U.S. may keep doors open to Vietnam trade

Legislation - Sen. Gordon Smith, R-Ore., proposes giving Hanoi permanent status that

may curb U.S. reliance on China

- From the Oregonian, www.oregonlive.com 

Monday, June 26, 2006 - By JEFF KOSSEFF

WASHINGTON -- Since Congress permanently expanded trade with China six years ago, Chinese imports into the United States have more than doubled. Now many members of Congress fear that the United States has grown too
reliant on China. So they're looking to increase trade with Vietnam. Sen. Gordon Smith, R-Ore., introduced a bill this month to grant Vietnam permanent normal trade-relations status, which would allow its entry into the World Trade Organization and a reduction in tariffs. That could increase U.S. trade with Vietnam.

"I believe there is a national interest in not having all of our eggs in the China basket," Smith said.

Many trade expansion plans are stalled in Congress. Opponents point to a variety of problems with recent trade deals, including job losses in the United States, human rights violations and weak environmental standards abroad.

"A lot of the organizations that haven't liked the direction of our trade policy aren't happy with this trade proposal, given that you don't have workers' rights and environmental protections in effect there," said Larry Weiss, executive director of the Citizens Trade Campaign, a coalition whose members include unions, consumer groups and environmentalists. But unlike other trade legislation, Smith's Vietnam bill has bipartisan support. He sponsored the legislation with Sen. Max Baucus, the ranking Democrat on the Finance Committee, which oversees trade. And Rep. Earl Blumenauer and Darlene Hooley, both Democrats from Oregon, co-sponsored a companion bill in the House.

"I think it's absolutely critical to help heal the wounds left over from Vietnam," said Blumenauer, who visited Vietnam in 2000 with then-President Clinton. "It is an opportunity to have a strategic counterweight against the Chinese. We're making extraordinary progress with the country of Vietnam."

The bill has a wide array of U.S. business supporters, ranging from manufacturers to farmers who see the Vietnam as a new market for U.S. exports.

Currently, the United States must renew Vietnam's normal trade-relations status each year. In 2005, the United States reported $6.6 billion in imports from Vietnam, representing about one-third of 1 percent of all imports into the United States.

Smith's bill would make the trade status permanent. "The reason we like it is it is just going to give us an incredible amount of certainty about our ability to do business in Vietnam," said Brad Figel, a Washington, D.C., lobbyist for Nike. About 25 percent of Nike's footwear is manufactured in Vietnam.

But such permanent status also could reduce U.S. influence over human rights abuses in Vietnam, said Thea Lee, policy director for the AFL-CIO.

"We'd be losing some flexibility with respect to the tools we can use," Lee said.

Smith sees his bill as an opportunity to improve conditions for the Vietnamese.

"Having them subject to international norms, WTO rules, doesn't lessen our leverage," said Smith, who led a congressional delegation to Vietnam last year. "It enhances it."

Unions also worry that the trade expansion could cause further job losses in the United States and increase the already large trade deficit -- the gap between the amount that the U.S. imports and exports.

The U.S. trade deficit with China rose from $83.8 billion in 2000 to $201.5 billion in 2005.

"If you look at the China debate, people said this has to be a good thing for the U.S.," Lee said.

Trade experts say Smith's bill would provide U.S. companies with an alternative source of goods. They note that costs in China have risen as trade has grown.

"As economic development rises throughout that region after 30 years of opening of the economy, the middle class is growing, wages are growing, and it is not the low-cost area that it once was," said Christopher Runckel, president of Runckel & Associates, a Portland consulting firm that helps clients do business in Asia. "Vietnam is substantially less expensive for labor."

But the costs of shipping from Vietnam are much greater than from China, Runckel said.

Besides the cost considerations, Runckel said, relying mostly on one nation carries risks.

"Nobody wants to be dependent on only one supplier or one area, in case of a natural disaster, a hurricane, an earthquake, a political situation, or even in case of a trade dispute," he said.

Smith said Oregon farmers stand to benefit greatly from having the opportunity to sell to Vietnam.

"Obviously with Nike, there's lots of trade already," Smith said, "but in terms of opening up a market of 83 million people to products Oregon produces, it's a tremendous plus."

Jeff Kosseff: 503-294-7605; jeff.kosseff@newhouse.com