U.S. Vietnam Relations

Although the United States has lifted its trade embargo against Vietnam and allowed U.S. businesses to invest there, the United States has yet to establish full diplomatic relations with Vietnam. Additional steps toward normalization of relations depend on political and economic change in Vietnam and continued progress on the POW/MIA issue. This report discusses (1) ongoing changes in Vietnam's foreign and domestic policies and the reaction of the international community, (2) changes in U.S. policy toward Vietnam and the substance of bilateral relations between the two countries, (3) the interest that the United States and Vietnam are pursuing in their relations with one another, (4) prospects for Vietnam's economic and political development, and (5) key factors affecting the pace of movement toward normalized relations.

GAO found that: (1) changes in Vietnam's foreign and domestic policies have led to broader acceptance of Vietnam by the international community; (2) Vietnam's withdrawal from Cambodia and subsequent cooperation in the U.N.-coordinated search for a peaceful settlement in that country, and Vietnam's ongoing program of market-oriented domestic reforms have largely removed the basis for the international community's 1980s consensus that Vietnam should be isolated as an outcast; (3) multilateral organizations and most countries other than the United States have re-established full relations with Vietnam; (4) although the United States has not established full relations with Vietnam, it has, among other things, ended its opposition to international financial institution lending to Vietnam and lifted its embargo against trade with Vietnam by Americans; (5) as legal restrictions have lessened, U.S. private sector interests, including businesses, nongovernmental organizations, and Vietnamese-Americans, have established growing ties with Vietnam; (6) government agencies, including the Departments of Defense and State, have established limited official ties; however, constraints to full relations remain; (7) for example, U.S. government programs typically used to facilitate foreign trade are statutorily barred from Vietnam; (8) U.S. foreign policy interests include the promotion of human rights and democracy in Vietnam, as well as U.S. commercial and security interests; (9) for its part, Vietnam has important commercial and security interests to pursue with the United States; (10) despite ongoing reforms and positive economic trends, Vietnam faces an uncertain future; (11) while agreeing that Vietnam has considerable potential for growth and change, analysts point out that serious constraints remain; (12) Vietnam remains one of the world's poorest countries, and the Communist party continues to exercise a monopoly on political power; (13) given its starting point, Vietnam is years away from developing an economy similar to those of its dynamic neighbors in Asia; (14) informed observers generally agree that political change is likely to come only gradually; (15) executive branch officials and other analysts stated that the pace at which the administration moves forward in taking additional steps toward full bilateral ties will depend on U.S. conclusions regarding developments within Vietnam, particularly with regard to progress on the prisoner of war/missing in action issue; and (16) support for additional steps will also depend on the pace of political and economic change in Vietnam toward greater democracy and a more prosperous, market-oriented economy.