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U.S.-Vietnam Trade Relations: Jackson-Vanik Waiver

Fact sheet released by the Bureau of East Asian and Pacific Affairs
U.S. Department of State, June 17, 1999

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Overview: Extension of the Waiver Is In the U.S. National Interest

The United States has granted Vietnam a waiver of the Jackson-Vanik provisions of the Trade Act of 1974 since March 1998. President Clinton decided on June 3, 1999 to extend Vietnam's Jackson-Vanik waiver because he determined, as required by law, that doing so would substantially promote greater freedom of emigration from that country in the future. He based this determination on the country's record of progress on emigration and on Vietnam's continued and intensified cooperation on U.S. refugee programs since the waiver; he last extended the waiver in June 1998. The law requires such a waiver determination be made on an annual basis.

Engagement: The Administration's policy since the establishment of diplomatic relations in 1995 has been to work with Vietnam to normalize incrementally our bilateral political, economic and consular relationship. This policy builds on Vietnam's own policy of political and economic reintegration in the world. U.S. engagement will promote the development of a prosperous Vietnam integrated into world markets and regional organizations which, in turn, will contribute to regional stability. In addition, our involvement has secured Vietnamese cooperation and engagement on a range of important U.S. policy goals. It is in the U.S. national interest for this progress to continue.

Freedom of Emigration: Extension of the waiver for Vietnam will substantially promote freedom of emigration. Since the waiver was extended last year, Vietnam has made consistent progress on emigration issues. As a result, we are approaching completion of many refugee admissions categories under the Orderly Departure Program (ODP), including the Resettlement Opportunity for Vietnamese Returnees (ROVR), Former Re-education Camp Detainees and "McCain Amendment" sub-programs. The Vietnamese government has also agreed to help implement our decision to resume the ODP program for former U.S. Government employees, suspended by the U.S. Government in 1996.

POW/MIA Accounting: Obtaining the fullest possible accounting of our missing from the Vietnam War remains our highest priority in relations with Vietnam. The excellent cooperation we have received from the Vietnamese government and the people of Vietnam has enabled us to move forward in other areas of our bilateral relationship.

Human Rights: The United States remains concerned about Vietnam's human rights practices and continues to press for improved respect for human rights, worker rights and the rule of law. Our engagement with Vietnam on this issue as well as U.S. support for greater international integration on the part of Vietnam has produced some improvements, specifically increased openness, modest relaxation of restrictions on personal liberty and religious worship, and greater toleration of public criticism about corruption and inefficiency in government. Responding in part to U.S. Government pressure, the Vietnamese released a number of prisoners of conscience in 1998. Engagement with Vietnam is the answer if we are to make progress in these areas.

The Waiver Does Not Give Vietnam NTR: A Jackson-Vanik waiver is a prerequisite for Normal Trade Relations (NTR -- also known as most favored nation or MFN treatment). But the waiver itself does not confer NTR to Vietnam. Before Vietnam can receive NTR, Congress must approve a bilateral trade agreement (BTA) which remains under negotiation.

Jobs: U.S. business views Vietnam, the twelfth most populous country in the world with nearly 78 million people, as an important potential market for U.S. exports and investment. Increased U.S. exports to and investment in Vietnam that result from progress towards economic normalization, in turn, translate into increased jobs for U.S. workers.

Economic Reform: The waiver helps the U.S. Government influence Vietnam's progress towards an open, market-oriented economy. Despite several years of success in economic reform, Vietnam has not yet addressed serious structural problems, and U.S. businesses find the Vietnamese market a tough place to operate. We are using a variety of levers, including our bilateral trade agreement negotiations and WTO accession discussions, to press the Vietnamese to make key reforms to their trade and investment regimes that will increase U.S. business access to Vietnam's market and Vietnam's observance of international trade rules. The waiver keeps these negotiations on track -- the most effective tool we have to press for more rapid and far-reaching reforms.

Cost of Failing to Renew the Waiver: Rejection of the waiver for Vietnam could have negative consequences on many issues of importance to the U.S. Since it has been such an important element of economic cooperation, reversal could damage Vietnamese confidence in the bilateral relationship with potential negative consequences for cooperation in other areas, including POW/MIA accounting, emigration and human rights. Furthermore, our ability to promote comprehensive economic reform and greater international engagement by Vietnam would be seriously damaged. Finally, if the waiver is not renewed, U.S. Government trade promotion and investment support programs, such as those provided by the Export-Import Bank (EXIM), the Overseas Private Investment Corporation (OPIC) and the U.S. Department of Agriculture (USDA), would no longer be available. That would damage the ability of U.S. companies to compete in this potentially lucrative market with other foreign companies that receive similar assistance from their own governments.

Migration Issues

Jackson-Vanik is working. The President decided on June 3 to extend Vietnam's Jackson-Vanik waiver because he determined that doing so would substantially promote the objective of the Jackson-Vanik legislation -- to promote greater freedom of emigration. Overall, Vietnam's emigration policy has liberalized considerably in the last decade and a half. Since the 1980s, over 500,000 Vietnamese have emigrated as refugees or immigrants to the United States under the Orderly Departure Program. Furthermore, with the extension and renewal of the Jackson-Vanik waiver to Vietnam in 1998, Vietnam's cooperation on this issue increased. Based on progress made on refugee processing to date, we now anticipate that we will complete processing of nearly all the current ODP caseloads, including the Resettlement Opportunity for Vietnamese Returnees sub-program, before the end of FY 1999. Moreover, the Vietnamese government has committed to taking all steps necessary to meeting this goal for all refugee programs, including ROVR cases and those involving Montagnards. Most recently, the Vietnamese government has also agreed to help implement our decision to resume the ODP program for former U.S. Government employees, suspended by the U.S. Government in 1996.

Resettlement Opportunity for Vietnamese Returnees (ROVR): Vietnam and the U.S. signed an agreement to process applicants for the ROVR initiative in January 1997. After a slow start, processing eligible cases under the ROVR program accelerated dramatically in 1998 and is now near completion. As of June 1, 1999, the Vietnamese government had cleared for interview 19,975 individuals, or 96% of ROVR applicants. By contrast, at this time last year, the Vietnamese government had cleared 78% of applicants. The Immigration and Naturalization Service (INS) has approved 15,833 ROVR applicants for admission to the United States as refugees, 14,715 of which have departed for the United States. The number of ROVR cases on which the Vietnamese government has taken no action as of June 1 was 79, down substantially from 1,353 in May 1998. Likewise, progress has been made on cases initially denied clearance for interview by the Vietnamese government. As of May 1998, 776 cases were listed as having been denied clearance, most because of incorrect addresses and the failure of ROVR eligible individuals to attend a clearance interview. ODP provided updated information to the Vietnamese government in many such cases with the result that many denials were reversed and the number of cases denied clearance fell to 422 cases. The greatest problem for ROVR processing at this time is the failure of some cleared applicants to appear at the ODP office in Ho Chi Minh City for the INS interview.

Program for Former Re-education Camp Detainees: Under this program, popularly known as the "HO" program, eligible applicants must have been detained for at least three years in a re-education camp because of their association with the U.S. Government. As of May 24, 1999, there were only 287 HO cases involving 1,480 individuals who had not yet been interviewed by the INS. A sub-group of the HO program consists of applicants covered by the "McCain Amendment," which includes eligible persons over the age of 21 who are the sons and daughters of former re-education camp detainees who were approved for admission to the United States as refugees after April 1, 1995. As of May 24, 1999, there were 558 cases which remained eligible for consideration under the program which expires at the end of this fiscal year. The primary obstacle to processing of the remaining HO and McCain Amendment caseloads is failure of the applicants to apply to the Vietnamese government for exit permission.

Progress on Processing Montagnard Cases: Because of improved Vietnamese government cooperation, progress has been made in processing refugee cases involving Montagnards. Since the Jackson-Vanik waiver for Vietnam was extended in 1998, the Vietnamese government cleared for interview 220 individuals (32 cases), for interview, of which 118 (18 cases) have been approved for resettlement in the United States by the INS.

Completion of ODP Programs: ODP and other U.S. Government officials will continue to press the Vietnamese to take all necessary steps to expeditiously complete processing under all ODP programs and ensure that all interested applicants have the opportunity to interview and, if qualified, depart for the United States. Completion of ODP and ROVR programs will not mean the end of U.S. refugee processing in Vietnam. We are designing a new program to address the rescue needs of individuals who have suffered recent persecution or who have a well-founded fear of future persecution on account of race, religion, nationality, membership of a particular social group, or political opinion.

Vietnam's Human Rights Record

The United States remains concerned about Vietnam's human rights practices. Vietnam denies or curtails basic freedoms to its citizens, including freedom of speech, association and religion. The government maintains an autocratic one-party state that tolerates no organized opposition. Its labor law and practice do not meet international standards. Although Vietnam released about two dozen prisoners of conscience in two amnesties in late 1998, a number of people remain in jail or under house arrest for the peaceful expression of their political or religious views.

Engagement with Vietnam has resulted in some improvements. Exposure to the outside world, and the exchange of goods, ideas and people have brought about increased openness and some relaxation of restrictions on personal liberty. For example, there is improved access to information and foreign media. Recently, Internet access became available, although some firewalls exist. In some respects, conditions for religious practice have improved, although the government continues to restrict organizational activities of religious groups perceived as threatening the authority of the central government. Public criticism of corruption and inefficiency in the government is now permitted to a greater extent than ever before (although calls for pluralistic democracy or the overthrow of the Communist Party are not allowed). Since normalization of relations, more than two dozen jailed dissidents have been released. Over time, citizen-to-citizen contacts through the media, Internet, trade and investment, travel and cultural and educational exchanges expose Vietnamese people to international standards and values. Vietnam has made progress in the area of worker rights. In 1998, 60 independently organized strikes protesting unfair wages and working conditions occurred in all types of businesses, from state-owned to foreign enterprises. The Vietnamese government is currently drafting legislation on freedom of association.

The Administration continues to press for human rights. The Administration's support for extending the Jackson-Vanik waiver is coupled with continuous active efforts to promote respect for human rights and the rule of law.

Isolation is not the answer. Disengaging from Vietnam or imposing sanctions would likely strengthen the hand of the hard-line faction of Vietnam's leadership and weaken the reformers. We believe that engaging Hanoi and continuing to press Vietnam for greater openness and reform is one of the keys to improving respect for human rights in that country. For example, together with other Western governments, U.S. Government's persistent advocacy and unrelenting pressure were major contributing factors in encouraging the Vietnamese to release prisoners of conscience last fall, and more recently, in the release of Nguyen Thanh Giang and two Protestant pastors. U.S. businesses in Vietnam contribute to the improvement of worker rights. Nike and Mattel have contracted with the U.S.-based NGO, International Youth Foundation, to train and fund local NGOs to conduct independent monitoring of worker rights within the 20-30 factories that manufacture products for these major U.S. corporations.

POW/MIA Accounting

Obtaining the fullest possible accounting of our missing from the Vietnam War is our highest priority with Vietnam. Vietnam understands that this is our highest priority in bilateral relations, that its cooperation with our accounting effort made possible the establishment of diplomatic relations in 1995, and that our ability to normalize relations in other areas has been predicated on a continued high level of cooperation. As a result, Vietnam has maintained a high level of cooperation with the U.S. since normalization. The President has certified Vietnamese cooperation on four occasions, most recently issuing a determination on February 3, 1999 that Vietnam "is fully cooperating in good faith with the United States."

The President has identified four areas for measuring Vietnamese cooperation.

1) Concrete results from efforts by Vietnam to recover and repatriate remains. Since the last Presidential Determination:

2) Continued resolution of last known alive priority cases.

3) Vietnamese assistance in implementing trilateral investigations with Laos.

4) Accelerated Vietnamese efforts to provide all POW/MIA related documents.

As a result, there has been substantial progress in POW/MIA accounting, none of which would have been possible without extensive Vietnamese cooperation.

Economic Reform and the Vietnamese Business Climate

The Vietnamese business climate is still difficult. After nearly a decade of economic reform, the pace of reform has slowed. Future economic growth in Vietnam depends on increased private sector activity. Although U.S. businesses are not optimistic about the near-term prospects for increased activity in Vietnam and serious obstacles to private sector development remain to be addressed, many U.S. businesses remain active in Vietnam and anticipate improved prospects in the medium to long term. They believe the U.S. Government has an important role to play in encouraging the Vietnamese government to improve its business climate and allow the private sector space to develop.

Vietnam needs to undertake additional fundamental economic reforms. Recent policy changes aimed at improving Vietnam's exports and foreign investment inflows indicated that the Vietnamese leadership understands that the country's economic performance will suffer unless it remains firmly committed to carrying out economic reform. The U.S. Government has joined the international donor community in urging Vietnam to further reform state enterprises, the financial sector, the exchange rate system, and to move ahead on trade liberalization.

The U.S. Government is using a variety of levers to encourage Vietnam to undertake these reforms and improve its trade and investment regime. Both in Vietnam and here in Washington, U.S. Government officials actively engage Vietnamese officials in an ongoing dialogue on economic reform and necessary improvements to the country's business climate. Bilateral trade negotiations and WTO accession preparations provide leverage, holding out the prospect of possible MFN treatment in the future. These processes provide us with opportunities to obtain from the Vietnamese commitments to undertake necessary economic reforms and to make changes to their trade and investment regime that will directly benefit U.S. businesses.

Withdrawal of the waiver would derail multilateral and bilateral trade discussions that aim to increase U.S. access to Vietnam's market and Vietnam's observance of international trade and investment standards. The Jackson-Vanik waiver is one prerequisite for MFN trading status; the other is Congressional approval of a completed bilateral trade agreement. Both are necessary if the United States is to support Vietnam's accession to the WTO. The waiver has proven to be an effective tool for seeking economic reform and addressing U.S. businesses' difficulties in Vietnam. Withdrawal of the waiver could derail these negotiations, dimming U.S. businesses' prospects of gaining the changes to Vietnam's economic system they seek. The Vietnamese viewed the decisions in 1998 to grant and later extend the Jackson-Vanik waiver as an important step forward in the process of economic normalization. They responded with significantly improved offers in a number of important areas which have permitted us to significantly advance the negotiations. Nonetheless, key issues remain unresolved. Shortly after the President announced his decision to extend the waiver on June 3 this year, the Vietnamese government agreed to schedule another round of negotiations June 14-18 and indicated they are prepared to make new concessions to resolve outstanding issues.

U.S. businesses currently benefit directly from the waiver which give them access to programs that increase their competitiveness. The waiver makes available to U.S. businesses operating in Vietnam a number of U.S. Government trade promotion and investment support programs such as those offered by the Export-Import Bank, the Overseas Private Investment Corporation and the U.S. Department of Agriculture. U.S. business, farmers and workers stand to gain significant new opportunities as a result of these programs. OPIC is preparing to provide project finance to three new U.S. ventures in the Vietnamese market. A number of businesses have also approached OPIC about insurance coverage for their projects in Vietnam. EXIM has nearly completed negotiation of framework and project incentive agreements which will make a range of export support programs available to U.S. producers. USDA also has made available grants and credit guarantees that will help open the Vietnamese market to increased U.S. agricultural exports.

Failure to renew the waiver is likely to hurt U.S. exports to and investment in Vietnam and benefit foreign competitors. Without a Jackson-Vanik waiver, U.S. businesses would lose access to the above U.S. Government trade promotion and investment support. This would restrict their ability to compete on a level playing field with their European and Asian competitors who have access to similar programs.

[end of document]

For additional information on U.S.-Vietnam trade relations,
see Ambassador Peterson's testimony of June 17, 1999.

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