As we approach approval of the BTA, opportunities in Vietnam appear a little like the period in 1994 when observers were awaiting President Clinton’s Lifting of the Trade Embargo with Vietnam.  I was in Vietnam prior to and immediately following the lifting of the Embargo as we negotiated with current Consul General of Vietnam Nguyen Xuan Phong and Mr. Ha Kim Ngoc and others on opening of Liasion Offices, return of assets, return of diplomatic properties and many other issues.  The atmosphere in Hanoi and HCMC at this time can be likened to the “Gold Rush”.  Prospectors and others traveled to Vietnam hoping to “strike it rich”.  Six years later many of them are gone and never will return.  Many became disillusioned, many shouldn’t have been there anyway as they hadn’t a proper business plan, knowledge of the business they sought to enter, knowledge of the country, its people and its culture, sufficient capital or a long term view needed for success in international business.

In October 2,000 as we approach a new “opportunity” in Vietnam which should open with the passage of the BTA by both the Congress in Vietnam and the U.S.  Something that will probably not occur before Spring of 2001, we are once again in a “time of opportunity” but the same rules of business still apply.  These are those rules:

a.  Do Your Research in Advance

b.  Take your time to understand the country, its people and its culture.

c.   Do a business plan.  Business plans often make you ask those difficult questions which need to be considered prior to starting a business deal.

d.  Get help (the State of Oregon - Oregon Economic Development Department and the U.S. Department of Commerce - both in the U.S. at the Export Centers and at the Foreign Commercial offices, the U.S. Embassy in Hanoi and Consulates in HCMC, the American Chambers of Commerce both in Hanoi and Ho Chi Minh City, Banks, lawyers, accountants, etc., can all give you a lot of help. Much of it for little to no money and always remember - Free is a very good price.

e. Visit - seeing is believing and nothing tells you more about a country, its people, your potential partners, etc. than an actual visit.

f.  Establish a local presence - trying to manage a project long distance will just not work.  Search for an appropriate local representative and work with them closely.  Realize that close communication is necessary always but is even more critical in the early stages as your new associate learns about you, your company and the new venture.  Be free and open in your time and help build understanding and encourage a sense of ownership and responsibility in your new associate.

g.  Expect delays and compensate for them - Tim is money and since everything will probably take more time than you expect, know that your business will consume more money than you had planned.  Conserve and watch expenses closely in the early stages, as you will need those funds later in your project.

h.  Secure sufficient capital.

i. Maintain a long-term view - Time in Asia is not always measured with the same clock as in the West.  Be prepared for the long haul as profitable operations will not be achieved overnight. 

j.  And finally, be positive - Vietnamese people are practical, hard working and energetic.  They make good employees and can be good partners.  They are hospitable toward Americans and will welcome you with open arms if treated with respect and consideration.  Oftentimes one of the benefits of working on a project is the people you meet on the way to making it a reality.  I assure you your journey to success in Vietnam will offer many turns but also many opportunities to meet new friends and to learn - not only about Vietnam but about yourself.  Grasp the opportunity with both hands! 

Current Trade: 

• Extremely low level, Exports to U.S. in 1999 - 609 million
• Imports from U.S. 291 million (this is the same as we export  to Japan in a 3 day period.  By comparison, Export to Thailand in 1999 were 14, 324 million and Imports from US were 4,984. 

Document: 
The Bilateral Trade Agreement (BTA) is the most comprehensive trade agreement ever negotiated by Vietnam or the U.S.  It is 120 pages long and includes seven chapters.

Chapters are:

  Chapter one  - Trade in Goods
  Chapter two - Intellectual Property
  Chapter Three - Trade in Services
  Chapter Four  - Development of Investment Regulations
  Chapter Five  - Business Facilitation
  Chapter Six   - Transparency and Right to Appeal

When it will Come into Effect: 

• Has to be passed by both governments.  Expected in Spring of 2001. (Probably April).  Both parties favor (see statements by candidates).  July vote to continue EXIM and OPIC programs in Vietnam was 332 to 91.
• Once passed, Vietnam will receive “normal trading relations -NTR status”.  Vote will still be required yearly.  BTA is effective for 3 years but can be amended to extend.  U.S. has said it will support Vietnam’s entry into WTO within the next few years.

Tariffs 

Most of Vietnam’s requirements to lower tariff barriers are required to be phased in over 3 years from the date of signing of the agreement.

Examples:

Reductions in U.S. Customs Duties under BTA

• Average U.S. rate of duty on imports from Vietnam will drop from an average of nearly 40% to 3%.
• Most of the expected growth in exports from Vietnam to the U.S. as a result of this reduction in tariffs is expected to be in exports of footwear and textile and apparel products (garments).

Examples of U.S. Customs Duty cuts:

Men’s Cotton Shirts:  Reduced from 45% to 20.4%
Women’s underwear:   Reduced from 60% to 0
Ski Jackets:   Reduced from 65% to 7.4%
Tennis Shoes:   Reduced from 35% to 20%
Basketball Shoes:   Reduced from 35% to 8.5%

The BTA and the U.S. mechanism of determining quota on imports to U.S. especially garments, textiles and footwear will give Vietnam a first grace year in which there will essentially be no quota.  (exports should explode).  In second year, U.S. will set a quota limit for items subject to quota.