Economic and Trade Cooperation – Mega Story

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Hanoi (VNA) – Since Vietnam and the United States normalized relations and established diplomatic relations on July 12, 1995, the two countries have gone from former enemies to friends and have become full partners, in politics-diplomacy, in economy, education and science-technology to defense-security.

Twenty-five years after the normalization of their relations, trade between Vietnam and the United States has grown almost 120-fold, from $ 451 million in 1995 to $ 77.5 billion in 2019.

Besides strong political ties, economic and trade relations are also considered one of the most fruitful areas of bilateral cooperation and become a driving force for the comprehensive relations between the two countries.

Revolutionary growth

Twenty-five years after normalizing relations, the United States is currently the third largest among Vietnam’s more than 100 trading partners in the world.

In turn, the Southeast Asian country ranks the North American nation’s 16th largest trading partner. Bilateral trade has grown by 20% per year, with Vietnam continually registering a surplus with the United States.

Bien Dong Seafood Co. Ltd, located in Tra Noc II Industrial Park in Can Tho City in Mekong Delta, is one of three Vietnamese exporters of tra fish to the United States with low anti-dumping duty in this market (Photo: VNA)

Trade between the two countries has increased by nearly 120 times, from 451 million USD in 1995 to 7.8 billion USD in 2005, 45.1 billion USD in 2015, 47.15 billion USD in 2016, 50.8 billion USD USD in 2017 and 60.3 billion USD in 2018.

In 2017 alone, Vietnam’s exports to the United States accounted for over 20% of its total overseas shipments. Vietnam is also Southeast Asia’s largest exporter to the United States.

Their commercial turnover reached 77.5 billion USD in 2019, which is expected to reach 80 billion USD this year by the American Chamber of Commerce (AmCham).

According to the Vietnamese General Customs Department, bilateral trade amounted to USD 31.11 billion in the first five months of 2020.

Of that total, Vietnam shipped $ 25.11 billion worth of goods to the United States, up 10.6% year-on-year. The main export items include textiles-clothing products; mobile phones and components; computers, electronic products and components; machinery, equipment, tools and spare parts; shoe; and wood products, with revenues of at least USD 1 billion for each product.

Meanwhile, the United States gained $ 6 billion from shipments to Vietnam during the period, up 5.4% from a year earlier, with computers, electronics and components being the most sold, for a value of 1.92 billion USD, up 8.2% year on year.

The United States has also seen continued growth in exports of many items to the Southeast Asian nation, including lumber, wood products, animal feed and materials, aquatic products, fruits and vegetables. Regarding agricultural products, it shows a trade surplus of 400 million USD per year with Vietnam in terms of soybeans, meat, milk and fruits.

Party Secretary General and President Nguyen Phu Trong and US President Donald Trump witness the signing of a contract worth nearly $ 3 billion for 10 Boeing 787-9 Dreamliner between Bamboo Airways and Boeing in Hanoi on the 27th February 2019 (Photo: VNA)
Party Secretary General and President Nguyen Phu Trong and US President Donald Trump witness the signing of a contract worth nearly $ 3 billion for 10 Boeing 787-9 Dreamliner between Bamboo Airways and Boeing in Hanoi on the 27th February 2019 (Photo: VNA)

In addition to trade in goods, the two countries have also benefited from dynamic trade ties in the aviation sector with a multitude of contracts to purchase Boeing aircraft from Vietnamese carriers such as Vietnam Airlines, Vietjet Air and Bamboo Airways.

In terms of investment, at the end of 2019, the United States ranked 11th among 130 countries and territories investing directly in Vietnam, with nearly 1,000 valid projects worth around $ 10 billion at the current time.

The United States is not yet a top foreign investor in Vietnam, but it is rated as a high quality investor. Carrying out many valuable projects, American companies actively cooperate with their local partners and help them grow while making a significant contribution to social activities.

The North American country is also a recipient of investments from Vietnamese companies. It was in second place among Vietnamese foreign investment destinations between January and May of this year, with 21.72 million USD, or nearly 12% of the latter’s total foreign investment.

In addition, the United States has consistently maintained official development assistance (ODA) for Vietnam at a stable level of over US $ 100 million annually.

When it comes to tourism, it has also always been among the top five sources of foreign visitors to Vietnam. The number of American travelers increased by 11.55% on average between 2014 and 2018.

In 2018, 687,200 American tourists came to Vietnam, an increase of 11.9% over the previous year and accounting for 4.4% of the total foreign arrivals here. They made up about 11 percent of total American visitors to Asia.

In February 2019, the second summit between the United States and the Democratic People’s Republic of Korea was held in Hanoi. This meeting demonstrated Vietnam’s stature in the international community and its role in maintaining peace and staging political events at the global level.

Successes reaped through major agreements and policies

On July 13, 2000, Minister of Commerce Vu Khoan and United States Trade Representative Charlene Barshefsky signed the Vietnam-United States Bilateral Trade Agreement (BTA) at the office of the United States Trade Representative in Washington DC. Later, President Bill Clinton announced the deal at an event at the White House Rose Garden.

The BTA officially came into effect on December 11, 2001, when Vietnamese Commerce Minister Vu Khoan and US Trade Representative Robert B. Zoellick exchanged letters ratifying the agreement in Washington DC.

Trade Minister Vu Khoan and US Trade Representative Charlene Barshefsky sign the Bilateral Trade Agreement in Washington DC on July 13, 2000 (Photo: VNA)
Trade Minister Vu Khoan and US Trade Representative Charlene Barshefsky sign the Bilateral Trade Agreement in Washington DC on July 13, 2000 (Photo: VNA)

Under the agreement, all Vietnamese products exported to the United States would be entitled to tariffs under unconditional normal trade status, well below previous rates.

Two years after the entry into force of the BTA, the United States has become the largest importer of Vietnamese products and has maintained this position until now.

The experience gained during the BTA talks proved useful for Vietnam when negotiating its entry into the World Trade Organization (WTO) with the United States, a major partner of the WTO, opening the way to Vietnam to become the 150th member of this organization in January. 11, 2007.

On July 17, 2003, the Vietnam-United States Textile Agreement was signed by Minister of Commerce Truong Dinh Tuyen and United States Ambassador Raymond Burghardt in Hanoi. Later that same year, on December 4, the two countries signed the bilateral air transport agreement.

On December 8 and 9, 2016, the United States House of Representatives and Senate approved the Standing Normal Trade Relations (PNTR) status for Vietnam. US President George W. Bush signed the declaration granting PNTR to the country.

The two countries signed the Bilateral Maritime Agreement on March 15, 2007 and the Trade and Investment Framework Agreement (TIFA) on June 21 of the same year.

On March 27 and 28, 2017, they reactivated the technical meeting of the TIFA Council, engaging in dialogue in a spirit of mutual benefit and the search for new areas of cooperation.

Vietnam Airlines Managing Director Nguyen Xuan Hien and US Import-Export Bank Chairman Philip Merrill sign a financing agreement for a Boeing 777-200ER for Vietnam Airlines in Washington DC on August 15, 2003. C 'was the second of four 777. -200ER Vietnam purchased from Boeing and also the first to be delivered directly to Vietnam Airlines (Photo: VNA)
Vietnam Airlines Managing Director Nguyen Xuan Hien and US Import-Export Bank Chairman Philip Merrill sign a financing agreement for a Boeing 777-200ER for Vietnam Airlines in Washington DC on August 15, 2003. C ‘was the second of four 777. -200ER Vietnam purchased from Boeing and also the first to be delivered directly to Vietnam Airlines (Photo: VNA)

Speaking about the rapid growth of Vietnam-US trade relations, US Assistant Secretary of State David Stilwell saw it as the result of the industry and the vision of many people on both sides who believe in the prospect of peace.

At the logo launching ceremony for the 25th anniversary of bilateral diplomatic relations in late December 2019, Stilwell said U.S. companies are increasingly investing in Vietnam while Vietnamese manufacturers are also bringing more products to U.S. consumers.

For his part, Vietnamese Deputy Prime Minister Trinh Dinh Dung said the Vietnamese and American economies are increasingly complementary. While his country ships many solid products to the United States, such as seafood, cashews, clothing and shoes, the United States also supplies Vietnam with high-tech products such as projects. energy investment and aircraft purchase contracts.

Opening the 2019 US-Vietnam Business Summit, he pointed out that the investment and business opportunities of US companies in Vietnam are playing an increasingly important role in local development, helping the host country to join the chains of ‘global sourcing, improve the skills and incomes of local workers, and bring prosperity to the Vietnamese people./.

Sumi-Hanel Wiring System Co. Ltd, located in Hanoi Sai Dong B Industrial Park, specializes in assembling automotive electrical wires for export to the United States (Photo: VNA)
Sumi-Hanel Wiring System Co. Ltd, located in Hanoi Sai Dong B Industrial Park, specializes in assembling automotive electrical wires for export to the United States (Photo: VNA)


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