The Evolution of U.S.–Vietnam Ties

Once locked in war, Vietnam and the United States have built mature ties rooted in mutual economic and security interests.

November 09, 2017

U.S. President Donald J. Trump welcomes Vietnamese Prime Minister Nguyen Xuan Phuc at the White House, Washington, DC. Kevin Lamarque/Reuters
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Introduction

Four decades after the end of the Vietnam War, the relationship between the United States and Vietnam has changed remarkably. The two countries have forged strong trade linkages and defense cooperation. Vietnam, an emerging Southeast Asian economy with an authoritarian government, has sought to diversify its ties to major regional powers, fearing Chinese primacy in the region. China’s assertive behavior in the South China Sea, as well as increasing  tensions between Beijing and Hanoi, has boosted Hanoi-Washington relations, according to experts. However, U.S.-Vietnam ties could face limits, including U.S. concerns about Vietnam’s rights record and residual distrust of U.S. intentions among Vietnamese leaders.

Emerging From War

Vietnam declared its independence from French colonial rule in 1945 after Japan’s occupation ended with its surrender to the Allies. This set the stage for the First Indochina War (1946–1954). In 1950, Vietnamese forces in Hanoi were  recognized by China and Russia, while the United States and the United Kingdom recognized the government based in Saigon (today’s Ho Chi Minh City). Washington’s involvement in Vietnam escalated with the provision of military assistance first to French forces, followed by Saigon-based President of Vietnam Ngo Dinh Diem’s anti-communist forces after the country’s north-south division. U.S. troops formally deployed in 1964 with the stated purpose of stemming the spread of communism. Years of brutal battles culminated in the withdrawal of U.S. forces and the signing of the Paris Peace Accords [PDF] in 1973; the United States evacuated its personnel in 1975 as North Vietnam invaded the South and reunited the country.      

South Vietnamese scale the walls of the U.S. embassy in Saigon to flee advancing North Vietnamese forces, April 1975.
South Vietnamese scale the walls of the U.S. embassy in Saigon to flee advancing North Vietnamese forces, April 1975. Nik Wheeler/Corbis via Getty Images

U.S. casualties were 58,220 dead, around 2,600 missing, and more than 150,000 wounded [PDF], and there were wrenching domestic divides over the purpose and conduct of the war. For Vietnam the destruction was massive, with an estimated two million civilian deaths and an additional one million military deaths, as well as lasting environmental effects from the use of herbicides, such as Agent Orange, and unexploded ordnance scattered throughout the country. Washington severed diplomatic ties after the war’s end and imposed a full trade embargo.

Also aggravating relations between Vietnam and a number of nations was its campaign in Cambodia. Skirmishes along the western Vietnamese border with Cambodia expanded into a full-scale conflict in December 1978. Vietnamese troops deposed Cambodian totalitarian leader Pol Pot and the Khmer Rouge (its repressive regime was responsible for a genocide that killed nearly two million people) and installed a new government in Phnom Penh that would maintain power for a decade. The Vietnamese invasion triggered a retaliatory attack by China on its northern border in 1979 and widespread international isolation.

From the late 1970s through the mid-1980s, Vietnam’s economy was stretched thin as a result of its large military budget dedicated to activities in Cambodia and shortcomings in its command economy [PDF]. These hardships led to a heavy reliance on the Soviet Union. After China’s economic reforms in the 1970s and as the Soviet Union began to relax state control over its own economy in the 1980s, Vietnam began to explore ways to end its isolation.

The Path to Normalized Relations

One of the first hurdles to be cleared in restoring U.S.-Vietnam relations was cooperation on returning the remains of U.S. prisoners of war (POW) and missing in action (MIA) personnel. By the end of the 1980s, recovery efforts resumed with processes established for searches across the country by U.S. teams. This progress led to the opening of a field office for the United States Office in MIA Affairs in Hanoi under the George H.W. Bush administration in 1991, the first official postwar U.S. presence in Vietnam. This outpost, combined with a special temporary U.S. Senate committee set up to investigate POW/MIA-related issues, helped build momentum to normalize relations.

U.S. President Bill Clinton greets people on the streets of Ho Chi Minh City on his three-day visit to Vietnam in November 2000.
U.S. President Bill Clinton greets people on the streets of Ho Chi Minh City on his three-day visit to Vietnam in November 2000. Larry Downing/Reuters

Securing a Cambodian peace plan was the second linchpin. Although occupying Vietnamese forces backed a new government in Cambodia, the Khmer Rouge still controlled part of the country while in exile in Thailand and civil conflict was common throughout the 1980s. Peace talks begun in Paris in August 1989 ultimately led to the signing of an accord [PDF] in 1991. This initiated a cease-fire and installed the United Nations Transitional Authority in Cambodia, the first UN peacekeeping operation to oversee the administration of a country and to organize and conduct a national election. Vietnam’s withdrawal of occupying forces in Cambodia enabled countries including the United States to repair diplomatic ties with Hanoi. Washington lifted travel restrictions against Vietnam in 1991, the U.S. State Department and the Vietnamese Foreign Ministry opened offices in each other’s capitals in 1993, and in 1994 President Bill Clinton lifted the trade embargo. These incremental steps created a favorable environment for Clinton to normalize relations in 1995.

Economic Linkages

Vietnam’s major economic reforms, launched in 1986 to remedy the country’s economic plight, signaled an eagerness to restore international ties. The reforms, known as Doi Moi, prioritized building a market economy and creating opportunities for private-sector competition. Previously, the command economy had placed disproportionate importance on heavy industry while sectors such as agriculture struggled.

A woman crosses in front of a Pepsi billboard in Hanoi a year after the trade embargo was lifted, February, 1995.
A woman crosses in front of a Pepsi billboard in Hanoi a year after the trade embargo was lifted, February, 1995. Claro Cortes IV AS/Reuters

The introduction of a market economy in Vietnam, a country of more than ninety million, attracted sizeable investments. After restoring ties, Washington and Hanoi worked for nearly five years to negotiate a bilateral trade agreement that came into force in 2001. The deal lifted substantial nontariff barriers [PDF] to trade, including quotas, bans, and import restrictions; lowered tariffs from an average of 40 percent to 3 percent on a variety of goods, including agricultural and animal products and electronics; and  granted Vietnam conditional most-favored-nation trade status, a critical benchmark for accession to the World Trade Organization (WTO). After Vietnam joined the WTO in 2007, the two countries set up a forum to discuss Vietnam’s WTO commitments and additional investment and trade liberalization in the industrial, agricultural, and trade sectors.

The Barack Obama administration led considerable efforts to conclude the Trans-Pacific Partnership (TPP), a twelve-country free trade agreement signed in 2015. Vietnam, which has the lowest income of all the signatories, made significant reforms to meet the standards of the trade deal, including allowing labor unions outside of the Vietnamese Communist Party and committing to further protect intellectual property and boost regulations and transparency. Analysts say that Vietnam was likely to be the greatest beneficiary of the pact, especially by gaining preferential access to the U.S. market. However, since Washington’s formal withdrawal in January 2017, the future of TPP is uncertain.

Still, bilateral trade is expected to continue to thrive. Trade between the two countries has grown from $451 million in 1995 to around $52 billion in 2016. The United States is the largest destination for Vietnamese goods, such as clothing, electronics, footwear, and seafood. For its part, Vietnam imports machinery, vehicles, and agricultural products from the United States.

Source: U.S. Census Bureau, Foreign Trade

In spite of flourishing trade, the growing U.S. trade deficit with Vietnam is a potential irritant. The trade imbalance was Washington’s sixth largest in 2016, at an estimated $32 billion. Other concerns and barriers to trade [PDF] also remain, including piracy and inadequate intellectual property protections, food safety regulations, limitations to e-commerce development for foreign entities, and corruption.    

Growing Security Contacts

Vietnam’s future prosperity depends upon a stable and peaceful maritime environment.
Ted Osius, U.S. Ambassador to Vietnam

Washington and Hanoi have also made significant headway on the security front. Early defense ties were forged through the recovery of U.S. MIA personnel and included cooperation on search and rescue operations, environmental security, and demining; Vietnamese attendance at U.S. Pacific Command conferences and seminars; and high-level bilateral military exchanges. More recently, the two have committed to combining efforts on intelligence [PDF] and outlined a joint vision that emphasizes greater cooperation on global and regional issues. In 2016, Washington lifted a ban on lethal arms sales to Hanoi. Security ties have particularly focused on enhancing exchanges between the U.S. and Vietnamese coast guards to include maritime domain awareness-building and the provision of patrol vessels.

China’s increasingly bold regional stance has been the impetus for Vietnam’s amplified ties with the United States. This is especially true in the context of the South China Sea, where Hanoi’s and Beijing’s claims overlap. Tensions between the two neighbors reached a climax in 2014 when China deployed an oil rig into disputed waters. Since then, Vietnam has increasingly viewed its ties to the United States as a means to balance Chinese assertiveness, a role that the United States has carried out by enforcing freedom of navigation norms. “Vietnam’s future prosperity depends upon a stable and peaceful maritime environment,” said U.S. Ambassador to Vietnam Ted Osius.

U.S. President Barack Obama addresses the press with Vietnamese President Tran Dai Quang in Hanoi, May, 2016.
U.S. President Barack Obama addresses the press with Vietnamese President Tran Dai Quang in Hanoi, May, 2016. Carlos Barria/Reuters

Though defense and security cooperation has come a long way in the more than twenty years since the normalization of relations, obstacles remain. Lingering Vietnamese distrust of U.S. intentions, a strong sense of independence and nationalism, and concerns over provoking Beijing have restrained Hanoi from swiftly expanding security ties with Washington.

Discord on Human Rights

Vietnam’s position on human rights is a recurrent source of contention with some members of the U.S. Congress, as well as other governments and global rights watchdog groups. The country is still governed by a one-party, authoritarian system that suppresses dissent, including from the political opposition, independent religious communities, bloggers, journalists, and human rights advocates and lawyers. Authorities carry out arbitrary arrests and detentions [PDF] and extrajudicial killings; freedoms, such as those of the religion, assembly, and speech, are highly restricted; and the judicial system lacks transparency [PDF] and its independence is compromised, according to reports by the U.S. State Department and international rights organizations, as well as congressional testimonies.

Vietnam holds a key to the regional balance of power.
Alexander Vuving, Professor, Daniel K. Inouye Asia-Pacific Center for Security Studies

Though the Vietnamese government has convened regular human rights dialogues with the United States and occasionally frees political prisoners, it is consistently rated poorly by international rights monitors. Vietnam ranked 175 out of 179 countries in Reporters Without Borders’ 2017 World Press Freedom Index, only besting China, Syria, Turkmenistan, Eritrea, and North Korea. The advocacy group Freedom House classified Vietnam as “not free,” receiving a 20 out of 100 in its annual report.

A Burgeoning Partnership

U.S.-Vietnam relations are expected to continue on a positive trajectory under the Donald J. Trump administration. While disagreements over the trade imbalance could temporarily derail progress, China’s growing influence in the region will likely ensure that U.S. and Vietnamese strategic interests converge further, experts say.

Moreover, in the Philippines, President Rodrigo Duterte has shifted the archipelago’s stance on South China Sea disputes, leaving Vietnam as the most willing Southeast Asian nation to stand up to China. Because of its strategic location in the region and its more than two thousand miles of coastline, “Vietnam holds a key to the regional balance of power,” writes Alexander Vuving, a professor at the Hawaii-based Daniel K. Inouye Asia-Pacific Center for Security Studies. Experts such as Murray Hiebert at the Washington-based Center for Strategic and International Studies note that Vietnam is seen as more externally and strategically focused than its neighbors, making it a better partner for the United States.    

Still, Vietnam’s defense policy is based on the “three nos” principle: no military alliances, no foreign troops stationed on Vietnamese soil, and no partnering with a foreign power to combat another. While it is elevating ties with the United States, Vietnam is also building relations with the European Union, Japan, and India in a bid to diversify its partnerships and signal to China that it has other friends. And despite a complex history with Beijing, Hanoi still seeks a delicate balance with its northern neighbor and largest import market. Vietnam may vigilantly track China’s activity in the South China Sea, but it does “appreciate China’s economic growth; it’s a huge boon for the whole region, including Vietnam,” says Hiebert. 

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Resources Up

Expert Carlyle A. Thayer analyzes the shifts in Vietnam’s foreign policy amid increasing competition between the United States and China.

President Donald J. Trump and Vietnamese Prime Minister Nguyen Xuan Phuc issued a joint statement outlining ways to enhance the comprehensive partnership between the two countries in May 2017.

Professor Alexander Vuving argues for a stronger relationship between Washington and Hanoi to counter Chinese dominance in Southeast Asia.

This 2016 Congressional Research Service report details the economic and trade components [PDF] of the U.S.-Vietnam relationship.

The U.S. State Department describes the Vietnamese government’s restrictions [PDF] on the political rights and civil liberties of its citizens.

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