• U.S. has $32 billion trade deficit with Vietnam
• U.S. wants “resolution”on digital payment, automobile, intellectual property issues
Vietnam and the U.S. are getting along just fine but for that pesky trade deficit, according to President Donald Trump, who urged his country’s former war enemy to buy “the best military gear” just after it inked $12 billion worth of jet engine, truck, and natural gas deals, which would help tip the scales back
toward the U.S.
Big numbers are the name of the game, with the U.S. taking in imports from Vietnam that are larger in quantity, but then exporting products with larger price tags over to the Southeast Asian country, where Trump Nov. 12 wrapped up his inaugural state visit.
“We would like Vietnam to buy from us, and we have to get rid of the trade imbalance. We can’t have the trade imbalance,” he said in Hanoi. “Other than that, I think we’re going to have a fantastic relationship.”
More than four decades after the war in Vietnam, Trump has taken up another kind of battle, on the economic front. After he touted the two countries’ “terrific” defense ties and cooperation on North Korea and the South China Sea, Trump named only one gripe in Vietnam: its $32 billion trade surplus with the U.S., which he called a “tremendous amount of money.” The communist country punches above its weight, as Vietnam ranks No. 16 among major U.S. trading partners but No. 6 among those with a bilateral surplus.
Trade deficits aren’t inherently bad, as they bring affordable goods to the U.S., but they can become a problem if they persist, corporate lawyer Ken Duong said.
“We are comparing products which are less than $100 per piece [from Vietnam] versus multi-million or billion dollar items,” Duong, managing partner at Duong Global Business Consulting Group and TDL International Law Firm in Ho Chi Minh City, told Bloomberg BNA. “Thus, for the U.S. to rebalance the trade, it will continue to sell high-end, high value-added, and high-cost goods to Vietnam.”
The U.S. wants a “resolution” on digital payment, automobile, and intellectual property issues in Vietnam, which in turn wants better conditions for its catfish, shrimp, and mango sectors, according to a Nov. 12 joint statement.
As for the $12 billion in business that has been settled, the White House said U.S. “content” makes up $10 billion of that, though it’s unclear how the figures break down. The commercial deals signed at Hanoi’s amber-colored palace include Pratt & Whitney selling 44 aircraft engines to Vietnam Airlines for $1.5 billion and 20 engines to VietJet for $600 million. Officials did not release numbers for three memoranda of understanding, one on commercial trucks between Navistar and Hoang Huy, and two on liquefied natural gas for PetroVietnam Gas, which will work with AES Corp. and Alaska Gasline Development Corp.
The contracts build on a visit from President Barack Obama in 2016, when Boeing Co. and Pratt & Whitney announced several sales in the air travel industry. “I got to tour parts of Vietnam, and it’s really looking well,” Trump said at a meeting with Prime Minister Nguyen Xuan Phuc, adding: “The people are waving, and they like the United States; perhaps they like me.”
Agriculture, Energy Trade
His Vietnam trip covered the usual fare with a military band and state banquet but contrasts with the time Obama spent enjoying street noodles, a temple tour, and some impromptu rapping last year. The change is mirrored in trade; Vietnam shared Obama’s ardor for the Trans-Pacific Partnership, but was disappointed when Trump left the trade pact upon taking office.
Instead this year has focused on two-way commerce, such as the star apples now allowed from Vietnam and the U.S. dried grains, used for animal feed, that returned here in September.
The LNG deals are part of broader plans to ship more U.S. natural gas to Asia, including Japan and South Korea, which Trump visited before arriving in Vietnam. The U.S. will work with Vietnam to build an LNG import terminal and gas-fired power plant to provide 5 percent of the country’s power capacity.
“Quality infrastructure development is critical to sustainable economic growth and USTDA is on the front lines of this effort,” the U.S. Trade and Development Agency, which provides foreign aid for infrastructure projects, told Bloomberg BNA. It will be involved in “project preparation” for the terminal and power plant, the agency said. The U.S. Overseas Private Investment Corp. will provide a loan but declined to disclose the amount.
Last year Obama announced the end of the U.S. arms embargo on Vietnam; this year his successor looks to capitalize on the policy shift. “We make the best equipment, we make the best military gear and planes and anything you can name,” Trump told Vietnamese leaders. “The missiles are in a category that nobody even comes close.”
For More Information on the Topic
The Joint Statement between the United States of America and the Socialist Republic of Vietnam is available at https://www.whitehouse.gov/the-press-office/2017/11/12/joint-statement-between-united-states-america-and-socialist-republic.
Data on U.S.-Vietnam trade is available at https://ustr.gov/countries-regions/southeast-asia-pacific/vietnam.
Written by Lien Hoang on 11/16/17.
To contact the reporter on this story: Lien Hoang in Ho Chi Minh City, Vietnam, at firstname.lastname@example.org
To contact the editor responsible for this story: Jerome Ashton at email@example.com