am trade

TheNational Assembly will ratify the agreement -signed by Minister of Trade Vu Khoan in Julyof last year- during its current session.

Viet Nam's exporters stand to earn between US$900millionand $1billion this year, compared with last year's income of over $827 million.

Despite the high tariffs levied on Vietnamese exports dueto the nation's lack of US Most Favoured Nation Status (MFNS) - 40 per cent - exportincome rises every year. In 1994, Viet Nam earned only $50.4 million.

The two countries forged their trade link in 1994 when theUS lifted its embargo on Viet Nam. The event was followed by setting up of officialdiplomatic relations between the two countries in 1995 and the establishment of embassiesin 1997. Last year, the two countries' trade turnover was nearly $1.2 billion. It was only$222 million in 1994, but soared to $450 million in 1995 and $935 million in 1996.

Vietnamese exports are mainly agricultural, forestry andmarine products, while the US exports mostly equipment, machines and fertiliser.

US exports to Viet Nam have also grown but not as quicklyas Vietnamese exports to the US.

In 1994, US export income was $172 million. In thefollowing years, it reached $610 million.

As the global economy recedes, trade turnover between thetwo countries has remained stable. But experts believe this is due in large part to a lackof tough competition.

The BTA will confer Most Favoured Nation Status, nowNormal Trade Relations (NTR) on Vie t Nam, meaning US tariffs on Vietnamese products willdrop from 40 to 3 per cent. Viet Nam enjoys an advantage in industries that employ largeworkforces, such as textiles, footwear, food processing, wooden furniture and homeappliances.

Vietnamese exports are less competitive in design,quality, marketing and output capacity. The competitive US markets, a good bridge to otherinternational markets, will help Vietnamese companies improve quality and reduce prices.But while the BTA offers advantages, the risk of bankruptcy will rise.

To minimise risk and make use of opportunities, theagreement allows enterprises to implement the agreement over three to 10 years once theTrade Agreement comes into effect. Officials hope this will provide enterprises withenough time to adjust and improve management activities, renovate equipment and enhanceproduction capacity and product competitiveness.