The U.S.-Vietnam Economic Relationship

Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs 
Foreign Trade University
Hanoi, Vietnam
April 12, 2010

As prepared for delivery

Good afternoon. I am deeply honored to have the opportunity to visit and speak at the Foreign Trade University today. Thank you, Dr. Chau for the invitation to address this distinguished institution and engage in a discussion with such an impressive group of students.

Date: 04/12/2010 Description: Under Secretary for Economic, Energy and Agricultural Affairs Robert D. Hormats has his photo taken with students after his speech at the Foreign Trade University in Hanoi, Vietnam. © State Dept Image, U.S. Embassy Hanoi

You come to this school with different backgrounds and experiences. Some of you are studying economic policy, some are learning languages, and others will be entrepreneurs. As you know, education is a priority in the U.S.-Vietnam relationship and I hope some of you will have the opportunity to study in the United States as a part of your overall education. But no matter what path you’ve chosen, all of you will have a role to play in shaping the bright future of this country and the world.

This is a time of great opportunity and great promise for Vietnam. Today, Vietnam is riding the tide of economic prosperity. By any measure, the growth of this economy has been impressive. Real GDP has grown an average of 7.2 percent per year over the last decade. This growth provides an opportunity for growing numbers of people to share in the promise of better lives and greater opportunities.


But this is also an exciting time for the relationship and partnership between the United States and Vietnam. In 2010, we celebrate 15 years of diplomatic relations between our two nations. Together, the United States and Vietnam provide a great example of how partnerships in the 21st century can move us all forward in cooperation. The United States is committed to strengthening our partnership with Vietnam as a key pillar of our presence in this region and of our involvement in multilateral institutions in the Asia-Pacific area, like ASEAN and APEC.

We are proud to have played a role in helping to support Vietnam’s transition to a more open economy. Not only have our two countries signed an historic bilateral trade agreement, but this agreement has increased trade more than 700%, from just over $2 billion in 2001 to nearly $16 billion in 2009. The United States is now one of Vietnam’s most important export markets.

These economic ties have a real, meaningful impact that’s not only good for millions of our citizens, but also for businesses. Our strengthening economic relationship has supported and enhanced our expanding bilateral ties in a multitude of other areas as well: from cooperation in education, health, and the environment, to engagement in previously more sensitive areas, such as security and law enforcement.

We’re planning to carry this momentum forward as we continue to negotiate a new bilateral investment treaty. This is a win-win situation, which will further deepen our economic relationship and assist Vietnam’s efforts to attract more foreign investment.

Vietnam’s increasingly market-oriented approach also has lead to accession as the 150th member of the World Trade Organization. And it has advanced our cooperation in addressing economic and legal reform issues through the U.S-Vietnam Trade and Investment Framework Agreement (TIFA). We’re using this forum to increase transparency, reduce barriers to trade, and strengthen intellectual property rights protection. This greater openness and legal certainty has, in turn, helped attract U.S. companies’ investment in Vietnam’s dynamic markets.

With a thriving market of 86 million, a track record of healthy trade and stable growth, it is no wonder that Vietnam has been at the center of some of our most recent economic initiatives to engage with the Asia Pacific region.

Vietnam’s leadership as the Chair of ASEAN this year is another great example. Yours is an “action-oriented” chairmanship, pursuing ASEAN integration goals by 2015, including the ASEAN Customs National Single Window Initiative. And the United States looks forward to advancing its regional cooperation with Vietnam and other ASEAN partners. Our aim is to play a re-energized role in Asia. Our commitment is strong and enduring, because it is based profoundly on our national interests.

Just last month, the United States and Vietnam, together with six other partners, completed the first round of talks on the Trans-Pacific Partnership (TPP) regional free trade agreement. Teams from all eight TPP countries have begun progress toward a high standard, 21st-century agreement that can serve as a potential platform for economic integration across the Asia-Pacific region.

We hope that this trade agreement would be a natural next step to strengthening the vibrant U.S.-Vietnam economic relationship. And we’ll continue to do our part. Under President Obama’s National Export Initiative, Vietnam will be one of the priority markets for promoting commercial ties. Our efforts to identify new market opportunities for U.S. companies under this initiative will further promote U.S. trade and investment. And we know that Vietnam will wish to further promote its trade with the United States.

As we look ahead, the United States wants to continue to strengthen and expand its ties with Vietnam to further enhance its continued positive role as an emerging economy and responsible trading partner. And that’s where all of you come in. As the future government and business leaders of Vietnam, you will be working on the front lines to shape your nation’s history. Vietnam is a country with a rich and deep culture. For example, I had the pleasure during my last fisit of going to the Temple of Literature—a very impressive institution. Having travelled around your country, I have been deeply impressed by the energy, talent, entrepreneurship and creativity of your people. In the years ahead, these will enable you to be a very successful participant in the global economy. The United States is ready and willing to be a strong partner in supporting your efforts to continue modernizing your economy -- and address issues of climate change, intellectual property protection, and developing new standards for labor.

While your nation has embraced the complexities of economic governance and regulation, your ability to continue your economic advancement also depends on your willingness and capacity to increase transparency and expose corrupt practices at all levels. Vietnam’s products and the way they are made should stand for quality and integrity in the eyes of the world.

And while the relationship between Vietnam and the United States has never been stronger, deeper, and more constructive, our differing views on human rights also have the potential to make progress in some areas more difficult. We say this as friends and supporters with a deep belief that further unleashing the talents of the Vietnamese people will be a source of greater prosperity and dynamism.

We are committed to continuing a frank and open dialogue and on these issues. We deeply believe in the benefits that a free media, including open areas of the internet, and functioning civil society can provide in meeting the myriad challenges that come with a modernizing economy. But we also recognize that these are decisions Vietnam has to make for itself. As a sovereign nation with a great tradition, we cannot presume to lecture Vietnam on what is in its best interests. We can only speak from beliefs that we deeply hold about our own principles.

We are also open to discussion on areas of economic reform that present challenges to investors here in Vietnam. In particular, we are concerned that the new price control regime currently under consideration as an inflationary control measure would discourage both foreign and domestic investment. More importantly, where price controls have been tried, they do not work—and cause long-term distortion that last for years and are difficult to unwind. Please look at the experiences f other countries before you on embark on that path. We encourage Vietnam to address these difficult challenges in line with the market-oriented approach of the past decade.

As Vietnam grapples with all of these challenges, we applauded it for the plans it has already set in motion to move this agenda forward in the coming years. That goes for Vietnam’s initiative to adopt a National Target Plan for climate change as well. Acknowledging the need for low-carbon economic growth will be critical to reducing the harmful impact of the climate crisis on the environment. This is an issue which grows tougher and more complicated with each uptick of the global thermostat. We are grateful that the United States and Vietnam share a commitment to study, mitigate and adapt to climate change. Vietnam’s efforts to address this serious challenge have resulted in valuable research and knowledge-sharing partnerships such as the U.S.-Vietnam Climate Change Working Group and will improve the physical and economic wellbeing of people in both countries. Faced with the challenges of developing diverse energy sources -- from biofuels and wind energy, to oil & gas and nuclear energy -- Vietnam has recognized the need to advance energy projects that will address the long-term energy demands of a thriving economy.

And Prime Minister Dung’s National Project 30 plan to simplify administrative procedures, promises to improve the business environment for domestic and foreign investors alike. So it is an exciting time in the U.S.-Vietnam bilateral economic relationship. We look forward to building on our common goals and using the strength of our relationship to frankly and openly address areas where we may face disagreement or challenges. Our goal is to work through these issues and continue to move forward toward a growing cooperative partnership. Thank you.