Vietnam poised to join WTO; trade membership will cut both ways

HO CHI MINH CITY, Vietnam — Banking on new business after Vietnam joins the World Trade Organization (WTO), electrical appliance maker REE added a new office tower to Ho Chi Minh City's burgeoning skyline. But it's also bracing for an onslaught of competition from global giants like Toshiba and Samsung.

For REE and for Vietnam, WTO membership will cut both ways.

"Joining the WTO will create a lot of opportunities," said Nguyen Thi Mai Thanh, the company's general director. "But it will also present strategic challenges."

WTO members are expected to approve Vietnam's entry today, bringing to an end 10 years of negotiations with the communist country, which recently has begun accelerating the pace of market reforms. The deal will take effect 30 days after Vietnam's National Assembly approves it, which it is expected to do swiftly.

Today's vote is well timed, coming just days before Hanoi will be in the spotlight hosting the Asia-Pacific Economic Cooperation (APEC) summit, which will draw leaders from 21 countries and thousands of business executives from around the world.

WTO membership will give Vietnam increased access to foreign markets and the opportunity to take trade grievances to a neutral arbiter, strengthening its hand against nations that accuse Vietnam of illegally dumping goods on their markets. In return, the country will be required to drop its high tariffs on foreign imports and eliminate subsidies for state-owned companies.

Foreign companies will enjoy far greater access to Vietnam's economy, which has averaged 7.5 percent growth over the past decade.

However, U.S. businesses may not be able to take advantage of the WTO agreement immediately because Congress has yet to grant Vietnam "permanent normal trade relations" (PNTR) status. President Bush hopes a PNTR bill will be passed before he visits Hanoi for the APEC summit Nov. 18-19, but that looks unlikely.

Foreign investment in Vietnam has risen 41 percent in the past year. The government has approved new enterprise and investment laws that grant equal treatment to foreign and domestic firms, and it soon will soon approve a securities law that will increase the transparency of Vietnam's small but booming stock market.

"Entering the WTO sends a very important signal that everything they have done so far is not just temporary," said Cristoph Wyesner, head of the European Commission's political, economic and trade section in Hanoi.