The new economic policy, known as Doi Moi ("change and newness"), ushered in a period of over 20 years of rapid growth in Vietnam. The growth in bilateral trade has not been without its accompanying issues and problems. Both nations are negotiating membership in the Trans-Pacific Strategic Economic Partnership Agreement (TPP), a multilateral trade group. For its part, Vietnam has indicated a desire to foster closer trade relations by applying for acceptance into the U.S. General System of Preferences (GSP) program, and participating in negotiations of a bilateral investment treaty (BIT). The growth in Vietnam's export of catfish has also generated tensions between the two nations. Other economic issues have had an indirect effect on bilateral relations, such as claims of poor working conditions in factories in Vietnam, Vietnam's designation as a "non-market economy," allegations of inadequate intellectual property rights (IPR) protection in Vietnam, and Vietnam's exchange rate policy. This will be followed by an analysis of key trends in bilateral trade to discern any potential sources of trade friction in the future. In the President's 2009 Annual Report on the U.S. trade agreements program, the Obama Administration stated that U.S. participation in the TPP would strengthen U.S. trade and investment ties in the Asia-Pacific, help U.S. businesses compete in the region, and "could serve as a vehicle for achieving the long-term Asia-Pacific Economic Cooperation (APEC) objective of a Free Trade Area of the Asia-Pacific." Another complicating factor is Vietnam's membership in the Association of Southeast Asian Nations (ASEAN) and its support for ASEAN's discussions with other nations to form a pan-Asian trade association that could exclude the United States. However, in an April 2010 meeting with CRS, Vietnamese trade officials indicated that Vietnam would like to see the United States take a more active role in a possible ASEAN + 8 (Australia, China, India, Japan, New Zealand, Russia, South Korea and United States) forming the basis for a larger regional trade association. First, the United States must have conferred NTR status to the country. The Vietnamese government appears interested in concluding a BIT with the United States, both because it could foster greater inward FDI from the United States and because it could serve as a stepping-stone to a possible free trade agreement (FTA) with the United States. The Obama administration is reportedly reviewing the current model BIT, and may be deferring progress with Vietnam until the review is completed. Following the U.S. extension of conditional NTR to Vietnam, U.S. clothing imports from Vietnam shot up in value and share. Vietnam has become a major source of U.S. clothing imports, second only to China. However, some Members of Congress were concerned that the termination of the monitoring program—as well as the end of the special safeguards on Chinese clothing imports on December 31, 2008—would result in a surge of clothing imports from China and Vietnam. market." By these provisions, the 2008 Farm Act effectively transferred the regulation of imported catfish from the Food and Drug Administration (FDA) to the USDA, which is generally viewed as maintaining stricter inspection standards than the FDA. Workers in Vietnam have the legal right to collective bargaining. In theory, the 111 th Congress could consider legislation weighing in on the designation of Vietnam as a market or non-market economy by amending or superseding existing U.S. law. Furniture and Bedding

Over the last 10 years, Vietnam has risen from being the 62 nd -largest source for furniture and bedding imports for the United States to being the fourth-largest source—surpassing past leaders such as Italy, Malaysia, and Taiwan. Furniture and bedding provided over 11% of total U.S. imports from Vietnam in 2009, and it was the second-fastest growth category of imports from Vietnam (after electrical machinery) since 1998. Vietnam imports substantial amounts of cotton from the United States, which is then used to manufacture clothing to be exported to the United States.
After more than two decades of virtually no economic contact, the United States and Vietnam reestablished trade relations during the 1990s. Since then, Vietnam has rapidly risen to become a significant trading partner for the United States. Bilateral trade has risen from about $220 million in 1994 to $15.4 billion in 2009. Vietnam is the second-largest source of U.S. clothing imports, and a major source for footwear, furniture, and electrical machinery. Much of this rapid growth in bilateral trade can be attributed to U.S. extension of normal trade relations (NTR) status to Vietnam. Another major contributing factor is over 20 years of rapid economic growth in Vietnam, ushered in by a 1986 shift to a more market-oriented economic system.
Bilateral trade may increase if both nations become members of the Trans-Pacific Strategic Economic Partnership Agreement (TPP). The United States and Vietnam are among the eight countries negotiating the terms of expansion of the trade association. The Obama Administration envisions an expanded TPP as a "21st Century free trade agreement" that will become the cornerstone for a trans-Pacific regional trade association. Vietnam is also a party to negotiations to form a larger pan-Asian regional trade association based on the Association of Southeast Asian Nations (ASEAN) that could exclude the United States and could prove to be an alternative to the TPP and the U.S. vision for regional economic integration in Asia.
The growth in bilateral trade has not been without its accompanying issues and problems. Vietnam has applied for acceptance into the U.S. Generalized System of Preferences (GSP) program and is participating in negotiations of a Bilateral Investment Treaty (BIT) with the United States. Both the Bush and the Obama Administrations have shown some hesitance in accepting Vietnam as a GSP beneficiary country and in concluding a BIT with Vietnam. Vietnam would like to have the United States officially recognize it as a market economy.
There have also been problems with U.S. imports of specific products from Vietnam. In 2003, the United States began collecting antidumping duties on certain fish imports from Vietnam. From 2007 to 2009, the United States implemented a controversial monitoring program for selected clothing imports from Vietnam. In 2008, the 110th Congress passed legislation that transferred the regulation of catfish from the Food and Drug Administration to the U.S. Department of Agriculture. The Vietnamese government strongly protested these actions as largely protectionist measures. An examination of recent trends in bilateral trade reveals that other product categories—such as footwear, furniture, and electrical machinery—could generate future tension between the United States and Vietnam. Observers of Vietnam's economic development have also been critical of Vietnam's protection of workers' rights, its enforcement of intellectual property rights laws and regulations, and the country's exchange rate policies.
The 111th Congress may play an important role in one or more of these issues, as have past Congresses. The GSP program is scheduled to expire on December 31, 2010, and if Congress should take up GSP renewal, it may also consider Vietnam's pending application. The 111th Congress may also weigh in on clothing and fish imports from Vietnam, or its designation as a market or non-market economy. Finally, if current growth trends continue, Congress may be asked to act on the rising amount of footwear, furniture, and/or electrical machinery being imported from Vietnam. This report will be updated as circumstances require.