Thayer U.S.-vietnam Relations - Ten Years in Retrospect

Thayer Consultancy Background Brief:
ABN # 65 648 097 123

U.S.-Vietnam Relations: Ten
Years in Retrospect
August 24, 2023
U.S President Joe Biden will make a state visit to Vietnam in mid-September. This visit
is viewed as a new milestone in US-Vietnam relations. On this occasion, I would like to
ask for your assessment of the 10-year journey of U.S.-Vietnam economic
cooperation.
Q1. What has Vietnam-U.S. economic cooperation achieved in the past 10 years?
What milestones do you find the most impressive? Statistics show that two-way trade
between Vietnam and the US has increased from 450 million USD in 1995 when the
two countries established their diplomatic relations, to 138 billion USD last year. What
does this achievement indicate?
ANSWER: The foundations for Vietnam-United-States economic cooperation through
the comprehensive partnership were set more than ten years ago when Vietnam and
the U.S. signed a Bilateral Trade Agreement in 2000 and a Trade and Investment
Framework Agreement (TIFA) in 2007. The U.S. assisted Vietnam in meeting the
requirement for membership in the World Trade Organisation.
Under the 2013 comprehensive partnership, Presidents Barack Obama and Truong
Tan Sang pledged to conclude a comprehensive, high-standard Trans-Pacific
Partnership (TPP) agreement. The Obama Administration provided Vietnam
technical advice and other assistance on regulatory and economic reforms that
facilitated not only bilateral commercial relations but Vietnam’s international
economic integration.
Even though President Trump withdrew the U.S. from the TPP, Vietnam gained
valuable experience and played a major role in negotiating the Comprehensive and
Progressive TPP.
The remarkable growth in two-way trade may be accounted for by Vietnam’s
economic development and complementarity between the two economies. Vietnam
has a sustained trade surplus with the United States.
Q2. In March this year, a mission, including 52 enterprises from the U.S. visited
Vietnam to learn about the local market and seek business and investment
opportunities. This is the largest-ever U.S. business mission to Vietnam amid the trend
of foreign businesses moving out of China. In your assessment, why did U.S.
enterprises choose Vietnam? What advantages does Vietnam have in comparison with
China?
2
ANSWER: U.S. and other foreign businesses operating in China decided to relocate
some of their production processes due to trade tensions, China’s strict COVID
lockdown, rising costs of doing business, and bureaucratic regulation. Vietnam
recovered from COVID and opened up. Vietnam offered a supportive regulatory
environment, a lower wage structure, and a young productive and educated work
force.
The interruption to world trade caused by COVID exposed the risk of over dependence
on China for reliable supply. This motivated U.S. businesses de-risk their exposure to
China by looking fort alternatives. Vietnam was an attractive destination. In addition,
the Biden Administration has promoted U.S. investment and business opportunities in
Vietnam and dealt with commercial issues on a pragmatic basis.
Q3. Some sources told Politico that President Biden will sign a strategic partnership
agreement with Vietnam. The agreement will allow for new bilateral collaboration to
boost Vietnam’s efforts to develop its high-technology sector in semiconductor
production and artificial intelligence.
Why will the U.S. help Vietnam develop semiconductor production and artificial
intelligence but not other areas? What potential do they see in Vietnam and what are
the benefits that the US can gain when partnering with Vietnam in the high-technology
sector?
ANSWER: The U.S. has set priority on developing resilient and secure supply chains
with Vietnam because Vietnam already has demonstrated the capacity to produce
semiconductors to world standards with American companies like Intel and Amkor.
Semiconductors are of vital importance to U.S. manufacturing.
The U.S. and Vietnam have become trusted partners based on years of dealing with
each other.
The United States has chosen to prioritize artificial intelligence and quantum
computing because these are the frontier technologies for the future. Vietnam has
also set priority on Fourth Industrial Revolution technology; so the views of Vietnam
and the U.S. are congruent. The U.S. would also like to develop green energy
technology with Vietnam.
President Biden’s Indo-Pacific Economic Framework for Prosperity has four pillars:
trade; supply chains; clean energy, decarbonization, and infrastructure; and tax and
anti-corruption. Vietnam is free to pick and choose which pillar or pillars it would like
to contribute to.
Q4. What is the current status of Vietnam in these two fields compared to other
countries in the region? What advantages and disadvantages does Vietnam have in
these two fields?
ANSWER: The major players in AI and quantum computing in the Indo-Pacific, based
on the number of approved patent applications, are the United States and China in a
league of their own followed by Japan, India and South Korea.
In Southeast Asia, Singapore is the leading country. Indonesia, Malaysia, Thailand and
Vietnam are at a roughly comparable stage in terms of national policy development
and research and practical application of AI and quantum computing.
3
Q5. What additional advantages will Vietnam have if the U.S. provides support for AI
and quantum computing?
ANSWER: The United States and its private sector corporations are major developers
and players in AI and quantum computing technologies. Vietnam would benefit from
their direct investment, joint ventures with Vietnamese partners, the transfer of
management and technical skills, and market access.
Suggested citation: Carlyle A. Thayer, “U.S.-Vietnam Relations: Ten Years in

Retrospect,” Thayer Consultancy Background Brief, August 24, 2023. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
mailing list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.
Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.

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Thayer Consultancy Background Brief:

ABN # 65 648 097 123

Suggested citation: Carlyle A. Thayer, “U.S.-Vietnam Relations: Ten Years in

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