A slow process

JIM LEHRER: Ambassador Barshefsky, you negotiated this deal. What, it took four years, is that right?

CHARLENE BARSHEFSKY: Almost five.

JIM LEHRER: What was the problem?

CHARLENE BARSHEFSKY: Well, we embarked upon this negotiation at the President's direction shortly after he normalized diplomatic relations with Vietnam and instructed that we begin to pursue bilateral trade agreement with Vietnam.

I think for Vietnam, this has been a difficult process.

This is a closed country with a very closed economy. It's very difficult to do business in Vietnam.

But it's also an economy that isn't growing, isn't diversifying, isn't creating jobs and is experiencing net disinvestment. So from the point of view of the Vietnamese leadership over the course of these last five years, it's become obvious that they have simply got to move forward or be left further and further behind.

The situation for Vietnam I think became all the more acute after we pursued trade agreements with Laos, with Cambodia and of course with China.

JIM LEHRER: What was your reading, Ambassador Barshefsky, in talking to the negotiators for Vietnam about...

when they say they want a free-market economy, do they mean... do they really mean it?

I mean is there a Vietnamese version of a free market economy, or is there something that is familiar to ours?

CHARLENE BARSHEFSKY: I don't believe that the words "free-market economy" should be taken literally. I think what the Vietnamese are after is additional economic growth, and we know from experience that that growth is very hard to obtain on a sustainable basis without economic reform, without competition, without at least some degree of market opening. I think at least in its first stage, this is what Vietnam wants to accomplish. It will not happen overnight, even under this agreement.

We phase in a number of obligations in the good sector and in services and in cutting of tariffs and so on because it will take time for Vietnam to begin even a moderate market opening.

JIM LEHRER: Are we going to help them in any way, other than just to sign this deal?

CHARLENE BARSHEFSKY: We'll certainly provide technical assistance. This is particularly the case on what I would call rule-of-law issues. This agreement, apart from effecting the most important market opening in Vietnam in 30 years, also has very substantial provisions on increased transparency in Vietnam's trade regime, in the way they pass laws, in the way they pass regulations, notions that the public should have advanced notice of changes in law, that they should be able to comment on changes in law.

This is very radical for Vietnam, and in particular, in these rule-of-law areas we'll be providing substantial technical assistance. And of course we'll assist, as well, in implementation of regulatory reform and other areas, as needed.

JIM LEHRER: Would you agree, Ambassador Peterson, that that kind of thing, transparency is a radical idea in a closed country such as Vietnam?

PETE PETERSON: It's a major problem. And of course, with the lack of transparency corruption operates freely.

JIM LEHRER: What kind of corruption? Give us a feel for the kind of corruption that operates.

PETE PETERSON: Well, there's petty corruption and then there's major corruption. The petty corruption is just sort of a service issue, where somebody does something for you and there's an expectation that you're going to pay for that service, even though you're getting that service from a governmental agency.

They pay very low wages, and so some of their take-back is through that process.

But the major corruption is with the lack of transparency in doing contracting and in doing the kinds of business issues that Ambassador Barshefsky has talked about.

This agreement is going to carry the Vietnamese to a new level in transparency that is going enact, I think, a significant process of reducing corruption, as well.

JIM LEHRER: How will the transparency do that?

PETE PETERSON: Well, because people are going to be able to see, you're going to see what ministries are doing, you're going to see... in fact, one minister is going to see what the other minister is doing that currently that even doesn't take place.

A person puts in a contract for a... or a bid for a contract, and that's going to be seen all the way up and down the line. There's going to be open bids. It's going to be a process that they haven't done before.

JIM LEHRER: Is this going to... agreement, Ambassador Peterson, likely to create new wealth at the upper reaches of Vietnamese society, or is that society is not going to allow that to happen, at least to individuals?

PETE PETERSON: No. There's going to be an accumulation of wealth across the entire spectrum. And there's quite a disparency between the rural and the urban areas now and they're going to have to be very careful with their investment to make sure that that doesn't widen in this process.

I think that you're going to see that 77 million people in Vietnam becoming major consumers for American goods ultimately.

JIM LEHRER: But Ambassador Peterson, the wealth now is held by the people who are running the government, right?

PETE PETERSON: Well, it's...

JIM LEHRER: No?

PETE PETERSON: It's across the board. Is not as distributed as much as we would like, but you would be surprised to go to an average Vietnamese home now and that home is chuck full of assets. Those assets have been accumulated in just the last ten years.

It's a major change, and you see this even in the rural areas, where televisions, telephones, refrigerators, a whole host of other kinds of consumer articles that are present now couldn't have been even thought of ten years ago.

New property rights

JIM LEHRER: Ambassador Barshefsky, back to the rule-of-law issue, you negotiated some property rights issues here, as well. And they're considered very important. What are they, and why are they important?

CHARLENE BARSHEFSKY: Well, for example, Vietnam will lease property to foreigners. This is, again, something quite radical but important, as we begin to effect market opening.

Foreign companies, American companies will be able to own outright businesses in a whole host of services... and sectors.

JIM LEHRER: That was not possible before?

CHARLENE BARSHEFSKY: Never. Never. Not at all. Not at all. So this is very, very important. This isn't merely a means for Vietnam to attract investment; it also allows for the growth of expertise and the expansion of sectors of its economy that have never before existed, let alone expanded.

Of course the United States is a leader in services trade, whether it's banking or insurance or telecom, architecture, engineering, accounting, advertising, so on and so forth, all of which are covered by this agreement.

So there are very substantial rights that will be acquired by U.S. companies and a very substantial change destined for Vietnam.

JIM LEHRER: And finally, Ambassador Peterson, in that respect, tell us why it's in the United States' interest for there to be a prosperous Vietnam, a Vietnam that is growing economically and otherwise.

PETE PETERSON: Let me add one point before we get to that, that this trade agreement will bring a great deal more predictability in Vietnam for American businesses, so they will know exactly what kind of returns they can expect, what kind of rules that they will operate under ultimately, and -

JIM LEHRER: Sure.

PETE PETERSON: -- this is going to be a big issue, as well. There's a whole number of reasons why it's important for the United States to be engaged in Vietnam, one and then two, to conclude a trade agreement like this one. It is on our interest to be there in Vietnam, to help bring stability to an area that has been historically destabilized for centuries. Right now, the Vietnamese people can actually look out over the horizon and anticipate peace and prosperity for generations.

This is the first time in 4,000 years that's in place. And with that, the United States is there not only to sell goods but also to encourage the Vietnamese to continue to work with their neighbors, to work with the community of nations and to be a good player, if you will, on the stage with the rest of the world to bring peace throughout that region and through the entire world.

JIM LEHRER: Well, thank you both, Ambassadors.

PETE PETERSON: Thank you.

CHARLENE BARSHEFSKY: Thank you. http://www.pbs.org/newshour/bb/asia/july-dec00/vietnam_7-13.html

-- lu cho' thui HANOI (vietnamcongsans@yahoo.com), June 13, 2004