Trade between Viet Nam and the United States has skyrocketed since the two countries implemented a landmark exchange deal in 2001, according to a report released yesterday.

The US-Viet Nam Bilateral Trade Agreement has also helped modernise this country’s commercial and legal systems as well as opened the Vietnamese marketplace to greater foreign competition, said the report compiled by the Ministry of Planning and Investment and the US-funded Support for Trade Acceleration Project, or STAR Viet Nam for short.

During the first two years of the trade pact, exports to the US more than tripled, making the US Viet Nam’s single biggest export market. Before the deal, Viet Nam mainly exported raw materials to the US. But since its signing, manufactured goods have accounted for about 75 per cent of total exports, with clothing the dominant export.

"The United States is proud to have played a role in Viet Nam’s extraordinary economic growth over the past five years," said US Deputy Chief of Mission Jonathan Aloisi at a seminar to present the report’s results yesterday.

The report said Vietnamese shipments to the US may increase in 2007 and beyond thanks to the lifting on quotas on clothing exports. Viet Nam’s increasingly diversified manufacturing sector could also drive the increase in exports, officials said.

US exports to Viet Nam more than doubled over the last five years, but did not accelerate nearly as dramatically as Viet Nam’s exports to the US, said Steve Parker from STAR project.

According to the report, Viet Nam’s economy has shifted towards the export of light industrial products and handicrafts.

Foreign investment into Viet Nam also surged during the last five years, said Parker. The trade deal had had an indirect impact on improvements in the business environment, the WTO accession process and hopes for sustained growth, he said.

The US led the way in investment in Viet Nam, according to the report.

However, many challenges remain. Viet Nam’s infrastructure is below par and the implementation of some laws is lagging behind their official passage.

The trade deal came into effect on December 10, 2001. It covers trade, commercial law and dispute settlement, intellectual property rights protection, trade in services, investment, business facilitation and transparency and the right to appeal. — VNS