13 February 2001

 

Testimony of

 

Virginia B. Foote

President

U.S.- Vietnam Trade Council

 

For the

 

United States Commission

On International Religious Freedom

 

            Chairman Abrams, members of the Commission, I am pleased to be here today representing the U.S.-Vietnam Trade Council to testify before your Commission at this important time in U.S.- Vietnam relations. 

 

            The U.S.- Vietnam Trade Council, founded in 1989, is a trade association with strong membership from the American business community.  With offices in Washington D.C. and Hanoi we have worked along with our educational affiliate, the U.S.-Vietnam Forum, to help improve relations between the United States and Vietnam with educational exchange programs, annual conferences, Congressional delegations and programs designed to provide assistance on international trade norms and standards.

           

            Today I would like to discuss the potential of the U.S.-Vietnam Trade Agreement, signed on July 13, 2000 and the positive impact of normalization of relations has had on cooperation between the United States and Vietnam in a number of areas.  Beginning in the late 1980’s, the Vietnamese government committed to ending its isolation and began working to normalize relations worldwide.  Diplomatically, in this area, Vietnam has had tremendous success in establishing relations in Europe, within Asia and with the United States.  Vietnam joined ASEAN in 1995, APEC in 1998, and now belongs to over a dozen international organizations and signed onto numerous international agreements. Vietnam now has observer status in the WTO and is committed to joining.

 

            The Reagan, Bush and Clinton administrations responded with a policy of normalizing relations with Vietnam through a step-by-step process pegged to cooperation on the U.S.’s principal goal of seeking the fullest possible accounting for our missing in action from the Vietnam War, and affected by immigration, trade and other issues of importance to the United States.

 

            As the attached timeline shows, this process has proceeded slowly through three administrations and has led to the lifting of the trade embargo, the establishment of diplomatic relations and the beginnings of economic normalization including the initial waiving of the Jackson-Vanik amendment in 1998. Throughout the process of normalization, Vietnam has greatly enhanced its efforts on issues of high priority to the U.S. including the MIA efforts, immigration goals, and economic integration. Vietnam and the U.S. have also developed an important dialogue on human rights and labor standards.  During President Clinton’s historic visit in November 2000, the U.S. and Vietnam signed a Memorandum of Understanding to establish a program of cooperation and dialogue on labor issues.  The U.S. has also pledged $3 million dollars in technical assistance for Vietnam for bilateral projects and in collaboration with the International Labor Organization (ILO). 

 

The conclusion of the U.S.-Vietnam Trade Agreement was a key step to further progress in normalizing relations.  The U.S.-Vietnam Trade Agreement is the most comprehensive agreement Vietnam has ever signed, and the most comprehensive bilateral trade agreement the U.S. has ever negotiated.  The Vietnamese government has committed to important reform in the areas of trading rights, transparency, customs, investment, services, and intellectual property rights.  Although bilateral trade is currently a modest $1 billion (2000 figures), Vietnam is the second most populous nation in Southeast Asia with a population of 80 million and with extensive economic growth potential.  Moreover, approval of the trade agreement will ensure that exports from U.S. companies will receive treatment in Vietnam no less favorable than products of foreign competitors.  The terms of the agreement will require a substantive reform of Vietnam’s legal infrastructure and will promote the rule of law in Vietnam affecting both foreign and domestic business. 

 

            The agreement, if approved by Congress, would grant NTR status to Vietnam subject to an annual review under the Jackson-Vanik Amendment.  Presently, Vietnam is one of only five countries that do not have NTR with the U.S., including Afghanistan, Cuba, Laos, and North Korea.  But Congressional passage of the U.S.-Vietnam Bilateral Trade Agreement is not a Vietnamese equivalent to last year’s Congressional passage of PNTR for China – it is equivalent to granting of annual MFN status to China in 1979 with the normalization of diplomatic relations.  The annual renewal of the U.S.-Vietnam BTA under the Jackson-Vanik Waiver will provide opportunity for Congress to assess NTR status and the relationship overall.  But the last ten years of normalization have shown that as the U.S. and Vietnam foster closer ties it strengthen the overall bilateral relationship and encourages further dialogue and cooperation on other issues as well. 

 

            The BTA will not only strengthen market access for American companies in Vietnam, it also will greatly benefit the people of Vietnam.  With a per-capita GDP of $387, Vietnam is one of the poorest nations in the world.  By increasing trade, investment, and development in Vietnam, and promoting market reforms including greatly expanded trading rights, the BTA could contribute to lifting of Vietnam out of endemic poverty.  With a well-educated population with a literacy rate of 91% and with over half under the age of 25, Vietnam has great potential for development as a significant trading partner worldwide.   Furthermore, by expanding trade and extending the rule of law in Vietnam, the BTA will encourage access to information and greater transparency. 

 

            American involvement in the process of economic reform is welcome in Vietnam and could be extremely important to overall development in the long run.  American companies set a high standard for trade, investment, labor and business practices.  American management and technology is greatly admired in Vietnam.  American companies are actively involved in training programs through the Trade Council and individually.  American products are popular.  Our business community – with great involvement by the Vietnamese- American community – continues to play a key role in the normalization of relations.

 

            But given that the U.S. normalized relations far more slowly than other nations did, American business involvement in Vietnam has lagged behind other nations and still operates with severe handicaps.  Without NTR status, a trade agreement, and initially without trade support programs, American companies and individuals nonetheless began traveling, investing and trading with Vietnam.  Today the U.S. is twelfth largest investor with slightly under one billion committed to foreign investment projects, and $1 billon in two-way trade. 

 

            Since the initial “road map” for normalization was laid out under the Bush Administration in April 1991, the bilateral relationship has made an immense amount of progress.   The road map pegged normalization of relations to full cooperation from Vietnam in accounting for U.S. personnel listed as prisoners of war/missing in action (POW/MIAs), a comprehensive settlement in Cambodia, and immigration issues.  On February 3, 1994 President Clinton lifted the trade embargo on Vietnam, and in 1995 the U.S. and Vietnam settled bilateral property claims and opened diplomatic liaison offices in Washington and Hanoi.  In 1997 the Senate approved former Vietnam War POW and Member of Congress Pete Peterson as U.S. Ambassador to Vietnam.  In 1998 President Clinton issued the first waiver of the Jackson-Vanik Amendment, which Congress upheld by a vote of 260 in favor and 163 opposed.  Congress renewed the waiver in 1999 by a vote of 297 in favor and 130 opposed.  In 2000 the margin increased positively again to 332 in favor and only 91 opposed.

The initial Jackson-Vanik waiver in 1998 allowed trade support programs, such as loans from the Overseas Private Investment Corp (OPIC), the Export-Import Bank (Exim) and other credits for American business to establish operations in Vietnam.  Since reopening in Vietnam, OPIC has committed $15 million in finance support to three projects and has registrations for 29 projects seeking political risk insurance.  OPIC also supports four privately managed private equity funds that are eligible to invest up to $640 million in projects in Vietnam.  In December 1999 Exim and the State Bank of Vietnam completed the framework agreements, which allowed Exim to begin operations in Vietnam.

            Initially U.S. policy pegged the Jackson-Vanik waiver to progress on the Resettlement Opportunity for Vietnamese Returnees (ROVR) program specifically and immigration in general.  While extremely difficult to reach agreement on initially, the implementation of the ROVR program has been fairly smooth and rapid.  The State Department reports that the government of Vietnam has cleared over 96% of the nearly 20,000 ROVR cases.  The Orderly Departure immigration program overall has also been successful.  Approximately half a million Vietnamese have come to the United States under ODP.  Only a small number of ODP cases remain to be processed.  Since the initial waiver of Jackson-Vanik, the Vietnamese have allowed all remaining ODP cases – including the Montagnard cases which are of particular concern to the U.S. – to be processed under the new and far quicker system developed by the Vietnamese initially just for ROVR cases. 

 

            The ODP office in Bangkok has been closed and responsibility for handling the few remaining cases successfully transferred to the Refugee Resettlement Section (RRS) at the Consulate General of Ho Chi Minh City, which opened in August 1999.  It is expected that interviews of remaining ODP and ROVR applicants, of which a few hundred remained as of June 2000, will be concluded in the near future. 

 

            In the search for our POW/MIAs from the war Vietnam has developed a permanent staff to visit crash sites and interview witnesses throughout the country.  The U.S. and Vietnam have provided reciprocal access to information on MIAs from the war and have conducted 41 Joint Field Activities on POW/MIA cases since 1993.  Vietnam has unilaterally undertaken case specific investigations in 216 cases since 1996.  Of 196 persons associated with "last known alive" cases in Vietnam, fate has been determined for all but 41.  President Clinton has certified Vietnamese cooperation since the law required, most recently issuing a determination on February 3, 2000 that Vietnam "is fully cooperating in good faith with the United States." 

 

            Our relationship has strengthened in other areas as well. Americans are traveling to Vietnam in great numbers.  In 1997 Vietnam issued 98,000 visas for Americans wishing to travel to Vietnam, over 66,000 for Vietnamese Americans wanting to visit their homeland.  In 2000 the total was 152,928 visas, approximately 137,000 of which were for Vietnamese Americans.  Remittances from overseas Vietnamese are estimated at $2-3 billion annually and this year one hundred and fifty thousand overseas Vietnamese worldwide returned to Vietnam for the Lunar New Year, a record number.

 

            In November 2000 President Clinton became the first U.S. President to visit Vietnam since the end of the war.  During the President’s trip ten new business partnerships were announced and our two countries concluded numerous agreements.  One of these was an Agreement on Scientific and Technological Cooperation to facilitate cooperation between American and Vietnamese scientists in areas such as health, technological innovation and entrepreneurship, disaster mitigation and marine and water resource management.  Increased cooperation in the prevention and treatment of infectious diseases, including typhoid fever and HIV/AIDS will strengthen Vietnam's ability to meet critical health challenges.

The U.S. and Vietnam also signed a Memorandum of Understanding on Labor in November 2000. The MOU including $3 million in technical assistance focuses on strengthening Labor Protection skills training and employment services social insurance and safety nets employment of the disabled industrial relations and labor law child labor, focusing on street children and child trafficking, and workplace education and prevention programs on HIV/AIDS.  Vietnam also ratified the International Labor Convention on the Elimination of the Worst Forms of Child Labor, thus joining the United States and 45 other countries that have so demonstrated their commitment to ending the worst forms of child labor.

The U.S also pledged six million in technical assistance to Vietnam over a three-year period to assist with implementation of the bilateral trade agreement.  Through a grant from the U.S. Agency for International Development (USAID) and the support of our members, the U.S.-Vietnam Forum has provided technical assistance on commercial and legal reform to Vietnamese Ministries and government branches with economic portfolios.  The Forum provided technical assistance on the issues raised by the BTA and WTO standards.  Recently this work has included assistance with the new Insurance law, which passed the National Assembly in December 2000, drafting the implementing regulations for the new Insurance law, and the new Customs law, to be submitted to the National Assembly in May.  We are also working with the Ministry of Justice and Ministry of Trade on a “roadmap” of Vietnam’s commitments in the trade agreement, and will continue to assist in overall BTA implementation.

            Since our two countries set out on the path to normalized relations Vietnam has enjoyed many successes and few setbacks.  The bold economic reform program that Vietnam embarked on in the late eighties showed impressive results almost immediately.  Vietnam went from near famine to become the third largest rice exporter behind Thailand and the United States in a matter of a few years.  Economic growth rates climbed to 8 and 9 percent.  Foreign investors flocked to Vietnam.  From 1988 – 1999 over $36.6 billion in foreign investment was committed.  With Vietnam’s very low per capita income of approximately $250 per year in the early 1990s, the international donor community began generous overseas development assistance programs, reaching pledges of $2.8 billion for 1999.  Total ODA committed since 1993, when Vietnam became eligible, to the end of 2000 equaled $17.5 billion.

 

            By 1996, Vietnam’s impressive FDI growth had peaked at $8.6 billion.  But as the Asian flu hit, and Vietnam’s economic reform stalled, foreign investment dropped by 40% in 1997 to $4.6 billion and continued to decline.  In 1998, FDI commitments totaled approximately $3.8 billion and in 1999 dropped to $1.5 billion.  Official GDP growth rates were calculated at around 5% in 1998 and 4.7% in 1999, a ten-year low.  In 2000 GDP growth climbed back to 6.5%, but is expected to drop off again in 2001 due to low levels of FDI.  Unemployment has hovered around 7.4 percent since 1999, when it climbed up from a low of 5.9 percent in 1996.  At the same time, the poverty rate has fallen by half in the past ten years, one of the sharpest declines for any country.  Income per person is now around $370 per year and much higher in the major cities.

 

            About 70% of Vietnam’s population of approximately 80 million, live and work in rural areas, 96% working in the private sector.  In the industrial sector, some 25% of the work force is in the state sector, 60% in the private sector and 10% in the foreign invested sector.  But currently the private sector accounts for only half of GDP, a disappointing constant percentage over the last five years – 34% from farm-based and service sectors, 10% from the foreign invested sector, and only 7% from small to mid-size enterprises.  With 50% of the population under 25, and as state enterprises are equitized new jobs will need to be created in the private sector.

 

            For Vietnam, the easy parts of economic reform have been accomplished.  But the signing of the U.S.-Vietnam trade agreement was a watershed event.  The BTA provides an important blueprint for Vietnam to tackle some of the more difficult issues, which lie ahead.  Towards this end, commercial law reform is already underway.  In the banking and insurance sector Vietnam passed a new Insurance Law in December 2000 and is currently working on the implementing regulations.  The General Department of Customs is working on a new customs law, which has been favorably reviewed by international customs experts. Vietnam is also addressing competition policy, the elimination of burdensome registration and licensing procedures, intellectual property protection, administrative procedures, and increased transparency.  A new database of Vietnamese law is now available on the internet and Ho Chi Minh City, has said it will start offering online licensing for foreign investment projects that do not require appraisal.

 

            Also marking a turning point marking important reform in the domestic private sector is the Enterprise Law, which came into effect in January 2000.  Six months later 5,000 new enterprises had been founded in Vietnam with a total registered capital of US$285.7 million. These figures are very significant given the small size of Vietnam’s fledging private sector.  The number of enterprises founded in the six months after the law went into effect in January 2000 equals the number founded in the previous nine years.  This figure does not include the 2,647 enterprises in Ho Chi Minh City alone who have switched to new business fields or expanded their operations, investing a combined $67.7 million.  Also significant was the opening of the long-awaited stock market in July 2000.

 

             The United States should stay involved in this process.  It is in our interest to see an economically healthy and internationally engaged Vietnam in the Southeast Asian region.  The Economist Intelligence Unit estimates that although GDP growth increased in 2000 to 6.5%, it will slow in 2001 due to the continuing decrease in foreign investment.  However, the EIU estimates that passage of the bilateral trade agreement with the U.S. this year would boost Vietnam’s GDP growth again in 2002 to 6.8%.  With fully normalized economic relations, the United States could well join the top ranks of investors in Vietnam.    

 

            Vietnam has made substantive progress in political and social reforms since the launching of doi moi in 1986.  Since then we have seen improvements in human rights, with the release of hundreds of political detainees and re-education camp inmates, the return of thousands of Vietnamese who had fled abroad as refugees, and increased willingness on the part of the government to cooperate with the U.N. on human rights issues.  Vietnam signed the International Covenant on Civil and Political Rights (ICCPR) in 1982, and has recently begun to work with the U.N. to address the rights protected in the Covenant.  In 2000 Vietnam has released over 20 religious or political prisoners from jail, including 12 Hmong Protestants and three Catholic priests. Some dissidents released from prisons still face harassment, but they have been able to meet outsiders and supporters.

 

            Although problems remain, religious freedom in Vietnam has generally improved over the past ten years and the individual practice of religion has increased dramatically.  In the past three years the Government has loosened restrictions on Roman Catholics, relaxing the requirement that clergy belong to the government-run Catholic Patriotic Association.  Authorities allowed the Vatican's ordination of a new archbishop in Ho Chi Minh City in 1998 as well as the ordination of five bishops in other dioceses in 1998 and 1999.  A high-level Vatican envoy made his annual visit to the country in May 2000, during which the filling of other vacant bishoprics was discussed.  In June 2000, a bishop was named for Da Nang province, and in August 2000, a bishop was named for Vinh Long province.  In 1998 a number of bishops traveled to Rome, Italy, for a synod of Asian bishops. Up to 200,000 Catholics gathered in August 1999 at an annual Marian celebration in La Vang in the central part of the country and celebrated their faith freely there.  This month the government recognized the Federation of the Evangelical Church of Vietnam, which just concluded its first official gathering in Ho Chi Minh City.  The government of Vietnam now officially recognizes six religions, including the Federation of the Evangelical Church of Vietnam.

 

            Social and political reform has been reflected in the formation and changing composition of the National Assembly. The position of Vietnam's National Assembly as the highest organ of the State is fixed in the 1992 Constitution and is elected directly by the people through secret ballot.  The National Assembly approves the state budget, and has the final say on large scale or long-term economic projects.  In practice, the National Assembly is increasingly assertive in Vietnam's political structure, taking a more active role on reviewing legal reforms.  Women make up over 25 percent of the National Assembly, and in the present Assembly 14 percent of the representatives are non-Party members.  The Chairman of the National Assembly Nguyen Duc Manh is a member of the Tay ethnic minority group and is serving is second term as Chairman of the National Assembly. 

 

            Vietnam’s strategic and economic role in the region and the well being of the Vietnamese people will be greatly affected by U.S.- Vietnam relations and by the course of bilateral relations.  The bi-partisan policy of a step-by-step process of normalizing relations with Vietnam, while in my view has been too slow, has produced positive results for American, Vietnamese and regional interests and I encourage a continuation of this policy in the future. Vietnam and the U.S. share a tragic history, which both countries are mindful of as they build a new future.  Comfort with the outside world’s intentions and a growing economy will continue to contribute to increased openness, increased transparency in government, a rise in living standards, and greater international economic and political integration.  The past ten years is proof.

Religious Demography of Vietnam

The Government officially recognizes Buddhist (approximately 50 percent), Roman Catholic (8 percent), Protestant (0.9 percent), Cao Dai (1 percent), Hoa Hao (2 percent), and Muslim (0.1 percent) religious organizations. However, some Buddhist, Protestant, Cao Dai, and Hoa Hao believers do not recognize or participate in the government-approved associations. Some organize their own associations, and thus their organizations are considered illegal by the authorities. 

Buddhism
Some estimates suggest that more than half the population of approximately 80 million persons are at least nominally Buddhist, visit pagodas on festival days, and have a world view that is shaped in part by Buddhism, although in reality these beliefs rely on a very expansive definition of the faith. One prominent Buddhist official has estimated that 30 percent of Buddhists are devout and practice their faith regularly. The Government's Office of Religious Affairs uses a much lower estimate of 7 million practicing Buddhists.  A Khmer minority in the south practices Theravada Buddhism. Numbering from perhaps 700,000 to 1 million persons, they live almost exclusively in the Mekong delta.

Catholicism
There are an estimated 6 million Roman Catholics in the country (about 8 percent of the population). The largest concentrations are in southern provinces around Ho Chi Minh City, with other large groups in the northern and central coastal lowlands. In recent years, the Government has eased its efforts to control the Roman Catholic hierarchy by relaxing the requirements that all clergy belong to the government-controlled Catholic Patriotic Association. Few clergy actually belong to this association, which is a loose affiliation of clergy that holds conferences and participates in events with the Communist Party and the Vietnam Fatherland Front.

Authorities allowed the Vatican's ordination of a new archbishop in Ho Chi Minh City in 1998 as well as the ordination of five bishops in other dioceses in 1998 and 1999. A high-level Vatican envoy made his annual visit to the country in May 2000, during which the filling of other vacant bishoprics was discussed. In June 2000, a bishop was named for Da Nang province, and in August 2000, a bishop was named for Vinh Long province. In 1998 a number of bishops traveled to Rome, Italy, for a synod of Asian bishops. Up to 200,000 Catholics gathered in August 1999 at an annual Marian celebration in La Vang in the central part of the country and celebrated their faith freely there.

Protestantism
There are approximately 700,000 Protestants in the country (less than 1 percent of the population), with more than half of these persons belonging to a large number of unregistered evangelical "house churches" that operate in members' homes or in rural villages, many of them in ethnic minority areas.

Based on believers' estimates, two-thirds of Protestants are members of ethnic minorities, including ethnic Hmong (some 120,000 followers) in the northwest provinces and some 200,000 members of ethnic minority groups of the central highlands (Ede, Jarai, Bahnar, and Koho, among others). The house churches in ethnic minority areas have been growing rapidly in recent years, sparked in part by radio broadcasts in ethnic minority languages from the Philippines.

Cao Dai
The Office of Religious Affairs estimates that there are 1.1 million Cao Dai followers (just over 1 percent of the population). Some nongovernmental organization (NGO) sources estimate that there may be from 2 to 3 million followers. Cao Dai groups are most active in Tay Ninh province, where the Cao Dai Holy See is located, and in Ho Chi Minh City, the Mekong delta, and Hanoi.

Hoa Hao
Hoa Hao, considered by some of its followers to be a "reform" branch of Buddhism, was founded in the southern part of the country in 1939.  Hoa Hao followers are concentrated in the Mekong delta, particularly in provinces such as An Giang, where the Hoa Hao were dominant as a political and religious force before 1975. According to the Office of Religious Affairs, there are 1.3 million Hoa Hao followers; church-affiliated expatriate groups suggest that there may be 2 million to 3 million.

Islam
Mosques serving the country's small Muslim population, estimated at 50,000 persons, operate in western An Giang province, Hanoi, Ho Chi Minh City, and other provinces in the southern part of the country. The Muslim community is composed of ethnic Cham in the southern coastal provinces and western Mekong delta. The Muslim community also includes some ethnic Vietnamese, and migrants originally from Malaysia, Indonesia, and India. Most practice Sunni Islam.

The Muslim Association of Vietnam was banned in 1975 but authorized again in 1992. It is the only official Muslim organization. Association leaders say that they are able to practice their faith, including daily prayer, fasting during the month of Ramadan, and the pilgrimage to Mecca, Saudi Arabia. The Government no longer restricts Muslims from making the Hajj. Roughly 1 dozen Muslims journey to Mecca for the Hajj each year.

Hinduism
There are a variety of smaller religious communities. An estimated 8,000 Hindus are concentrated in the south, including some ethnic Chams on the south central coast who practice Hinduism.

Baha’i
There are estimated to be between from several hundred to 2,000 Baha'i believers, largely concentrated in the south; prior to 1975, there were an estimated 130,000 believers, according to church officials.

Mormonism
There are several hundred members of the Church of Jesus Christ of Latter-Day Saints (Mormons) who are spread throughout the country but live primarily in the Ho Chi Minh City and Hanoi areas.

The prominent position of Buddhism does not affect adversely religious freedom for others, including those who wish not to practice a religion. The secular Government does not favor a particular religion. The Constitution expressly protects the right of "nonbelief" as well as "belief." Of the country's approximately 80 million citizens, 14 million or more reportedly do not practice any organized religion. Some sources strictly define those considered to be practicing Buddhists, excluding those whose activities are limited to visiting pagodas on ceremonial holidays. Using this definition, the number of nonreligious persons would be much higher, perhaps as high as 50 million persons.

 

February 13, 2001

Source: State Department Human Rights Report 2000 (http://www.state.gov/www/global/human_rights/irf/irf_rpt/irf_vietnam.html)