Is There a Ceiling on the U.S.-Vietnam Relationship?

By Sophie Fitzgerald

Pundits have touted trade and investment as the main engine of the U.S. and Vietnam’s deepening relationship. Vietnam’s inclusion in the U.S.-driven Trans-Pacific Partnership (TPP) trade deal, and an important agreement on double taxation in 2015, heralded a maturing economic relationship between the two countries. However, optimism around this relationship belies the remaining political divide between the two countries. Vietnam’s political system remains ideologically at odds with the U.S., and the two countries’ future relationship may have a “ceiling.”

U.S.-Vietnam relations are no doubt better than ever before. Vietnamese Communist Party General Secretary Nguyễn Phú Trọng’s visit to the U.S. in July 2015 capped a year in which Vietnam’s “comprehensive partnership” with the U.S. was upgraded to an “extensive comprehensive partnership” and a major U.S. arms embargo on Vietnam was partially lifted. Particularly significant was U.S. President Barack Obama’s personal receipt of Nguyễn, who is the leader of the Vietnamese Communist Party and one of the four most powerful men in Vietnam, into the Oval Office.

Many observers argued that Obama’s gesture tacitly accorded General Secretary Nguyễn the status of a Head of State. This is not the first high-level Vietnamese government official the Obama administration has engaged with; in 2013 Obama hosted a meeting at the White House with Vietnamese President Trương Tấn Sang on President Sang’s first trip to the United States. The willingness of the Obama administration to engage with Vietnam at the highest levels of State indicates the impressive growth of relations between the two countries. Indeed, before 1994, Vietnam and the U.S. had no official economic or diplomatic relationship whatsoever.

The thawing of diplomatic relations seems in part to have been driven by economic interests. Vietnam’s decision to opt for market-oriented growth in the 1980s allowed President Clinton to negotiate a reopening of trade relations with Vietnam in 1994. Clinton followed this with a reopening of diplomatic relations in 1995, suggesting the U.S.’s priorities were economic. Vietnam has become the U.S.’s 27th-largest trading partner, with a total two-way trade of $36 billion in 2014.

Despite positive overtures in the U.S.-Vietnam relationship, however, an ideological divide remains. Vietnam is a one-party, authoritarian state. The clash between U.S. and Vietnamese political ideologies led tragically to the Vietnam War, and made it difficult to re-open a diplomatic relationship before 1994.

Remaining challenges in the U.S.-Vietnam relationship revolve around sensitive ideological issues. One example is Vietnam’s record of human rights violations, which the U.S. has protested. The Vietnamese government maintains an active surveillance network on its citizens and has selectively repressed individuals and organizations deemed threatening to the party’s power. In response, members of the U.S. House of Representatives have frequently moved to pass The Vietnam Human Rights Act, and Vietnam is regularly criticised in the U.S. State Department’s annual Human Rights Report. This criticism in turn generates Vietnamese ire; Vietnamese conservatives are said to suspect that the U.S.’s long-term strategy is to end the Vietnamese Communist Party’s monopoly on power through a “peaceful evolution.”

The human rights issue has caused friction in the past. Obama avoided meeting with high-level Vietnamese leaders or visiting Vietnam despite multiple trips to Southeast Asia in the early years of his presidency, in part due to a perceived deterioration in Vietnam’s human rights condition. Given that neither the U.S. nor Vietnam have shown a concerted effort to change their practices in this matter, this issue may become a greater dilemma in the future.

In addition, the lingering legacy of the Vietnam War provides political fodder for opponents of the relationship on both sides. The U.S. and Vietnam have worked to confront the legacy of the war, in particular working to account for the Americans missing in action in Vietnam. However, the Vietnam War remains emotional and divisive in the U.S. In Vietnam, the effects of unexploded mines and the chemical defoliant Agent Orange endure.

Challenges to a future U.S.-Vietnam alliance will be economic too. The two countries have clashed over the trade of specific categories of goods. For example, Vietnam argued that U.S. classification of Vietnamese tra fish as catfish was a protectionist measure. Other product categories such as footwear or furniture could generate tension between the United States and Vietnam. Vietnam has not been accepted into the U.S.’s Generalized System of Preferences and has failed to negotiate a Bilateral Investment Treaty with the U.S. It has also failed to be recognized as a “market economy” despite pushing hard for this during TPP negotiations.

The U.S. must engage with Vietnam on one undisputed area of shared interest if a solid alliance will be formed: Both countries share a desire for regional stability and freedom of commerce in Southeast Asia, currently threatened as it is by China. This issue has been the font of many recent bilateral policy initiatives, including the introduction of two annual vice-ministerial dialogues on defense and security, and the partial lifting of a U.S. arms embargo on Vietnam in 2015. However, the U.S. must go further, fully lifting the arms embargo on Vietnam in order to encourage Vietnamese trust. By appealing to the modern challenge of a developed China, Vietnam and the U.S. can move away from the political issues of the past.

Sophie Fitzgerald holds a BA in Economics and International Relations from the University of Melbourne and Georgetown University. She has lived for 12 years in Asia and speaks Mandarin. Recently she interned at the US-ASEAN Business Council providing business intelligence about South East Asia to Fortune 250 U.S. companies. She currently works at a management consulting firm in Melbourne, Australia.

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