Trade Ties That Bind


One of the things I learned over there is that war is a terrible waste. That’s why I’m so encouraged to see today’s Vietnam trying to join the World Trade Organization. The decision to go to war with a trading partner is much more difficult than the decision to go to war with a country that protects its economy from foreign competition.

Vietnam has now taken a big step toward global economic integration by finalizing a trade agreement with the United States. This follows the normalization of diplomatic relations in 1995 and the conclusion of a bilateral trade pact in 2001, which has boosted Vietnamese exports to the United States to more than $6.5 billion last year. Under the new deal, Vietnam will lower tariffs on manufacturing and agricultural products and remove non-tariff barriers that have hampered competition in computer, financial, and telecom services.

Yet the country still suffers from the Communist victory in the 1970s. Since then, the Vietnamese economy has remained essentially closed. In the current Index of Economic Freedom, a publication of the Heritage Foundation, Vietnam ranks #142 in the world, out of 157 graded countries–a little bit better than Syria and a little bit worse than Yemen. In its own backyard of Southeast Asia, Cambodia and Malaysia are tied at #68 and Thailand comes in at #71. Those nations are rated “mostly free”; Vietnam is labeled “mostly unfree.”

But things are slowly improving. In recent years, the economy has grown by 7 or 8 percent annually. Vietnam’s weighted average tariff has dropped from 17.4 percent in 2001 to 13.7 percent in 2004, according to the World Bank’s latest data. That’s still far too high, but the momentum appears to be in the right direction. Accession to the WTO will do nothing but help.

It will also restore a little honesty to international trade. Many of the clothes we import from China today were actually made in Vietnam, where labor costs are even cheaper than they are to the north. As a member of the WTO, these types of outsourcing games will be harder to play.

Vietnam and its 81 million people still face many challenges. Corruption remains a huge problem, national infrastructure is weak, and the country’s human-rights record is lousy. This is the legacy of Communism, and at some point Vietnam will need to understand that economic prosperity ultimately depends upon political liberty.

Tightening our trade ties may spark positive change. I haven’t been to Vietnam since I was on active-duty, but I have been to the former Soviet Union. People there told me that when they were able to receive American television programs via satellite, they learned that everything their leaders had told them about the United States was false. They decided that rather than hate us, they hoped to be more like us: They wanted to wear blue jeans and drink Coke.

I suspect that the Vietnamese will want to become more like us as well–they’ll want to wear more blue jeans, drink more Coke, and, eventually, maybe even import a little democracy.

Several years ago, a Vietnamese diplomat who was on his way to talks in Washington asked if he could spend a night on a Midwestern farm. Through happenstance, he stayed with me in Iowa. We ate a steak and potatoes dinner, swapped combat stories, and commented on how during the war neither one of us would have imagined our meeting ever taking place.

It’s nice to think that instead of trading bullets as enemies, our two countries increasingly will trade goods and services as friends.

Bill Horan, a Board Member for Truth About Trade and Technology ( grows corn, soybeans and grains on a family farm in Northwest Iowa. Bill proudly served his country in Vietnam as a U.S. Marine.

Bill Horan

Bill Horan

Bill Horan grows corn, soybeans and other grains with his brother on a family farm based in North Central Iowa. Bill volunteers as a board member for the Global Farmer Network.

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