WASHINGTON-Wireless telecom trade advanced on two major fronts last week, as the United States and Vietnam struck a sweeping trade agreement and the Senate signaled it was prepared to vote on the historic China trade bill before Congress recesses for the month of August.
China and Vietnam, both populous and handicapped by poor telecom infrastructures, represent enormous trade opportunities for the U.S. wireless industry.
Given both countries are Communist and the still-lingering wounds of an unpopular war in Southeast Asia a quarter century ago that saw 59,000 American soldiers killed and others unaccounted for to this day, the trade agreements pack as much political punch as they do trade value.
“The agreement we sign today will dramatically open Vietnam’s markets on everything from agriculture to industrial goods to telecommunications products, while creating jobs both in Vietnam and in the United States,” said President Clinton last Thursday.
Standing directly behind Clinton as he spoke in the Rose Garden last Thursday was Senate Commerce Committee Chairman John McCain (R-Ariz.), a former prisoner of war in Vietnam who favors normalized relations with Vietnam.
In addition to prying open Vietnam’s market, the deal would reduce U.S. tariffs on Vietnamese products from 40 percent to 3 percent. The Clinton administration also is expected to support Vietnam membership in the World Trade Organization. Today, Vietnam’s status is one of a WTO observer.
Congress, for its part, appears ready to embrace normalized trade relations with Vietnam. Clinton said he was undecided about visiting Vietnam later this year.
Virtually five years ago to the day, Clinton reestablished diplomatic ties with Vietnam. In 1994, the president lifted the trade embargo on Vietnam.
“There really is no legacy [telecom] system in Vietnam right now,” said Christine Keck, director of the Asia-Pacific program at the Telecommunications Industry Association. “What they’re doing is the proverbial leapfrog to digital, which bodes well for an explosion in technology.”
Keck said the trade deal will enable American firms to get financing from the Overseas Private Investment Corp. and U.S. Export-Import Bank.
The U.S.-Vietnam trade accord was struck after talks last week between U.S. Trade Representative Charlene Barshefsky and her Vietnamese counterpart, Vu Khoan. Those talks were preceded by several days of staff-level negotiations between the two countries. The seeds of the U.S.-Vietnam trade agreement were sown in 1996.
Last November, the two sides reached an agreement in principle. But Hanoi subsequently began to back away from the accord because Communist leaders believed Vietnamese trade negotiators conceded too much.
It appears some factions in Vietnam are anxious to make political and economic reforms in light of decreased foreign investment in recent years and the desire to remain competitive with China as it begins to embrace free-market principles en route to WTO entry. Telecom infrastructure development is key to achieving those goals.
Today, the U.S. does very little telecom trade with Vietnam. It remains a very closed market, with most major industries state controlled. In 1999, the U.S. telecom exports to Vietnam totaled a paltry $11.6 million.
At the same time, U.S. trade with Vietnam has grown. When Clinton took office in 1993, U.S. exports to Vietnam totaled $4 million. Since then, exports have increased to nearly $300 million.
Moreover, Vietnam appears tailor-made for wireless technology. The country has more than 77 million people. According to the Commerce Department, there are only 0.17 cellular subscribers per 100 people. It’s not much better on the wireline side, with only 2 citizens in 100 having landline telephone service.
The Vietnamese government wants to increase wireline telephone density to five lines per 100 people by the end of the year.
The two cellular phone operators are Saigon Mobile Telephone Centre and Ho Chi Minh City P&T. Other telecom carriers include Vietnam Posts & Telecommunications, Vietnam Telecom National, Vietnam Telecommunications International, Vietnam mobile Telecom Services and Vietnam Datacommunication Co. NetNam is the main Internet service provider.
Mobile phone operators use Global System for Mobile communications and Time Division Multiple Access technologies.
Among the firms doing business in Vietnam are Motorola Inc., Nortel Networks, Hughes Electronics Co., AT&T Corp., Siemens AG, L.M. Ericsson, Alcatel, NEC, Bosch, Daesung, Lucky Goldstar, France Telecom and Millicom International Cellular S.A.
On the China trade front, indications emerged last week that a Senate vote could take place by month’s end. Republican and Democratic senators and Clinton administration aides were optimistic after meeting with Senate Majority Leader Trent Lott (R-Miss.) last Wednesday.
Lawmakers, Republican and Democratic alike, and U.S. industry worry that delaying the vote until September-being so close to the November elections-could fatally politicize the issue and jeopardize passage of a trade measure that promises to give the wireless industry access to China’s 1.3 billion people.
“It’s going to get done,” said a Lott spokesman. “He’s got appropriations bills and other legislation he’s committed to getting passed.”
The House passed China trade legislation in May.
The China trade bill is complicated by side legislation sponsored by Sens. Fred Thompson (R-Tenn.) and Robert Toricelli (D-N.J.) that would impose sanctions on China for exporting nuclear and missile technology to other countries.
TIA’s Keck said the sanctions bill sends conflicting signals.
“We feel like there are laws on the books that address those issues,” she said.
