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Nitya Kapadia

The development of the trade relationship between the US and Vietnam

Updated: Mar 7, 2021

Vietnam and the USA have had a rocky relationship in the past, stemming from ideological differences that influenced much of modern history in the latter part of the 20th century; a relationship stemming from the Cold War. The Vietnam War, considered a proxy war by many, lasted 19 years, and was a violent battle of communism versus capitalism, leading to the death of millions of soldiers and civilians, the damage of which can still be seen today. As the USA were effectively forced to pull out of Vietnam, the two countries shared no trade for almost two decades, with the White House extending the embargo that President Nixon had implemented. However, as time has gone on, diplomatic relations have evolved into an entirely new relationship, and as expected, these trade embargoes have changed. A trade embargo is a form of economic sanction, where a government prohibits the exchange of specific goods with another country. Typically, these are formed in times of unfavourable economic and political conditions between countries, as they can have severe consequences on a nation’s economy.



In 1975, North Vietnam took over the city of Saigon in South Vietnam, and in retaliation, a trade embargo was put in place by America. For two decades, trade ceased to exist between the two nations. 19 years later, on the 3rd of February 1994, President Clinton made the monumental decision to lift the embargo, in efforts to reconcile the relationship of the two countries, and uncover the fate of American Prisoners of War who had not returned home after the USA removed itself from Vietnam. Even at the time, this had mix reactions back in the USA. Many businesses were eager for this to happen, as they were looking forward to expanding their companies to Vietnam and its surrounding nations. However, organisations that represented veterans and their families were appalled by this, claiming it was an insult to the sacrifices the soldiers had made. Additionally, this situation was not helped by the fact people thought Clinton was a ‘draft-dodger’, and had made open protests against the War. In 2000, Clinton became the first President to visit Vietnam since the War.

In 2016, during the time of the Obama administration, the USA lifted the embargo on sale of arms to Vietnam, ending a 50 year ban. Whilst the White House insisted it was because they wanted further normalisation of relations between the two countries, many people thought it was because Vietnam has stood up to China’s influence in the region. Vietnam is one of the countries that is engaged in a dispute with China over islands in the South China Sea; this area is rich in oil and gas reserves. One policy of the US is the right to freedom of navigation in the South China Sea. Furthermore, Vietnam was a key player in the Trans Pacific Partnership, a USA-led trade deal, that was speculated to have been created to stand up to the growing influence of China in the region.



Similar to 1994, there were mixed reactions to this decision. The Vietnamese President, Tran Dai Quang, stated, ‘At this stage, both sides have developed a level of trust and cooperation’, as well saying it was, ‘clear proof that both countries have completely normalised relations’. Likewise, Obama said it was, ‘our desire to complete what has been a lengthy process towards moving toward normalisation with Vietnam’. On the contrary, a Chinese state-run newspaper had a headline declaring, ‘Obama unable to turn Hanoi into an ally’. Many human rights activists were furious with this decision, as they believed that President Obama had given away their only leverage to demanding better rights for the political prisoners in Vietnam. Phil Robertson, the deputy Asia director for Human Rights Watch stated that “Obama has jettisoned what remained of US leverage to improve human rights in Vietnam – and basically gotten nothing for it,”



The future of relations between the two countries seems to be positive, with Vietnam being America’s closest ally in Southeast Asia, and the USA going the extra mile to vouch for Vietnam to improve its international standing. Similarly, their trade relationship is flourishing; the bilateral trade between them has grown from $451 million in 1995, to an estimated $81.3 billion in 2019. 2020 was a celebration of 25 years of diplomatic relations between the countries, suggesting that despite the unusual

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