Jeffrey A. Bader, Deputy Assistant Secretary for East Asian and Pacific Affairs Statement before the Subcommittee on Asia and the Pacific House Committee on International Relations Washington, D.C., June 18, 1997 U.S. Department of State

Thank you Mr. Chairman. I am pleased to have the opportunity to speak today on United States policy toward Vietnam. This is an opportune time to review our policy, with Secretary of State Albright's visit to Vietnam just one week away and the arrival of our first Ambassador to the Socialist Republic of Vietnam, Pete Peterson, six weeks behind us.

Vietnam is a nation in the midst of significant transformation. After years of self-imposed isolation from its neighbors and the West because of its occupation of Cambodia, the Vietnamese leadership changed course beginning in the mid 1980s. Faced with a growing gap between its economic stagnation and the dynamic growth of its neighbors, Vietnam's leaders made two fundamental decisions: to withdraw Vietnamese troops from Cambodia, and to embark on a policy of domestic reform. These two decisions paved the way for Vietnam's reemergence as a partner accepted by its ASEAN neighbors and by the West. The collapse of the Soviet Union, its former ally, added impetus to the decisions the leadership had taken.

Domestically, Vietnam embarked on a policy of economic reform, or "Doi Moi." This policy has reduced the role of central planning and encouraged the development of private businesses, especially in the agricultural and retail sectors. Vietnam has sought to attract foreign investment, both from the region and from the West. The result has been a surge in Vietnam's growth, which took off in 1991 and has averaged 9.5% since 1995, and a steady stream of foreign investors and traders coming to Vietnam seeking opportunities in the new more favorable climate.

Vietnam's movement toward a market economy "with socialist characteristics" has, however, been halting and there are significant barriers and obstacles the leadership has not confronted. The state sector and state monopolies continue to play a dominant role, and have a privileged place, in the economy. Vietnam has yet to commit itself to the strategy of export-led growth that has been so successful for its ASEAN neighbors, pursuing a more cautious and protectionist approach relying on import substitution policies. Rule of law, the sanctity of contracts, protection of intellectual property, and determination to reduce official corruption--all essential to sustaining economic growth and creating a climate for foreign investment--need considerable strengthening if Vietnam is to compete.

Internationally, Vietnam's reorientation has had at least three major components: 1) improving its relations with the states of the region, particularly the ASEAN countries; 2) enhancing its relations with the U.S. and other Western countries; and 3) integrating into the broader international community. This has led Vietnam to join ASEAN, and with it the ASEAN Regional Forum which discusses regional security issues with the important states of the Asia-Pacific, including the U.S., China, and Japan. It has manifest itself in Vietnam's desire to join APEC and the World Trade Organization, and of greatest interest to us here, it has meant that Vietnam has sought to make major strides to develop its relations with the U.S.

Vietnam's desire to improve relations with the U.S. has led it to engage us on a number of issues of concern to us, in many cases flexibly. These include: POW/MIA accounting, establishment of diplomatic relations, resettlement opportunities abroad for Vietnamese boat people and return of some of them to Vietnam, economic and commercial cooperation, protection of intellectual property rights, repayment of sovereign debt, security dialogue, and law enforcement cooperation. I would now like to turn to U.S. policy in Vietnam--what we have been doing and some next steps.

Since the early 1990s, the U.S. has been proceeding cautiously in developing relations with Vietnam, following a road map conceived in the Bush Administration. In 1994, in light of progress in POW/MIA accounting and the successful implementation of the Paris Peace Accords, the Clinton Administration lifted the trade embargo on Vietnam. The U.S. opened a Liaison Office in Hanoi later in 1994. On July 11, 1995, President Clinton announced our establishment of diplomatic relations, and on May 9, former Congressman Pete Peterson took up his duties as our Ambassador to Vietnam.

Obtaining the fullest possible accounting of American POW/MIAs from the Vietnam War continues to be our highest priority with regard to Vietnam. Our expansion of the relationship into other areas has not lessened the centrality of POW/MIA accounting to our relations with Vietnam. As my predecessors have previously testified, our policy has been to take carefully phased, incremental steps forward in the relationship as we achieve tangible progress in reaching our accounting goal. Before each major step, the President has carefully reviewed the progress that has been achieved and judged that further progress could best be promoted through these steps.

In 1993, the President set out four specific areas in which cooperation by the Vietnamese would be examined as a basis for further improvement in relations:

-- Resolving discrepancy cases and live sightings, as well as conducting field activities. With the assistance of the SRV, we have been able to confirm the fate of all but 48 of the 196 "last known alive" high priority cases; i.e., persons known to have survived their capture or aircraft loss, but who did not return alive. After evaluating over 1,850 reports that POW/MIAs had been sighted alive since 1975 and over 140 field investigations, we have found "no compelling evidence that any American remains alive in captivity in Southeast Asia."

-- Recovering and repatriating remains. This month, JTF-FA (Joint Task Force-Full Accounting) began the 46th JFA (Joint Field Activity) in Vietnam, 26 of these since January 1993. These joint U.S.-Vietnamese operations and unilateral Vietnamese turnovers of remains have produced 211 sets of remains since 1993. During these activities, Vietnamese and Americans work together under harsh and dangerous conditions to recover remains of the missing.

-- Accelerating efforts to provide documents that will help lead to the fullest possible accounting. The Vietnamese creation of teams in 1994 to search nationwide for documents and records has provided new leads. Joint research teams have reviewed and photographed approximately 28,000 archival items. In 1995 and 1996, Vietnamese officials unilaterally turned over 300 documents totaling 500-600 untranslated pages. We have conducted more than 195 oral history interviews of Vietnamese veterans and officials.

-- Providing further assistance in implementing trilateral investigations with Laos. Since the Vietnamese agreed in December 1994 to cooperate on recovery operations in Laos, 22 Vietnamese witnesses have assisted in field activities in Laos, providing information that led to the repatriation in 1996 of remains associated with cases of 12 unaccounted-for Americans.

Taking into account all information available to the government, the President signed a Presidential Determination on December 3, 1996 that Vietnam is cooperating in full faith in all four of these areas.

The arrival of Pete Peterson in Hanoi provides us an invaluable asset as we pursue the goal of fullest possible accounting. As a former POW, he brings a special, unique commitment and credibility to this task. At the same time, he has already demonstrated an extraordinary ability to communicate with the Vietnamese, enabling him to build a framework of cooperation necessary to further the goal of accounting for our POW/MIAs.

Concern for human rights is an important element of our policy with Vietnam. Vietnam's decision to introduce market mechanisms has not been paralleled by comparable efforts to introduce political reforms. Vietnam remains a one-party dictatorship in which criticism of the regime is not tolerated and attempts to organize politically outside the Communist Party framework are unacceptable.

We have a formal human rights dialogue with Vietnam and have held five sessions so far, the most recent in March of this year. These meetings have enabled us to convey our concerns about human rights abuses directly to the Vietnam Government. When the Secretary visits Vietnam at the end of this month, human rights will be among the most important issues she raises with Vietnamese leaders. Through the dialogue and our regular contacts with the Vietnamese Government, we have raised broad human rights issues such as freedom of religion, freedom of the press and of expression, and the right of association, as well as specific cases of imprisoned political and religious dissidents. We have pressed Vietnamese officials at the highest levels to release political and religious prisoners. We have also made it clear that Hanoi's improvement in respect for human rights will be a factor affecting the pace of our normalization of relations.

In January of this year, we reached agreement with the Vietnamese Government on the Resettlement Opportunity for Vietnamese Returnees--or ROVR. ROVR was created to encourage Vietnamese in countries of first asylum, such as Thailand and Hong Kong, who have been found ineligible for refugee status to return voluntarily to Vietnam. To further offer inducement to their return to Vietnam, we have agreed to consider those who enrolled in the program one last time under liberal criteria with a view to determining whether they are eligible for resettlement in the U.S. Although this program has been slow to get started because of delays in issuance of exit permits by Vietnamese officials, we hope to begin full-scale interviewing of these applicants in the near future. This will be the last chapter in the saga begun in the mid-1970s which has brought about one million Vietnamese to the U.S. under various resettlement programs.

We are working with Congress to open a Consulate General in Ho Chi Minh City. Opening a Consulate General is very much in our own interest. It will enable us to provide consular and business services to the 3,000 Americans resident in Ho Chi Minh City and 75,000 American tourists visiting annually. There is a huge demand for immigrant and non-immigrant visas, which currently must be handled at great expense to the U.S. Government out of Bangkok. When it opens, Ho Chi Minh City will be one of the biggest visa-issuing posts in East Asia and the Pacific. A presence in Ho Chi Minh City will enable us to more closely monitor the economic, social, and human rights situation in the South.

Vietnam and the U.S. have a shared interest in combating the transit of narcotics through Vietnam to the U.S. We have provided training in demand reduction and counter-narcotics for Vietnamese customs. In the future we will be looking at increasing cooperation in this area.

With Vietnam's membership in ASEAN and participation in the ASEAN Regional Forum, we now have fora for discussing regional issues with the Vietnamese leadership. Vietnam's conduct and influence will be an important element in affecting regional stability. It claims numerous islands, reefs, and atolls in the Spratly Islands and occupies the largest number of islands of all the claimants. It has historic interest and influence in Cambodia and Laos. And Vietnam's relationship with China has long been of consequence to the region--from the time of our own military involvement, through the PRC invasion in 1979, to the normalization in relations that accompanied Vietnam's withdrawal from Cambodia. A U.S.-Vietnam dialogue, multilaterally and bilaterally, should contribute to increasing stability in Southeast Asia.

Our two military establishments have begun to develop a modest relationship. Thus far this has involved exchanges of visits at a relatively low level. We held our first round of military-to-military talks in Hanoi in October. It was reciprocated by a visit of Vietnamese officers in February. Both sides intend to proceed cautiously at a pace comfortable to both, and which maintains the preeminence of the POW/MIA accounting effort.

The economic relationship is a high priority for both countries. Growth in trade and investment has been impressive, but far short of the potential inherent in this dynamic economy. Since we lifted the embargo in 1994, over 400 U.S. firms have set up operations in Vietnam, and hundreds of others pursue business from regional and U.S. headquarters. For 1996, U.S. exports to Vietnam were just over $600 million, doubling the 1995 figure, and U.S. imports from Vietnam totaled over $300 million. Although the U.S. dropped recently among sources of foreign investment in Vietnam from 6th to 9th, we expect our rank to climb back up.

Because of the embargo and the absence of contacts between our two countries for so long, the U.S.-Vietnam economic relationship is one of the handful in the world which should experience dramatic growth in the years to come and create jobs for Americans as exports grow. For this to happen, Vietnam needs to eliminate trade barriers and continue to develop an institutional and legal framework meeting the needs of American business.

A comprehensive bilateral trade agreement, which will help increase market access and transparency for U.S. firms in Vietnam, is under negotiation. We recently finished three rounds of talks in Hanoi during which we presented the draft text of the agreement. We are now awaiting a response from the Vietnamese. Having developed a better understanding of Vietnam's trade and investment regime and clarifying for the Vietnamese U.S. objectives and international trade terms and concepts, we are ready for negotiations in earnest.

During the last round of trade talks, we also initialed an interim copyright agreement which we expect to finalize soon. This is an important step. Development of IPR protection will be essential as Vietnam seeks to attract foreign investment. Because of our concerns over lack of protection for copyrighted items, such as CD's, software, books and film, and pharmaceutical patents for American drug manufacturers, we have placed Vietnam on the Watch List for the first time this year.

Vietnam is one of the half-dozen countries to whom the U.S. does not grant MFN status, despite having probably the most dynamic growing economy of them all. A completed trade agreement and a waiver of the Jackson-Vanik Amendment are prerequisites for MFN. The Administration will consult with the Congress on the requirements and the timing of decisions to grant MFN. It is in the interest of the U.S. to provide MFN so that our commercial relationship can achieve its full potential.

U.S. companies have told us they want trade and investment support, such as EXIM Bank, OPIC and TDA programs. The Jackson-Vanik waiver also is required for EXIM Bank and OPIC to operate in Vietnam. EXIM Bank support, in particular, is essential if U.S. companies are to compete on a level playing field against foreign competitors. An OPIC delegation visited Vietnam at the end of May to continue work on its two other requirements--a labor certification and a bilateral OPIC agreement. TDA has offered some of its programs in Vietnam and will soon offer its full range of programs. We have also tabled a civil aviation agreement with Vietnam.

On April 7, Secretary Rubin signed a bilateral debt rescheduling agreement in Hanoi. The agreement commits Vietnam to repay the former government of South Vietnam's debt of $146 million. The Vietnamese have already begun payments. The Brooke Amendment bar on assistance to countries in arrears on official debt repayments will be lifted on June 23 when the debt rescheduling agreement comes into effect.

Current legislation has prohibited most bilateral assistance to Vietnam. USAID has provided humanitarian assistance through NGOs for prosthetics and rehabilitation services to war victims and to displaced children and orphans. Assistance is about $3 million a year. USAID also plans to offer modest assistance with HIV/AIDS prevention and commercial legal reform. USIA has been providing Fulbright fellowships and grants for Vietnamese to study in and visit the U.S., and the National Institutes of Health and the Centers of Disease Control have spearheaded efforts to assist Vietnam's health sector.

The U.S. and Vietnam have begun to normalize relations on a wide front. The result is an increasingly complex relationship. The U.S. and Vietnam have a tragic history. Healing the wounds of war takes time, effort, and good will. We are moving toward a time when Americans will truly see Vietnam not as a war but as a country, and the Vietnamese not as former enemies but as a people with whom Americans can build a relationship based on reconciliation and shared hopes for the future. We still have much more work ahead of us.

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