of the indicators used to measure political freedom.
29 “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.
30 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.

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CRS-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 (see below). In another recent case,
during the summer of 2007, a month-long protest in Ho Chi Minh City by farmers
complaining about allegedly improper seizures of their land was broken up by
authorities after the protestors began attracting the support of some political
dissidents. 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.
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
situation.”31 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. In 2006, citing “many positive steps” taken by the Vietnamese government,
the State Department lifted the CPC designation for Vietnam.
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
31 State Department, Supporting Human Rights and Democracy 2003-04 Report.

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CRS-17
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.32 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.
A Wave of Arrests of Vietnamese Dissidents. In 2006 a number of
dissident groups appeared and publicly called for peaceful democratic change. The
government responded by arresting many participants, with estimates of the number
ranging from dozens to hundreds. The arrests, which appear to have peaked between
March and April 2007, may have been part of a strategy to decapitate the 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. According to some human rights organizations, as of
the spring of 2008, dissidents linked to the 2006 groups continue to be arrested
and/or harassed.
In the spring of 2007, the White House and the State Department criticized the
arrests, most notably by President Bush and Vice President Cheney’s 45-minute
meeting in late May 2007 with a group of Vietnamese-American human rights
activists. Many Members of Congress also spoke out, including through the House’s
passage (by a vote of 404-0) of H.Res. 243, calling on Hanoi to release political
prisoners. To protest the arrests, Congressman Earl Blumenauer resigned his
position as chairman of the U.S.-Vietnam Congressional Caucus in May 2007.33
Religious Freedom. According to a variety of reports, most Vietnamese now
are able to observe the religion of their choice. However, while the freedom to
worship generally exists in Vietnam, the government strictly regulates and monitors
the activities of religious organizations. Periodically, the authorities have increased
restrictions on certain groups. Although the constitution provides for freedom of
religion, Vietnamese law requires religious groups to join one of the
officially-recognized religious organizations or denominations. According to many
reports, the government uses this process to monitor and restrict religious
organizations’ operations. Additionally, many groups either refuse to join one of the
official religious orders or are denied permission to do so, meaning that these groups’
activities technically are illegal.
The State Department’s 2004 designation of Vietnam as a CPC principally was
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
32 Fall 2005 and winter 2006 correspondence with State Department and USAID officials.
33 “Blumenauer quits the US - Vietnam Caucus,” OregonLive.com, May 27, 2007.

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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.
In November 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 and regulations, and
stepped up enforcement mechanisms. 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 that it would repeal its
administrative decree allowing detention without trial. 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.
The Vietnam Human Rights Acts. In large measure due to Vietnam’s
crackdowns in the Central Highlands earlier in the decade, attempts have been made
since the 107th Congress to link U.S. aid to the human rights situation in Vietnam.
A number of measures entitled “The Vietnam Human Rights Act” have been
introduced, with most proposing to cap existing non-humanitarian U.S. assistance
programs to the Vietnamese government at existing levels (FY2007 in the case of the
most recent version of the bill, H.R. 3096) if the President does not certify that
Vietnam is making “substantial progress” in human rights.34 H.R. 3096 would grant
the President a national interest waiver that allows him to exempt any programs that
are deemed to promote the goals of the act and/or to be in the national interests of the
United States. In addition to the aid cap, the bill would require the executive branch
to produce annual reports on Vietnam’s human rights situation and would authorize
funds to promote democracy in Vietnam and to overcome the jamming of Radio Free
Asia. Proponents of the Vietnam Human Rights Act argue that additional pressure
should be placed on the Vietnamese government to improve its human rights record.
34 The Vietnam Human Rights Act was first introduced in the 107th Congress as H.R. 2833,
which was passed by the House, 410-1 (roll call 335) on September 6, 2001 and did not
receive action in the Senate. In the 108th Congress, H.R. 1587/S. 2784 were introduced.
House passed H.R. 1587 by a vote of 323-45 (roll call 391). In the Senate, the bill 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 (H.R. 3190) 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.

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Critics have argued that the bill could chill the recent warming of bilateral political
and security ties and could weaken Vietnamese economic reformers in ongoing
domestic battles inside Vietnam.
In effect, H.R. 3096 establishes a two-part test for determining whether U.S.
assistance programs would be covered by the cap: 1) Does the program constitute
aid “provided to the Vietnamese government,” as opposed to the private sector and
non-governmental organizations? 2) Does the program constitute non-humanitarian
aid? The act defines non-humanitarian assistance as sales or financing under the
Arms Export Control Act and any assistance under the Foreign Assistance Act of
1961. Exceptions are explicitly made for disaster relief, food aid, refugee assistance,
and HIV-AIDS assistance. Under these conditions, it appears that for FY2007 U.S.
aid programs that would be frozen by H.R. 3096’s provisions appear to total less than
$20 million, and probably total less than $10 million. Many of the existing U.S.
military-to-military programs with Vietnam, such as the IMET program, would be
frozen.
At a July 31, 2007 markup session, the House Foreign Affairs Committee
reported favorably H.R. 3096 to the full House by voice vote. The action was taken
after the bill was amended. As introduced, the bill would have prohibited non-
humanitarian assistance to the Vietnamese government unless human rights policy
changes were made. The amended version, which the House passed on September
18, 2007 (414-3, roll no. 877), softened this provision to a freeze. The bill has not
seen action in the Senate.
In October 2008, an alternative Vietnam Human Rights Act (S. 3678) was
submitted in the Senate. It would prohibit increases in many forms of U.S.
non-humanitarian assistance to Vietnam unless (a) such increases are matched by
additional funding for human rights programming, or (b) Vietnam’s human rights
conditions are certified as improving. Like H.R. 3096, S. 3678 would grant the
President the authority to waive this prohibition, would authorize the increase of
RFA anti-jamming funding programming, and would require the submission of a
stand-alone human rights report for Vietnam. Unlike the House bill, the Senate bill
would prohibit Vietnam’s entry into the GSP program unless Vietnam’s labor rights
regime is certified as making improvements.
Political and Security Ties
Military-to-Military Ties Expand. 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

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and exchanges.35 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.
In 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. During his visit, 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.36 In its budget
request to Congress, the Bush Administration requested about $200 million in
International Military Education Training (IMET) funding, double the estimated
FY2007 level. In December 2007, Admiral Timothy Keating, commander, U.S.
Pacific Command, visited Vietnam.
Agent Orange.37 Vietnamese leaders have pressed the United States for
assistance in cleaning up the dioxin left from the spraying of Agent Orange during
the Vietnam War, as well as providing medical care for the estimated 3-5 million
Vietnamese “victims” of Agent Orange. Having resolved its other top priorities —
such as PNTR and WTO membership — the legacy of Agent Orange may emerge as
one of the Vietnamese government’s chief issues in future bilateral discussions with
the United States. According to the Vietnamese press, the Agent Orange issue was
discussed during the most recent round of dialogue between the United States and
Vietnam on human rights in May 2008.38 On May 15, 2008, the House Subcommittee
on Asia, the Pacific, and the Global Environment held a hearing on the Agent Orange
issue entitled, “Our Forgotten Responsibility.”
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.39 To date, the U.S. government has
not provided assistance to programs specifically to address purported Vietnamese
“victims” of Agent Orange or dioxin. However, according to the State Department,
the United States has provided $40 million in support for “mine-action programs”
since 1993 and $43 million in disability assistance since 1989 though the Leahy War
35 Office of the Assistant Secretary of Defense (Public Affairs), “Press Availability with
Secretary Rumsfeld in Vietnam,” June 5, 2006.
36 David Griesmer, “Vietnam Visit Strengthens Military Ties,” U.S. Pacific Command
Public Affairs, May 16, 2007.
37 This section written by Michael Martin, Analyst in Asian Trade and Finance.
38 “Vietnam, US Human Rights Talks Based on Mutual Respect,” Thanh Nien News, May
31, 2008.
39 “Joint Statement Between the Socialist Republic of Vietnam and the United States of
America,” White House Office of the Press Secretary, November 17, 2006.

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Victims Fund, which purportedly included $2 million in funding for Agent Orange
related projects.40 Although the State Department did not provide an itemization of
the use of the $2 million, apparently most of the funds were used for technical and
scientific activities.41
The Iraq Accountability Appropriations Act of 2007 (H.R. 2206/P.L. 110-28),
signed into law by President Bush in May 2007, appropriated $3 million for
assistance to Vietnam for environmental remediation of dioxin storage sites and to
support health programs in communities near those sites. In his March 2008
testimony to the Senate Committee on Foreign Relations Subcommittee on East
Asian and Pacific Affairs, Assistant Secretary for East Asian and Pacific Affairs
Christopher R. Hill stated, “… we are now devising a plan to implement $3 million
… set aside by Congress for environmental remediation and health-related
programs.”42 Since Hill’s testimony, there have been no further announcements from
either the embassy or the State Department about the use of the $3 million.
Although the United States has demonstrated some resistance to providing
medical assistance to the alleged Vietnamese “victims” of Agent Orange, it has
recently indicated a willingness to help with the containment and removal of the
residual dioxin, especially in identified “hot spots” near ex-U.S. military bases in
Bien Hoa, Da Nang, Nha Trang, and Phu Cat. In February 2007, the United States
announced it would provide $400,000 to support mitigation planning for the dioxin
clean-up of the Da Nang airbase.43 The clean-up of the Da Nang airbase is a joint
operation involving Vietnamese Ministry of Defense, the U.S. Environmental
Protection Agency (EPA), and a group called the U.S.-Vietnam Dialogue Group on
Agent Orange/Dioxin (Dialogue Group).44
The Vietnamese government has also been supportive of a U.S. civil suit,
Vietnam Association for Victims of Agent Orange/Dioxin v. Dow Chemical Co.,
seeking compensation for the Vietnamese “victims” of Agent Orange from the
manufacturers of the herbicide. On October 5, 2005, the U.S. District Eastern District
of New York dismissed the case. On February 22, 2008, the Second Circuit Court
40 Statement of Assistant Secretary for East Asian and Pacific Affairs Christopher R. Hill,
Senate Committee on Foreign Relations, Subcommittee on East Asian and Pacific Affairs,
March 12, 2008.
41 Personal communications with representative of State Department, April 25, 2008.
42 Statement of Assistant Secretary for East Asian and Pacific Affairs Christopher R. Hill,
Senate Committee on Foreign Relations, Subcommittee on East Asian and Pacific Affairs,
March 12, 2008.
43 “US Gives Vietnam $400,000 to Plan Clean-up of Agent Orange Hotspot,” Associated
Press, February 9, 2007.
44 The Dialogue Group includes representatives from the American Academy for the
Advancement of Science, the Aspen Institute, the Ford Foundation, Ngoc Tam Hospital
Corporation, Vietnam National University, and the World Committee on Disability - as well
as the Vietnamese government. There are no current U.S. government officials in the
Dialogue Group.

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upheld the decision of the District Court.45 The Vietnamese government and various
Vietnamese organizations reacted strongly to the U.S. Court of Appeals decision. The
Vietnam Association for Victims of Agent Orange/Dioxin called the decision
“irrational, biased, and unfair.”46 The Vietnam Association of War Veterans termed
the decision “legally and morally erroneous.”47 Foreign Ministry spokesman Le
Dzung said, “It is particularly regretful that the ruling came in a time that the U.S.
government has started cooperating with Vietnam to resolve the consequences caused
by Agent Orange/dioxin.”48
The legacy of Agent Orange poses both challenges and opportunities for the
United States. Greater U.S. assistance with the clean-up of residual dioxin and the
provision of medical care to people with illnesses purportedly related to exposure to
Agent Orange could generate low-cost “soft power” benefits for the United States in
Vietnam and across Southeast Asia during a time when some observers assert that
the United States has been neglecting the region. However, there are concerns that
any action that appears to admit responsibility for the supposed aftereffects of the
military use of chemical defoliants might set a precedent by which other nations
might seek U.S. post-conflict assistance.
Human Trafficking. In June 2008, the State Department issued its eighth
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, China, Laos, and Thailand.
However, the report criticized Vietnamese government for lax investigation of
complaints of the exploitation of Vietnamese workers in officially sanctioned export
labor programs.
45 United States Court of Appeals for The Second Circuit, Docket N. 05-1760-cv, In re
“Agent Orange” Product Liability Litigation, February 22, 2008. The civil suit mirrors one
submitted on behalf of U.S. Vietnam veterans in the same U.S. District Court in 1979. While
the District Court also dismissed the claim in this case, there was an out-of-court settlement
in which the manufacturers of Agent Orange agreed to pay $180 million to Vietnam veterans
who claimed that exposure to Agent Orange caused them numerous health problems. It was
also thought that the court case and the out-of-court settlement contributed to the passage
of the various laws providing Vietnam veterans with medical coverage and disability
compensation for conditions attributed to Agent Orange and dioxin. It has been speculated
that the Vietnamese “victims” of Agent Orange are hoping that their court case may result
in a similar out-of-court settlement and/or passage of federal laws granting them assistance
or compensation.
46 Press statement of the Vietnam Association for Victims of Agent Orange/Dioxin,
February 25, 2008.
47 “Veterans Protest US Court’s Agent Orange Verdict,” Thanhnien News, March 9, 2008.
48 “US Court’s Ruling Erroneous and Unjust: VN Foreign Ministry Spokesman,” Ministry
of Foreign Affairs, February 25, 2008.

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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. The omnibus Consolidated
Appropriations Act, 2008 (H.R. 2764), which President Bush signed into law on
December 26, 2007, extends the application closing date from the end of 2007 to the
end of 2009.
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.49 In May
2008, the House passed H.Res. 986 (roll no. 366), stating that the House “will not
forget” and “will continue to press for a full accounting of” U.S. military and civilian
personnel who remain unaccounted for from the Vietnam conflict.
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
49 Office of the Assistant Secretary of Defense (Public Affairs), “Press Availability with
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.

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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. Vietnam’s real GDP
growth in 2007 was an estimated 8.5%, and is estimated to be under 7% in 2008.50
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
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.
50 Economist Intelligence Unit, Vietnam Country Report, June 2008.

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Despite the impressive macroeconomic advances, Vietnam remains a poor
country; about one-third of Vietnamese children under five years of age suffer from
malnutrition.51 Per capita GDP in 2006 was just over $3,000 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
more than 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.
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
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
51 World Bank, “Vietnam at a Glance,” September 12, 2005.

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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%.52
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
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
52 “Party Faces the Future,” Economist Intelligence Unit - Business Asia, May 1, 2006.

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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.
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 countries compete for
foreign direct investment and for markets in many of the same low-cost
manufacturing products. Vietnamese leaders periodically express 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,

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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, others 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. In
May 2007, the United States adopted a new policy toward the Montagnards in
Cambodia, in which individuals UNHCR deems not to be refugees will not be
considered for resettlement in the United States. In the year following policy shift,
the United States accepted approximately 100 Montagnards for resettlement.
The Senate Appropriations Committee’s report accompanying H.R. 2764, the
FY2008 Department of State, Foreign Operations, and Related Programs
Appropriations Act, requested the Secretary of State to submit a report on the
estimated number of Montagnards who are refugees in Cambodia. The language was
not included in the final legislation that was included in the omnibus Consolidated
Appropriations Act, 2008 (H.R. 2764), which President Bush signed into law on
December 26, 2007.
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.Res. 506 (Lofgren). Condemns ongoing human rights abuses in Vietnam
and calls for the United States to remove permanent normal trade relations status
with Vietnam unless all political and religious prisoners are released and significant

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and immediate human rights reforms are made by Vietnam. Introduced June 20,
2007; referred to Committees on Foreign Affairs and Ways and Means.
H.Res. 665 (Tom Davis). Endorses reforms for freedom and democracy in
Vietnam. Introduced September 19, 2007; referred to House Committee on Foreign
Affairs.
H.Res. 986 (Boehner). States that the House “will not forget” and “will
continue to press for a full accounting of” the over 1,700 U.S. military and civilian
personnel who remain unaccounted for from the Vietnam conflict. Introduced
February 14, 2008; passed by the House, May 22, 2008 (394 - 0, roll no. 366).
H.Res. 1048 (Lofgren). Condemns the detention of Dr. Nguyen Quoc Quan,
a U.S. citizen, by the Vietnamese government, and expresses the sense of the House
that the United States should remove permanent normal trade relations status with
Vietnam unless Dr. Nguyen is released. Introduced March 13, 2008; referred to the
Committees on Foreign Affairs and Ways and Means.
H.Res. 1089 (Loretta Sanchez). Calls on the government of Vietnam to
release from prison and end the harassment of people who signed the April 2006
Manifesto on Freedom and Democracy for Vietnam. Directs the Secretary of State
to establish a Countries of Particular Concern list to condemn countries like Vietnam
that engage in “particularly severe violations” of human rights. Introduced April 8,
2008; referred to House Committee on Foreign Affairs.
H.R. 275 (Christopher Smith). The Global Online Freedom Act of 2007.
Directs the President to annually designate a list of Internet-restricting countries,
including Vietnam. Places restrictions and reporting requirements on certain U.S.
business activities in designee countries. Introduced January 5, 2007; reported as
amended by the Committee on Foreign Affairs, December 10, 2007; on February
2008, discharged by House Committees on Energy and Commerce, and on Judiciary;
placed on the Union Calendar, Calendar No. 320.
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.
H.R. 2206 (Obey). The U.S. Troop Readiness, Veterans’ Care, Katrina
Recovery, and Iraq Accountability Appropriations Act, 2007. Appropriates $3
million for assistance to Vietnam for environmental remediation of dioxin storage
sites and to support health programs in communities near those sites. Introduced May
8, 2007; passed by House May 10, 2007 (221 - 205, Roll no. 333); passed by Senate
May 17, 2007 by voice vote; signed by President May 25, 2007; became P.L. 110-28.
H.R. 2764 (Lowey). The Department of State, Foreign Operations, and Related
Programs Appropriations Act, 2008. Senate version would appropriate $10.7 million
in economic support funds (ESF) — nearly double the Administration request — to
support Vietnam’s economic and judicial reform efforts. In contrast, the House

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Committee on Appropriations recommended $5 million in ESF, $0.7 less than the
Administration requests. Both versions of the bill encourage funding programs in the
Central Highlands region. Introduced June 18, 2007; passed by the House June 22,
2007 (241-178 (Roll no. 542)); Senate version passed by the Senate September 6,
2007 (Record Vote Number: 325).
H.R. 3096 (Chris Smith). The Vietnam Human Rights Act of 2007. Would
freeze non-humanitarian aid to Vietnam at 2007 levels unless the Vietnamese
government were to make certain human rights policy changes. Authorizes funds for
organizations and individuals that promote human rights in Vietnam, and for
overcoming the jamming of Radio Free Asia by the Vietnamese government.
Introduced July 19, 2007; passed by the House September 18, 2007 (414-3 (Roll no.
877)); referred to Senate Committee on Foreign Relations.
H.R. 4223 (Fortenberry). Establishes a Congressional-Executive Commission
on the Socialist Republic of Vietnam to monitor and report annually on, among other
items, Vietnam’s human rights conditions and rule of law developments. Introduced
November 15, 2007; referred to House Committees on Foreign Affairs and House
Committee on Rules.
H.R. 6535 (Delahunt) and S. 3097 (Kerry). Vietnam Education Foundation
Amendments Act of 2008. Among other items, establishes the Vietnam Education
Foundation within the State Department’s Bureau of Educational and Cultural Affairs
and establishes a new “American Research College” in Vietnam. H.R. 6535
introduced July 17, 2008; referred to House Committee on Foreign Affairs. S. 3097
introduced June 6, 2008; reportedly favorably without amendment September 12,
2008 (S.Rept. 110-458).
S. 3678 (Boxer). Vietnam Human Rights Act of 2008. Prohibits increases in
many forms of U.S. non-humanitarian assistance to Vietnam unless (a) such increases
are matched by additional funding for human rights programming, (b) Vietnam’s
human rights conditions are certified as improving, or (c) the President issues a
waiver. Prohibits Vietnam’s entry into the U.S. Generalized System of Preferences
(GSP) program unless Vietnam’s labor rights regime is certified as making
improvements in certain areas. Introduced October 1, 2008; referred to Senate
Foreign Relations Committee.

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Figure 1. Map of Vietnam
Source: Map Resources. Adapted by CRS.

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