Vietnam – U.S bilateral trade agreement (BTA) was signed in 2000 and came to effect from 2001. After 5 years applying BTA, from 2001 to 2006, Vietnam – U.S bilateral trade has been booming, in which Vietnam exports much more than imports. The real value, however, that Vietnam receive from such an excess of exports over imports is tiny, only 15-20%, while the left 80% belongs to others.

In the meeting on assessing the impacts of BTA on Vietnamese economy after 5 years applying held by the Central Institute for Economic Management in Hanoi, economists of STAR – Vietnam project said that BTA has much influence on exporting performance of Vietnam to the U.S. Before the existence of BTA, Vietnam exports to the U.S gained approximately 1 billion US dollars in 2000 and include most pre-processed goods. After the implementation of BTA, the U.S has cut tariff on Vietnamese products from 40% to 4% and become the number one exporting market of Vietnam at sudden growth rates: 128% in 2002, 90% in 2003. Garments and textile products are leading the increasing trend at the growth rate of 1,764% in 2002 and 164% in 2003.

Before 2000 when the BTA was signed, Vietnam exported mainly pre-processed goods. After 2001 when the BTA came into effect, Vietnamese processing goods exported to the U.S accounted for 75% the exports value (most garments and textile products). Although the growth rate of exporting from Vietnam to the U.S after 2003 is slower because in the implementation of Garments and Textile Agreement the U.S has set the quantity limitation on Vietnam’s garment importing growth rate in the between of 7 to 8% per year, the general exporting growth rate of Vietnam to the U.S increases from 16-29% per year in the period from 2003 to 2006. To sum up, from 2001 to 2006, Vietnam exports to the U.S are multiplied by 8 times, about 9 billion US dollars in 2006 (Statistics of the United State International Trade Commission (USICT), accounts for 20% of the exporting turnover of the country.

As said by specialists, in 2007 Vietnam’s exports to the U.S are on the rise because Vietnam has become an official member of WTO which helps to eliminate the quota on garments. On the other hand, Vietnam has been diversifying its processed products, switching from garments to a series of processed industrial goods which is believed to have potential to develop within its small market share in the U.S, quite successful. During 5 years of implementing the BTA, the U.S exports to Vietnam also increased by 140%. Especially in 2003, the U.S exports to Vietnam recorded its highest turnover, about 1.4 billion US dollars (USICT), increased by 128.3% in comparison with 2002 (Boeing 777 was the main export item). In the next 3 years, the growth of U.S exports to Vietnam decreased 12.2%, 2.4%, and 7.7% in 2004, 2005, and 2006 respectively. If the extraordinary growth rate thanked to aircraft exports in 2003 is excluded, during 5 years of applying the BTA, the U.S exports to Vietnam increased average 20%/year, including transportation equipment, machinery, food and other pre-processed goods.

Overlooking the bilateral commercial picture of the two nations, BTA has fueled Vietnam exports to U.S more than it does with U.S exports. This increased the trade surplus of Vietnam against the U.S. According to USICT, Vietnam’s trade surplus against the U.S increased from 600 million US dollars in 2001 to 7.5 billion US dollars in 2006. Whereas according to Vietnam General Department of Statistics the figures are 650 million US dollars and 6.8 billion US dollars respectively.

However, according to analysts, the reason which led to trade surplus does not lie in Vietnamese economic policies. Specifically, nearly 50% of Vietnam total exports to the U.S thanks to clothes, in fact, Vietnam only makes up a tiny piece in the cake of the total exporting value through domestic value added (about 10%). Most value of those exporting products dues to input elements which are imported from foreign countries, including many Asian suppliers. This means Vietnam trade surplus against the U.S is large whilst its trade deficit against Asian partners is high, too. According to Ms Pham Chi Lan, a senior economist, in the total excess of exports of Vietnam, its real profits are only 15-20%, the other 80% belongs to contributors of the export rate as mentioned above, even the U.S.

The U.S market plays an important role to Vietnamese products, but Vietnam’s general impacts on U.S market are insignificant. Vietnam exports to the U.S just accounts for 0.4% total imports of the U.S. Vietnam’s large trade surplus makes up only 0.7% trade deficit of the U.S. However, in the first 5 years of implementing BTA, the U.S has set quota on Vietnam’s garments and pursued some antidumping cases against filet fish and frozen shrimps which created difficulties for Vietnamese producers.

Although the excess of exports over imports is large, actual value added is still low in company with facing technical barriers which showed that Vietnam exports to the U.S are unstable and it is wise to contemplate the strategic view on this market as well as domestic production.