U.S. Department of the Treasury

(Archived Content)

It is a pleasure to speak to you today. This is my first visit to Vietnam -- in fact, as far as we can determine, it is the first visit ever by a US Secretary of the Treasury. My visit signifies that our relationship has changed from one marked by conflict, to one marked by cooperation, mutual respect, and opportunity.

Vietnam is a nation with a proud history -- as I saw today when I visited the Temple of Literature -- and it is also a nation with tremendous potential. Already, Vietnam has made great strides in transforming a country shattered by war to one brimming with energy and confidence. Vietnam is blessed by bountiful resources, and, with half its population under 25 years old, the advantage of a young, energetic and ambitious population.

The United States welcomes Vietnam’s progress toward its rightful place politically and economically in Southeast Asia, and as a nation integrating fully into the global economy. The United States believes Vietnam’s growth and prosperity, while certainly in Vietnam’s interest, is also in our interest.

In the last few years, we have taken the first steps to strengthen ties between our two nations. To begin, Vietnam’s cooperation on POW/MIA issues has permitted us to move forward on diplomatic and economic normalization. This morning, I visited the Joint Task Force and was enormously impressed by the cooperation that exists on the POW/MIA issue. Moving forward on the POW/MIA issue is still the highest priority in our bilateral relations, and the American people recognize and appreciate the great efforts Vietnam has made and is making in this area.

In this context, the United States in 1994 lifted the trade and investment embargo against Vietnam. In 1995, our two governments established diplomatic recognition -- we have nominated

former Congressman Pete Peterson and look forward to his confirmation by the Senate. We have also supported Vietnam’s access to the technical and financial resources of the international financial institutions, such as the World Bank and the International Monetary Fund.

Today, we took another important step forward with the signing of the bilateral debt agreement. This agreement removes an important obstacle to closer ties between the United States and Vietnam -- and the payments that Vietnam will resume under this agreement will send a message to the international financial community that Vietnam takes its financial responsibilities seriously.

Vietnam’s reforms -- such as macroeconomic stabilization to reduce the fiscal deficit and inflation and allowing the establishment of private sector business and foreign investment -- have begun to bear fruit. The results of these doi moi polices are clear to see: growth was 9.5 percent in 1996 and inflation has been reduced to single digits.

But, impressive as this progress has been, Vietnam still has many obstacles to overcome to sustain investor enthusiasm. Today, I would like to discuss what Vietnam can do to open markets, deepen ties with the United States, join the economic mainstream and foster sustainable growth.

To begin, the developing countries that have achieved sustained growth are the ones that have fully unleashed the energy of market-based economies. There is a lot Vietnam can do -- and do quickly -- to mobilize the private sector and attract foreign investment by focusing on three critical areas: creation of a modern legal framework that can accommodate private sector activity; liberalization of trade and investment by reducing tariff and non-tariff barriers and by establishing standards of national treatment; and the implementation of deeper structural reforms.

Those of you here today who are businesspeople working in Vietnam know better than anyone the numerous obstacles to business that exist here. Vietnam would make great strides in improving its economy and conditions for local and foreign investors by reducing tariffs, eliminating import licenses and simplifying government approvals, updating areas of commercial law such as intellectual property rights and land laws to be consistent with international practices, and increasing bureaucratic and legal transparency. For example, the process to receive governmental approval for private sector ventures is cumbersome and complicated, requiring far more licenses and permits than other countries in the region. Vietnam will need to address these -- and other -- issues to continue to attract business and foster sustained growth.

One of the central features of today’s global economy is the mobility of capital. Investors have many options of where to go with their investments. I worked for a Wall Street investment firm for 26 years and I often helped companies decide when and where to invest. For Vietnam to compete effectively for its share of global investment, it must address those issues of concern to international investors.

Further progress in reform will also open the door for closer economic ties between our two governments. The next step is to complete a bilateral trade agreement, based on Vietnam’s willingness to make substantial commitments to open markets and treat foreign firms the same as Vietnamese businesses. We have presented a draft of the bilateral trade agreement and will begin another round of negotiations later this month.

Once the bilateral trade agreement, is secured, satisfaction of the provisions of the Jackson-Vanik amendment would make Vietnam eligible for Most Favored Nation trading status. Separately, and not necessarily as a matter of time sequence, satisfaction of Jackson-Vanik will also bring closer the possibility of cooperation with the U.S. government and the institutions we have that promote trade and investment such as the Overseas Private Investment Corporation, the Export-Import Bank, Trade Development Agency, and other forms of assistance. But Vietnam’s overall progress on a number of issues will be the background under which this cooperation will develop. For example, if Vietnam wants access to OPIC loans and insurance programs, Vietnam will need to satisfy fair labor standards. The business community can play a valuable role in promoting international labor standards in Vietnam.

Ultimately, each nation must follow its own development path in leading its people to prosperity and greatness. But there is also little question that market-based economies and trade openness are the essential conditions for development. That has been certainly true for Vietnam’s Asian neighbors who raised the standards of living of their people by establishing solid internal market conditions and by lowering and simplifying tariff structures, not trying to preserve industrial behemoths behind tariff walls. Other developing countries around the globe from Latin America to Central and Eastern Europe that have opened their economies and sparked economic growth have reinforced this lesson.

None of these countries achieved their success by making the journey on their own. We must all work together, the governments of Vietnam and the United States, as well as you in the private sector, each working to make the most of the opportunities we both have before us. Together, we can foster prosperity in Vietnam, and benefit both Vietnam and the United States for decades to come.