Vietnam's Economic Transformation

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From Communism to Capitalism: Vietnam’s Economic Transformation

In October 2001, US President G. Bush signed an agreement that created a US Vietnam free trade area. The signing marked yet another milestone along Vietnam’s path toward a more open market, the timeline for which includes the following: ▪ In February 1994, US President Bill Clinton ended America’s 19 year economic embargo of Vietnam and opened the door for US companies to target the world’s twelfth most populous country. ▪ In July 1995, President Clinton reestablished diplomatic relations with Vietnam. In the absence of diplomatic relations, many Vietnamese manufactures exports to the US faced prohibitive tariffs ▪ In 1995 Vietnam joined the Association of Southeast Asian Nations (ASEAN) ▪ In 1998 the White House announced that it would exempt Vietnam from the Jackson-Vanik amendment. The exemption meant that American companies investing in Vietnam could apply for financial assistance from the Overseas Private Investment Corporation and the Export-Import Bank ▪ In July 2000, US President Bill Clinton signed a trade pact with Vietnam ▪ The Asia-Pacific Economic Cooperation (APEC) Summit was held in Hanoi in November 2006 ▪ Vietnam joined WTO in 2007

After being ratified by Congress, President Clinton’s actions in the mid- 1990s established normal trading relations between the 2 countries. In particular, Vietnam benefited from an immediate lowering of duties on a number of goods produced by its light industry sector. Vietnamese tariffs and quotas on imports from the United States would be lowered more gradually. A number of US companies immediately seized the opportunity. As Brian Watson a Hong-Kong based deputy regional director for the McCann-Erickson advertising agency said in the mid 1990’s, “Vietnam is the next great frontier. There is an enormous amount of interest among clients. Every meeting starts with a question about going into Vietnam.” While the US business community hailed the...
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