WTO votes in Vietnam as its newest member
But U.S. businesses, eager to gain access to its fast-growing market, are being blocked by trade restrictions between the two nations.
NEW YORK (CNNMoney.com) -- The World Trade Organization Tuesday cleared the way for Vietnam to become its 150th member - a move that boosts its trading access with other countries but doesn't yet allow U.S. businesses to freely set up shop in the Southeast Asian nation.
Vietnam now has to ratify the deal, and it will become a member 30 days after it has informed the WTO of the action, a WTO spokeswoman said by phone from Geneva, Switzerland, where the trade group is based.
By becoming a fully-fledged member of the global trade body, Vietnam will be able to benefit from freer market access and global trading rules established and enforced by the WTO for its members.
As Vietnam's new leadership pushes for a more market-oriented economy, many U.S. corporations are eager to tap into the country's rapidly expanding middle-class consumer base.
Vietnam, a communist nation of 84 million people, is the fastest growing major economy in Southeast Asia. Its economy grew at a rate of 8.4 percent in 2005. Its gross domestic product (GDP) has grown from $31 billion to $50 billion over the past four years.
According to a 2005 study from consulting firm A.T. Kearney, consumer spending in Vietnam rose 16 percent last year and retail sales increased 20 percent in 2005 versus the previous year.
But U.S. businesses will not yet be able to take advantage of the same trade benefits and market access opportunities that other WTO members will get because Vietnam's trade with the U.S. is currently restricted.
That's because the Bush administration hasn't been able to convince lawmakers in Congress to grant Vietnam the trade relations accorded to most of Washington's other trading partners.
The administration was hoping to get the so-called "most favored nation" status before Bush visits Hanoi in November for the Asia-Pacific Economic Cooperation (APEC) leaders' meeting.
But some Republican lawmakers have blocked the bill, claiming it would allow Vietnamese firms to "dump" cheap clothing exports into the United States at the cost of U.S. jobs. Legislators from textile states, specifically Sen. Elizabeth Dole (R-N.C.) and Sen. Lindsey Graham (R-S.C.), are holding up the legislation.
"Dumping" is when producers are found to be selling unfairly at below-market prices.
The trade status would give Vietnam the same treatment the United States extends to other members of the World Trade Organization in return for mutually favorable tariff treatment for U.S. exports.
Until the bill is approved, American companies say they're losing out.
"Vietnam's economy will start to boom. We want to expand our services there but our future prospects are being stymied until the trade issue is resolved," said company Matt Niemeyer, spokesman for insurance provider ACE Group