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U.S. Inks Free Trade Deal with Vietnam

posted on June 9, 2006

Despite rapid growth in the first quarter of this year, the U.S. economy still faces an uphill climb in many respects. Budget deficits, burdensome debt and a cavernous gap in the trade balance all weigh heavily on the nation's financial security. **The government reported this week that the U.S. trade deficit rose to $63.4 billion in April... up 2.5 percent from March, but well below Wall Street expectations. The reason? America's dependence on foreign oil. Crude oil imports alone rose to 23.8 billion dollars last month, accounting for more than a third of the deficit. Total imports rose to more than $179 billion... their second highest on record. While total exports fell to more than $115 billion. U.S. Agriculture currently enjoys a small trade surplus, and represents the lone bright spot in America's trade picture. But even that is in jeopardy. And the U.S. is looking east for the answer.

U.S. Inks Free Trade Deal with Vietnam

One of the principal goals for developing nations in building a trade relationship with the United States is entry into that exclusive club known as the World Trade Organization. In fact, WTO membership was a key motivation for Vietnam in the recent signing of a trade deal with the U.S. that paves the way for the Asian country to join the world trading bloc.

The accord knocks down remaining trade barriers between the two countries, which saw bilateral trade rise almost 22 percent last year to nearly $8 billion. The deal ends U.S. quotas on Vietnamese textiles and garments and gives American companies greater access to a growing Southeast Asian market.

The deal also was important to the Hanoi government because it wants to become a WTO member before it hosts the Asia Pacific Economic Cooperation summit in November, which President Bush is scheduled to attend.

A vote in the U.S. Congress still is needed for the trade pact to take effect.

U.S. trade officials have been active elsewhere in Asia. Talks opened this week between American and South Korean trade representatives, who are trying to hammer out a free trade agreement before the end of the year.

South Korea is America's seventh largest trading partner. Analysts say that makes a potential deal with Korea the most significant free trade pact since the U.S. signed the North American Free Trade Agreement with Canada and Mexico more than a decade ago.

Meanwhile, India announced it is pondering a significant cut in its subsidized wheat sale program by reducing limitations for wheat imports by two million metric tons. In India, the government buys wheat and rice from farmers and then sells the commodities to consumers at highly subsidized rates.

The change in the domestic program would further boost wheat imports by India.

Tags: news trade Vietnam