US- Vietnam's biggest export market

According to the Ministry of Planning and Investment (MPI), in the first half of this year, the US continued to be Vietnam's biggest export market, accounting for more than 20 percent of the country's total export value.

The General Department of Customs said two-way trade turnover between Vietnam and the US is estimated to reach US$19 billion or even US$20 billion this year of which, export turnover is likely to hit US$14 billion and import turnover more than US$ 5 billion.

US Ambassador to Vietnam Michael W. Michalak said 2010 will be a breakthrough year in trade relations between the two countries.

Deputy Minister of Industry and Trade Nguyen Cam Tu said the US remains the most important export market in Vietnam's strategy for economic and trade development. Vietnam-US economic and trade relations will play a crucial role in Vietnam's international economic integration.

US President Barack Obama recently selected Vietnam to be one of the six key markets that the US is keen to enhance trade links with, along with China, India and Brazil.

Mr Obama has set a target of doubling export turnover in the next five years and Vietnam is one of the first countries with which the US wants to reach this target, said Fred P. Hochberg, Chairman and President of the Export-Import Bank of the US (Ex-Im Bank) during his visit to Vietnam early last month.

Trade balance maintains high surplus level

For years, Vietnam's balance of trade has reflected a steadily rising trade deficit but in its relations with the US, the balance has been kept at a high surplus level.

In 2005, Vietnam's export turnover to the US reached US$5.04 billion and the figure was US$ 9.23 billion in 2008. In 2009, due to the impact of the global and US economic slowdowns, Vietnam's export value to the US fell compared to a year earlier while import turnover from this market increased so Vietnam's export turnover still hit US$ 8.35 billion.

Over the past few years, Vietnam has mostly exported garments and textiles, wooden products, footwear, crude oil, seafood, computers and electronic components. Garments and textiles make up the lion’s share of Vietnam's export value to the US (around 43 percent in 2005-2009). Vietnamese garment and textile products are increasingly capturing the attention of US importers. The US International Trade Commission (USITC) said that Vietnam is one of the leading countries in Asia capable of competing with China in this field.

The American Apparel and Footwear Association also said that Vietnam is the second option for US importers after China in seeking goods suppliers from Asia.

Apart from the Bilateral Trade Agreement (BTA) signed in 2001, the two countries have signed other cooperation agreements on garment and textile exports, investment insurance, credit support, aviation, and raising competitive capacity, particularly the Vietnam-US Trade and Investment Framework Agreement (TIFA).

They are continuing to negotiate the signing of a bilateral investment treaty (BIT) and Vietnam's possible participation in the Trans-Pacific Strategic Economic Partnership Agreement (TPP) in which the US is a member.

Biggest investor in Vietnam

The US has now become a leading investor in Vietnam with a total registered capital amounting to US$10 billion in the early months of this year.

US Ambassador to Vietnam Michael W. Michalak cited US$9.8 billion in total investment capital from the US to Vietnam in 2009 as a clear indication of keen interest in Vietnam despite the global economic meltdown.

Mr Michalak also pointed out some potential areas in which both countries can cooperate effectively, namely telecommunications, information and technology, oil exploitation, power production, expressway construction, project management, environmental protection and aviation.

Great potential for increasing export turnover

Mr Michalak said that the major disadvantages of Vietnamese businesses are inexperience in trade activities, language differences and a lack of information. According to Deputy Minister of Industry and Trade, Nguyen Cam Tu, to lift export turnover to the US, Vietnamese businesses need to sharpen the competitiveness of highly-valued industrial products and manufactured goods for export.
In fact, Vietnamese businesses mostly produce manufactured goods for trade partners and then export them to the US.

Vietnam's value of manufactured goods for export accounts for 1/4 its total export turnover to the US. Consequently, Vietnamese exporters need to increase added value in products and develop trademarks to boost business prestige and win consumer confidence in the lucrative market.

Vietnamese businesses need to try their best to meet US consumer demand for high-standard goods.

Mr. Michalak also advised Vietnamese businesses to seek prestigious and potential partners to set up investment cooperation with the help of US experts so that Vietnamese businesses can penetrate this market rapidly and effectively.

In addition, both countries should accelerate the negotiation process of the bilateral investment treaty (BIT) and the Trans-Pacific Strategic Economic Partnership Agreement (TPP). Economic experts said that only with the US granting a generalised system of preferences (GSP) to Vietnam and recognising its full market economy status, will Vietnam find itself in a favourable position to export its farm products to the US.