Vietnam, US trade talks boost tech, energy ties

Vietnam, US trade talks boost tech, energy ties

Tech in Asia·2025-05-26 17:00

On May 22, Vietnam and the United States held discussions to advance trade negotiations aimed at enhancing economic cooperation.

The meeting included Vietnam’s Minister of Industry and Trade, Nguyen Hong Dien, and US Secretary of Commerce, Howard Lutnick.

Vietnam expressed its demand for high-tech and energy products from the US.

It also reiterated its commitment to a transparent trade environment.

Minister Nguyen urged the US to address existing trade issues, such as recognizing Vietnam as a market economy.

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🔗 Source: Vietnam Times

🧠 Food for thought

1️⃣ From adversaries to partners: The remarkable transformation of US-Vietnam relations

The current trade negotiations represent the culmination of a dramatic diplomatic turnaround that began three decades ago.

After suffering approximately 3 million Vietnamese deaths and 58,000 American casualties during the Vietnam War, relations were completely severed until the 1990s, with the US imposing a trade embargo on Vietnam 1.

The normalization process began with cooperation on POW/MIA issues, leading to President Clinton establishing full diplomatic relations on July 11, 1995, followed by the opening of embassies in both countries 23.

The 2000 Bilateral Trade Agreement marked a pivotal economic breakthrough, reducing tariffs from an average of 40% to 3% on many goods and helping Vietnam gain WTO membership in 2007 14.

This foundation has enabled bilateral trade to surge from just $900 million in 1999 to approximately $149.6 billion in 2024, transforming Vietnam into a significant US trading partner despite their difficult history 45.

The current negotiations for a “bilateral agreement on reciprocal trade” represent the next stage in this evolving relationship, addressing persistent challenges like Vietnam’s non-market economy status and restrictions on high-tech exports.

2️⃣ The persistent trade imbalance challenging bilateral relations

The growing trade deficit remains a central challenge in US-Vietnam economic relations, with recent data showing the imbalance reached $123.5 billion in 2024, an 18.1% increase from the previous year 65.

This imbalance helps explain why Minister Nguyen Hong Dien specifically emphasized the need for “improving the trade balance in a fair, harmonious, and sustainable manner” during the recent negotiations.

US exports to Vietnam totaled just $13.1 billion in 2024, while imports from Vietnam reached $136.6 billion, creating a ratio of more than 10:1 in Vietnam’s favor that has drawn increasing attention from US policymakers 5.

The imbalance partly stems from Vietnam’s emergence as a manufacturing hub that benefits from foreign investment, with foreign-invested enterprises accounting for approximately 70% of Vietnam’s exports 7.

Despite tensions over the deficit, the US recognizes Vietnam as a more reliable alternative to China in regional supply chains, with companies like Google shifting production to Vietnam to avoid tariffs and diversify manufacturing 87.

The deficit issue highlights why Vietnam is actively seeking market economy status and removal from restrictive export control lists, which would enhance its ability to export higher-value goods to the US market while potentially increasing imports of US high-tech products.

3️⃣ Trade agreements as catalysts for economic development and labor transformation

Vietnam’s experience demonstrates how trade agreements can dramatically reshape a developing economy, with the 2000 US-Vietnam Bilateral Trade Agreement serving as a prime example of trade-driven transformation.

Following the BTA implementation, Vietnamese exports to the US surged from $1.1 billion in 2001 to $5.0 billion by 2004, primarily driven by manufacturing sectors that benefited from tariff reductions 9.

The agreement triggered significant labor market shifts, with approximately 204,000 workers moving from informal microenterprises to formal manufacturing firms within just two years, improving wages and working conditions 9.

This economic evolution has positioned Vietnam to target becoming a high-income developed country by 2045, as mentioned in the article, with trade agreements serving as stepping stones toward this ambitious goal.

The country’s GDP estimates were revised upward by 25.4% in 2019 based on new economic data, reflecting stronger economic fundamentals than previously recognized and validating its trade-centered development strategy 8.

Vietnam’s commitment to “promoting a transparent and healthy trade environment” reflects lessons learned from decades of economic reform and integration into global markets, where institutional improvements have proven essential for sustaining trade-driven growth.

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