US signs pact with Hanoi

WASHINGTON - Former enemies the United States and Vietnam have signed a landmark trade agreement, clearing the way for normal trade relations for the first time since the Vietnam War and boosting communist Hanoi's bid to join the World Trade Organisation.

The agreement, signed by US Trade Representative Charlene Barshefsky and Vietnam's Trade Minister, Vu Khoan, after four years of negotiations, will reduce tariffs on goods and services, protect intellectual property and improve investment relations between the two countries.

"From the bitter past, we plant the seeds of a better future," President Bill Clinton told reporters on the White House South Lawn before returning to Camp David, Maryland, for a Middle East peace summit.

"This agreement is one more reminder that former adversaries can come together to find common ground in a way that benefits all their people, to let go of the past and embrace the future, to forgive and to reconcile," he added, with Arizona Republican Senator John McCain, a former Navy pilot who spent 5 1/2 years in a Hanoi prison camp, at his side.

The Vietnam War ended in 1975.

The trade agreement is one of the most important economic milestones for Vietnam since it embarked on market-oriented reforms in the late 1980s, and could help Hanoi in its efforts to join the Geneva-based WTO, though Barshefsky said accession was a "number of years off."

It also marked a major step towards completing the normalisation process that began on July 11, 1995, when Clinton extended diplomatic ties to Vietnam.

The trade agreement must still be approved by the US Congress. Though Republican congressional leaders support closer trade ties with Vietnam, it remains to be seen whether lawmakers will approve the pact before this year's short legislative session ends.

In terms of commerce, the trade agreement will mean far more for Vietnam than for the United States. With Congress' approval, Hanoi would win Washington's coveted normal trade relations status.

According to the World Bank, the agreement could more than double Vietnam's exports to the US to $US768 million. It could also boost foreign investment, which fell to around $US500 million a year from peaks of $US2.8 billion in 1996 and 1997 when Hanoi was viewed as Asia's next dynamic tiger economy.

For the US, the impact was harder to gauge. Officials saw a market in Vietnam for goods such as telecommunications equipment, electrical power systems, computer hardware and software and services, and some oil and gas exploration equipment as well as airport and medical supplies.

US companies like shoemaker Nike and agribusiness giant Cargill Inc stand to benefit from increased access to the Vietnamese marketplace, but analysts said the gains might be slow to materialise.

Yesterday's signing came one year after Washington announced an "agreement in principle" with Vietnam, only to have Hanoi back away, arguing that certain provisions were unfair.