Trump Shows Signs He Will Rekindle US-Vietnam Relations

Vietnam is eyeing a chance to restart prized trade and security ties with the United States, while checking the persuasive influence of old rival China following a new overture from the Trump administration.

A letter from U.S. President Donald Trump to Vietnamese counterpart Tran Dai Quang suggesting more two-way cooperation should ease concerns in Hanoi that Washington has paused support for the Southeast Asian country, analysts say, though it is unlikely to herald any immediate breakthroughs.

There has been no official U.S. comment on the matter.

Vietnam, U.S. trade

Observers believe Hanoi hopes the letter, disclosed in the Vietnamese media last week, means the United States will agree to an increase in trade despite Trump’s scrapping of the Trans-Pacific Partnership, a 12-country trade deal that included Vietnam.

It may also signal a revival of the fledgling defense ties Vietnam formed under former President Barack Obama as China militarized a tract of ocean claimed by Hanoi.

“I think Vietnam’s attempt to maintain that multi-polar balance would come unstuck if Trump only deals with China and ignores Southeast Asia,” said Carl Thayer, emeritus professor of politics at the University of New South Wales in Australia.

Informal talks with Trump

The letter from Trump follows a December telephone call between Vietnamese Prime Minister Nguyen Xuan Phuc and Trump before he took office. Trump said then he wanted to advance relations, and the two sides discussed ways they might build on their trade and investment ties.

Vietnam should expect any trade perks only in the long term because Trump still advocates that American firms keep jobs onshore rather than setting up factories overseas to save money on labor, experts say.

“He sees Vietnam as a chief exporter to America and causing loss of jobs in America,” said Adam McCarty, chief economist at Mekong Economics in Hanoi. “Obviously, there are geopolitical considerations, but you’re never quite sure how sophisticated Donald Trump thinks.”

Vietnam’s economy

Vietnam’s $200 billion economy, about 40 percent of which comes from manufacturing, has grown sharply since 2011 largely on foreign investment in exports of goods from shoes to smartphones.

Any U.S. deal with Vietnam to cut import tariffs or liberalize markets would require years of talks, experts say. The Trans-Pacific Partnership, or TPP, took 10 years to negotiate before the member countries signed it in 2016. Trump effectively stopped the TPP by withdrawing the United States from the deal in January.

The two countries, wartime rivals five decades ago, signed the U.S.-Vietnam Comprehensive Partnership in 2013, which covers trade, development and maritime security but without calling for specific action.

Trump’s letter states a “wish” to work on regional and international issues and ensure “peace” in Asia based on respecting international law, according to the news website. Trump is considering participation in an Asia-Pacific Economic Cooperation leadership summit in Vietnam later in the year, the letter adds.

Vietnam counts the United States as its top export market and ran up a trade surplus last year on exports worth $38.1 billion and imports of $8.7 billion.

Cooperation on China

The U.S. government eventually may ask for Vietnam’s help resisting China, some analysts say.

Obama visited the country last year and lifted an embargo against selling lethal weapons. Obama was seen using Vietnam as part of a strategy aimed at containing Beijing’s reach into the South China Sea, where China has landfilled islets for military and civilian use.

The Trump administration also advocates resisting Chinese maritime expansion, but has not said how Vietnam might play a part.

Vietnam’s claim to the 3.5-million-square-kilometer sea conflicts with China’s. The two have sparred periodically since the 1970s when China took control of the Paracel Islands, which both sides call their own. In 2014, China angered Vietnam by allowing a state company to position an oil rig in overlapping waters.

But over the past three years, China and Vietnam have edged closer on trade with discussion about cooperating at sea. China is Vietnam’s top overall trading partner.

Vietnam is unlikely to tie up with the United States in any way that would offend China, said Kevin Snowball, chief executive officer of PXP Vietnam Asset Management in Ho Chi Minh City.

“At the moment, if you look at Vietnam’s trade figures year to date, we’re still doing extremely well with or without TPP, with or without Trump,” he said.

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