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Issue #583 | Forest Products

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Vietnam trade vote a boon for some US farmers

By: | at 07:00 PM | Channel(s): International Trade  

Some US farmers stand to gain big if Congress normalizes trade ties with Vietnam, a former enemy now seen as an up-and-coming Asian market, trade groups, officials and congressional aides said.

Vietnam is hoping that US lawmakers will vote next month to establish permanent normalized trade relations, or PNTR, with Vietnam. Ideally, they want President George W. Bush to have that approval in hand when he visits Hanoi for a Nov. 18-19 meeting of the APEC economic bloc.

Thirty years after the Vietnam war, PNTR is a final step in repairing ties, Vietnam’s ambassador in Washington, Nguyen Tam Chien, said. “From that point on ... our bilateral relations begin a totally new chapter,” he said.

Vietnam remains a poor country, but with 2005 growth of eight percent and a young population, the region’s fastest-growing major economy has piqued the interest of US exporters.

“Vietnam is a country of 83 million consumers, who can consume American products ... It’s a very important opportunity for American business,” said an aide to Sen. Max Baucus, who co-sponsored PNTR legislation in the Senate.

Passing PNTR would also allow a bilateral trade deal signed in May—a final step in Vietnam’s decade-long quest to enter the World Trade Organization—to take effect, cutting tariffs for 75% of agricultural products to 15% or less.

That will be a boon for US pork, soybeans and cotton, which could expand as Vietnam grows and becomes prosperous.

“Looking to the future, Vietnam has a lot of potential for us,” one USDA official said.

Agricultural exports to Vietnam have grown five-fold since 2001, when an initial bilateral deal took effect, Chien said. In 2005, they hit $239 million, including fish and forest products, according to the US Department of Agriculture.

The mainstays are cotton, animal feed products like soybeans, and cattle products like dry milk and sausage.

“Vietnam is viewed as a pretty serious up-and-coming market,” said Murray Hiebert, senior director for Southeast Asia at the US Chamber of Commerce in Washington.

Pork in particular

One key growth opportunity could be pork, which represents 72% of protein that Vietnamese consume.

Pork exports, which were just $3 million in 2004, could grow to more than $16 million by 2012, said Dave Warner, a spokesman for the National Pork Producers Association. That would also boost live hog prices back home.

The pork association and more than three dozen other farm groups sent a letter to members of Congress this month, urging members to pass PNTR before other nations get an edge there.

“The United States is obliged to do very little for Vietnam in return for these concessions ... We urge Congress to act now,” they wrote.

A vote on PNTR in Congress, trade watchers say, isn’t likely to be as arduous as other recent trade votes. PNTR has run into opposition from US textile producers who will see more competition.

But with Congress now on break, and the Nov. 7 congressional elections dominating the agenda in Washington, time is tight for passing PNTR before Bush’s Hanoi visit.

Vietnam also exports a huge amount of shrimp to the United States, worth $443 million in 2005. Total agriculture, fish and forestry imports from Vietnam were $1.1 billion last year.

Agriculture isn’t as important a sector in Vietnam as it once was—now making up a fifth of overall output, less than industry and services—but Chien said it ranks second worldwide for rice production and second in robusta coffee.

Chien said that more open trade would cap years of economic reforms in Communist Vietnam, but acknowledged it would leave less competitive sectors, like some agriculture, vulnerable.

He did urge Congress to pass PNTR quickly, and without “any discriminatory treatment.” While the Bush administration wants PNTR passed soon, it has also promised to keep a close eye on textile imports to make sure no dumping occurs. (Reuters)