By Joakim Parker & Todd Hamner
This year’s 20th anniversary of the normalization of relations between the United States and Vietnam offers reflections on what the two countries have achieved and what might come next. U.S. ambassador to Vietnam Ted Osius said this week that “the bilateral relationship is deepening and becoming ever more diverse…. the first twenty years were merely a prologue to a much longer and richer story.”
Most agree that the goals of the U.S.-Vietnam comprehensive partnership should broaden spheres of cooperation, especially under the ambitious planned Trans-Pacific Partnership (TPP) trade agreement. The U.S. Agency for International Development (USAID) remains convinced that Vietnam offers a special opportunity to twin the agency’s assistance strategy in the areas of trade and governance with Vietnam’s core development challenges and make valuable contributions to long-term U.S. interests in the region.
Over the past 20 years, two-way trade grew from only $450 million annually to over $35 billion in 2014. While this has benefited many in both countries and contributed to meaningful reductions of poverty in Vietnam, governance problems are holding back changes needed to sustain the momentum and advance inclusive growth in Vietnam. The successful completion of the TPP, a top U.S. priority, represents one of the most important milestones in deepening Vietnam’s international integration, particularly with the U.S. market and U.S.-based global value chains. The trade agreement offers USAID exciting opportunities to help Vietnam become a responsible TPP partner and leverage changes in the country’s decision-making and new accountability standards to realize its own development goals.
USAID has enjoyed a strong position in Vietnam. Since 2000, along with its partners, USAID has worked closely with the government and private sector to improve the general environment for trade and investment through the widely recognized series of Support for Trade Acceleration (STAR) programs. STAR has helped Vietnam meet requirements for the U.S.-Vietnam Bilateral Trade Agreement and then its accession to the World Trade Organization (WTO). A Senate report on the Asia rebalance stated that STAR, “which brought legal experts to Vietnam to help draft commercial laws, could be a model for other emerging partners in the region.”
What the TPP offers, however, is a broader scope of U.S. engagement with Vietnam on critical governance issues. Therefore USAID has collaborated with the Vietnamese government, among others, to design an even more ambitious and strategic successor to the STAR programs. The Governance for Inclusive Growth (GIG) program was announced by Secretary of State John Kerry in 2013, who distinguished it from typical aid by saying, “I want to make that clear. This is an investment.”
Finding ways to make Vietnam a responsible partner by its TPP commitments and using standards set by the TPP to shape growth that is both sustainable and inclusive is not simple. GIG employs a steering committee comprised of a number of Vietnamese institutions, while drawing on USAID’s coordination within the U.S. government, particularly the U.S. Trade Representative, to maximize alignments. Examples include GIG’s support for elements of the government’s new competitiveness agenda in ways that build accountability, and upcoming assistance to address biodiversity through customs reforms.
A recent high-profile example involves a new public-private partnership with the American Chamber of Commerce in Vietnam and the Vietnam Chamber of Commerce and Industry to facilitate the private sector’s input into the customs and trade facilitation provisions of the TPP as well as Vietnam’s implementation of the WTO Trade Facilitation Agreement.
USAID decided to choose Vietnam to pilot this type of alliance. It represents a new model for trade assistance that is rooted in real, substantive engagement with and leadership by the local business community. It opens up the governance process and offers a powerful tool for integrating small and medium-sized enterprises into domestic and global value chains, which makes growth more inclusive.
What we call “development diplomacy” is used to support GIG and related programs. Ambassador Osius on January 20 opened the GIG program’s first in a series of Vietnam Policymakers Seminars, which aim to help Vietnamese officials from a number of agencies better understand the challenges and opportunities associated with the TPP. With an eye toward improving policymaking, the first seminar drew on experts from the John Hopkins School of Advanced International Studies in Washington and the Ho Chi Minh City-based Fulbright Economics Teaching Program. In a conference jointly organized by the State Department and Center for Strategic and International Studies in Hanoi on January 26, experts also agreed on the need for the two countries to work closely together to ensure Vietnam can best take advantage of the potential benefits offered by the TPP.
The enthusiasm for USAID Vietnam’s programs and its use of development diplomacy suggests that Vietnam is indeed an environment where calls for alignment with a host country’s development needs and U.S. foreign policy goals find multiple points of intersection.
Mr. Joakim Parker is Mission Director of USAID Vietnam. Mr. Todd Hamner is Director of USAID Vietnam’s Office of Economic Growth and Governance.