President Triet visits U.S. -- Continued SE Asia growth

June 20, 2007

Vietnam President Nguyen Minh Triet is visiting the White House this week. President Triet's visit is the highest ranking since 1973, when South Vietnam’s President Nguyen Van Thieu met with President Nixon after the Paris Peace Accords effectively spelled the reunification of Vietnam. It has taken 30 years for the U.S. to restore relations with Vietnam, most recently with the establishment of Permanent Normal Trade Relations last December. (See U.S. OK’s Vietnam’s WTO entry, 1/3/07)

President Triet is seeking to grow business with Vietnam's largest trading partner. Trade with the U.S. grew to $9.7 billion in 2006, up from $1.5 billion in 2001. Increased trade will help both countries’ industries as well as reduce their dependence on trade with China. To keep from ruffling China’s feathers, President Triet visited China’s President Hu last month.

What President Triet's visit means:
Both countries are trying to expand trade while protecting certain industries. In November, Congress delayed PNTR status to Vietnam unless an antidumping review is done on its clothing exports every six months. The U.S. also levied import tariffs on Vietnamese shrimp and catfish.

Vietnam is worried about subsidized U.S. agricultural products putting its farmers out of business. Agriculture provides 20% of Vietnam’s economy. However, increased trade is necessary to keep Vietnam’s economic growth at a rate that will employ its young and expanding population.

For example, Vietnam recently became a member of the WTO, which will boost Foreign Direct Investment (FDI) to $8 billion in 2007. Its GDP growth for 2006 was 8.2%, according to the CIA World Factbook, and many experts are expecting the same growth rate for 2007.

Last but certainly not least, President Triet is seeking further remeditation from the U.S. for dropping 80 million liters of the defoliant Agent Orange between 1961 and 1971. The toxin’s side effects has created nerve damage and birth defects in 3 million victims, most of whom are children. Coincidentally, on June 18 a federal appeals court in New York will hear arguments on whether or not these victims are eligible to sue the 32 U.S. chemical companies which produced Agent Orange. (See The China Post, “Mothers hope U.S.-Vietnam Agent Orange efforts help,” 6/18/2007)

Source: Asia Times, U.S. primed for Vietnam visit, 7/15/07; Xinua, “Vietnam expects socioeconomic gains from president’s U.S. trip”

Action steps:
Make sure you have emerging market funds in your portfolio. Vietnam’s growth is a long-term trend that will continue even if U.S. growth slackens.

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