As President Barack Obama prepares to visit Vietnam it's remarkable to note just how far relations have come since 1994.
Vietnam and the US have established normal relations for more than 20 years, since 1995. The US has become a leading partner of Vietnam, with development constantly reaching new levels.
Trade relations have passed three important milestones. Firstly, before 1994 Vietnam and the US had almost no commercial relations as Vietnam was subject to an embargo not only by the US but also by other countries. The second milestone, in 1995, was when the US lifted the embargo and relations were normalized and diplomatic relations established. Vietnam’s exports to the US increased but remained limited. The third milestone, in 2001, was the first year of the bilateral trade agreement between the two countries. Vietnam’s export turnover to the US exceeded $1 billion for the first time, with the country gradually becoming the US’s largest export destination.
While it took six years for Vietnam’s export turnover to reach $1 billion, in 2002 and 2003 it exceeded $2 billion and $3 billion, $5 billion by 2004, and $7 billion by 2006. In 2007 (after Vietnam joined the WTO) it surpassed $10 billion and reached $11 billion in 2008, despite the global financial crisis and economic recession. It then exceeded $14 billion in 2010, $16 billion in 2011, $19 billion in 2012 and $23.8 billion in 2013. This was the first time Vietnam had an export market in excess of $20 billion, which then grew to $33.5 billion in 2015, which was higher than its total export turnover in 2005. Export turnover to the US in 2015 accounted for 20.7 per cent of the total and was 352.8 times higher than in 1994, increasing 32.2 per cent per year on average.
Vietnam has always recorded a trade surplus with the US, reaching nearly $25.7 billion in 2015.
There are a wide range of Vietnamese products now exported to the US, including 21 items recording turnover of $100 million or more and eight recording turnover of more than $1 billion, including textiles, footwear, computers, and electronic products.
The size of the US’s imports is huge, at over $2.8 trillion, while Vietnam’s exports to the country account for only 1.3 per cent. The US market therefore continues to hold major potential for Vietnam, but if certain items reach a particular size with lower prices than domestically-made equivalents they may be subject to the imposition of technical barriers, such as anti-dumping duties.
Vietnam must avoid such a situation and prepare evidence to fight such claims.
Eleven items imported from the US, meanwhile, reached $100 million in 2014, including machinery, equipment, animal feed, soybeans, plastic materials, milk and milk products, and motor vehicles. The US also has among the highest foreign direct investment in Vietnam, standing at $21.5 million over the first four months of 2016, ranking the country 16th, and raising the total to $11.3 billion, ranking it eighth. Projects from the US use high technology under modern management methods.
The US also has a large number of tourists visiting Vietnam, reaching 491,200 in 2015, ranked it fourth. Average daily spending by visitors from the US is $110.2, ranking it sixth. In the first four months of this year visitor numbers stood at 209,500, an increase of 13.6 per cent.
The US has become a major, comprehensive partner of Vietnam in terms of diplomacy, investment, trade, tourism and other matters. Relations are heading towards a higher level, especially with the official visit by US President Barack Obama on May 23.
The US is also the most important of the 12 member states in the TPP for Vietnam. The agreement will usher in a new period for exports and imports and the continued implementation of multilateral relationships.