On September 10-11, 2023, President Biden led a state visit to Vietnam, during which he joined General Secretary of the Communist Party of Vietnam Nguyen Phu Trong in announcing a historic new phase of cooperation by elevating the bilateral relationship to a Comprehensive Strategic Partnership (CSP). Since the two sides agreed to enter a Comprehensive Partnership in 2013, bilateral trade between the United States and Vietnam grew from USD30 billion to more than USD139 billion, a 360% increase. The Joint Leaders’ Statement announcing the CSP upgrade reaffirmed the importance of trade and investment collaboration and highlighted innovation-driven economic growth as a foundation of the bilateral relationship. On the heels of this momentous occasion, U.S. businesses should have much to be excited about in the Vietnam market.
Previously, U.S. firms were slow to take advantage of the growing opportunities that Vietnam presented; however, U.S. firms are increasingly looking towards this market as a key component to their growth strategy in Asia. This Country Commercial Guide is intended to introduce U.S. exporters to doing business in Vietnam and provide the foundation necessary for an American firm to take the initial steps needed to pursue business here.
Top five reasons why U.S. companies should consider exporting to Vietnam:
- The fastest growing middle and affluent classes in the region, providing the right demographics for growth and receptivity to U.S. products and services.
- Over the past few years, Vietnam has been active in signing bilateral trade agreements with countries throughout the world.
- Strong GDP growth expected to continue for the medium-term.
- Large population of almost 100 million consumers (#15 globally), half of which are under the age of thirty.
- Political stability.
The U.S.-Vietnamese commercial relationship has grown dramatically since the United States lifted its trade embargo against Vietnam in 1994 and the two countries renewed diplomatic relations in 1995. Twenty-eight years after normalizing relations, the United States is now Vietnam’s largest export market and the United States is a major source of foreign direct investment in Vietnam, helping fuel Vietnam’s remarkable economic growth. The United States has also benefitted from stronger trade ties. Over the past five years, Vietnam’s export revenue to the United States surged 230%, while its import value grew by more than 175%. This country of almost 100 million consumers, with an overwhelmingly positive view towards the United States, exhibits the demographics needed for continuous growth over the next 20 years, a rising star among Asia’s bustling economies.
The 1986 launch of a series of economic reforms collectively referred to as Doi Moi helped Vietnam move from a subsidiary economy to a globally integrated, socialist-oriented market economy. In fact, since 1990 Vietnam’s average economic growth rate of 5.5% ranks second only to the People’s Republic of China (PRC) in Asia. In 2022, Vietnam’s GDP growth was approximately 8%. Additionally, the shift of manufacturing operations from the PRC to neighboring nations is also contributing to Vietnam’s economic growth and increasing importance in global supply chains.
The 2001 U.S.–Vietnam Bilateral Trade Agreement (BTA) transformed the bilateral commercial relationship between the two nations and accelerated Vietnam’s entry into the global economy, with Vietnam joining the World Trade Organization (WTO) in January of 2007. Since the BTA, bilateral trade increased from USD 2.9 billion in 2002 to over USD 139 billion in 2022, transforming Vietnam into the sixth largest source of U.S. imports and 28th largest destination for U.S. exports.
Vietnam is one of 14 member countries comprising the Indo-Pacific Economic Framework for Prosperity (IPEF) that seeks to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness across the Asia region. Since its launch in May 2022, the IPEF members countries have engaged in intense negotiations to scope out each of the four IPEF pillars, including trade, supply chains, clean economy, and fair economy. Vietnam plays a central role in IPEF which promises to facilitate increased trade and investment in the region for American companies. Vietnam has emerged as an important market for U.S. agricultural exports in Southeast Asia. U.S. agricultural exports have grown from USD2.4 billion in 2013 to USD3.9 billion in 2021 and Vietnam is now the ninth largest market for U.S. agricultural exports.
Political Environment
Visit State Department’s website for background on the country’s political and economic environment.
Resources
- Why Vietnam is Overtaking China as a Destination for U.S. Export Manufacturing
- Macro Trends: Vietnam’s Economic Growth Rate
- Congressional Research Service: U.S.-Vietnam Relations
- U.S Census Bureau: Trade in Goods with Vietnam
- Office of the United States Trade Representative – Vietnam Country Page
- Vietnam Annual GDP Growth Rate Data
- White House: Joint Leaders’ Statement: Elevating United States-Vietnam Relations to a Comprehensive Strategic Partnership
- White House Fact Sheet: Comprehensive Strategic Partnership Upgrade
- S&P Global Market Intelligence: Vietnam strengthens economic ties with US during President Biden’s visit
