TRADE RELATIONS
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Donald Trump

Trump hails deals with Vietnam, but trade imbalance isn’t so good

The visit also comes at a time when Trump appears to be warming to China, Vietnam’s much larger and more powerful neighbour

PUBLISHED : Thursday, 01 June, 2017, 1:00am
UPDATED : Thursday, 01 June, 2017, 10:38pm

US President Donald Trump hailed billions of dollars of deals with Vietnam even as he used a visit by Prime Minister Nguyen Xuan Phuc to highlight the trade imbalance between the two countries.

The US Commerce Department announced 13 new transactions with Vietnam worth $8 billion, including $3 billion worth of US-produced content that would support more than 23,000 American jobs.

These include deals for General Electric Co worth $5.58 billion for power generation, aircraft engines and services, its largest-ever combined sale in Vietnam.

Caterpillar Inc and its dealer in Vietnam also agreed to provide generator management technology for more than 100 generators in Vietnam, the company said.

Phuc’s meeting with Trump makes him the first Southeast Asian leader to visit the White House under the new administration.

Watch: trade top of US-Vietnam agenda

But as the two leaders sat down for formal talks Wednesday, which also touched on North Korea, Trump was quick to raise the trade imbalance.

“We have a major trade deficit with Vietnam, which will hopefully balance out in a short period of time. We expect to be able to do that,” Trump said.

He added that Vietnam had made a “very large order” worth billions of dollars that would create jobs for the US.

Phuc said US-Vietnam relations have “undergone significant upheaval but today we have been able to become comprehensive partners.”

He said he has been impressed by Trump’s friendliness and openness and was confident bilateral cooperation would be enhanced.

The US and Vietnam normalised ties in 1995, two decades after the Vietnam War’s end. Under President Barack Obama, diplomatic and security ties blossomed, as Vietnam sought ways to counter China’s island-building and vast claims to the disputed South China Sea.

But the relationship is now on uncertain ground.

Vietnam would have been a prime beneficiary of the 12-nation Trans-Pacific Partnership agreement negotiated under Obama. Within days of taking office, Trump withdrew the US from the trade deal, saying it would hurt American workers.

At a dinner for Phuc late Tuesday hosted by American business leaders, US Trade Representative Robert Lighthizer said the annual trade deficit with Vietnam - America’s sixth-largest - increased over the last decade to nearly $32 billion from $7 billion, presenting “new challenges” for the relationship.

Speaking at the Heritage Foundation think tank Wednesday, Phuc pushed back, saying that in trade, the US and Vietnamese economies are “more complementary than competitive”.

Security cooperation between the nations that were once enemies has grown because of shared concern over China’s assertive behaviour in the South China Sea.

The US recently delivered six coastal patrol boats to Vietnam’s coast guard and a decommissioned Hamilton-class cutter.

Phuc did not address last week’s US Navy’s freedom of navigation operation in the South China Sea, the first since Trump took office, but said he welcomes US support for freedom of navigation and overflight, compliance with international law and peaceful resolution of disputes.

He called for US-China relations that are conducive to peace and stability and the interests of smaller nations.

“In Vietnam we have a saying that when the buffalos fight the flies may be hurt,” he said.

Trump will visit Vietnam in November for the Asia-Pacific Economic Cooperation leaders summit.

Murray Hiebert, a Southeast Asia expert at Washington’s Centre for Strategic and International Studies, said that while the Trump administration welcomed new business deals with Vietnam, its view was they were “nice, but not enough.”

“They want Vietnam to bring some ideas about how to tackle the surplus on an ongoing basis,” he said.

Associated Press, The Washington Post, Reuters