To Balance China, U.S. Should Open Up to Vietnam

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While in Vietnam this past July, Secretary of State Hillary Clinton announced that negotiations over a Trans-Pacific Partnership Agreement (TPPA) will be finalized by year's end. The agreement would create a free trade area among the U.S., Vietnam, Australia, Brunei, Malaysia, Singapore, New Zealand, and others. But like many other free trade agreements under the Obama administration, this one has stalled. With the administration focusing on its reelection campaign, the U.S. appears on track to miss its self-imposed deadline. This would be a shame because the TPPA presents a tremendous opportunity to regain ground lost to China in Asia.

U.S. competition with China is heating up. Both countries are vying to develop natural resources in the same emerging markets, trading barbs over China's currency manipulation, and filing dueling trade complaints. This economic competition has heightened military tensions. Most recently, the Obama administration announced a "pivot" toward Asia and sent Marines to Australia, while China has launched its first aircraft carrier, debuted stealth fighter jets, and developed anti-aircraft carrier missiles. America's need for strong Asian allies is apparent.

The TPPA would allow the U.S. to deepen its commercial ties in Asia and to strengthen its nascent relationships with China's regional competitors. To be sure, the U.S. already has strong alliances with several countries in the region, including South Korea, Japan, and Taiwan. But as China's footprint grows, the U.S. must create a broader web of regional relationships to contain Chinese expansion. The TPPA would enrich its members and bring additional Asian nations solidly into the U.S. orbit, thereby encircling China with strengthened U.S. allies.

Some argue that the U.S. should forego the free trade agreement because of the poor human rights record of certain potential signatories, notably Vietnam. But this view is short-sighted. The U.S. has more robust relationships with other countries that have similarly deficient human rights records. It reluctantly maintains these relationships in special cases where strategic reasons compel it to do so. (Take Saudi Arabia, which controls one-fifth of the world's oil reserves.)

Vietnam is such a country, given its potential to aid the U.S. in checking China's rise. It has the world's thirteenth largest population (almost 88 million), making it a sizeable market for U.S. goods. And it is an attractive target for U.S. companies looking to move production outside China to capitalize on considerably lower Vietnamese wages.

More importantly, however, Vietnam and China have overlapping claims in the South China Sea, which are more likely to be resolved in Vietnam's favor if the U.S. backs it. Much is at stake there, including control of important sea lanes through which $5.3 trillion of trade passes each year, access to rich fishing grounds, and the right to exploit potentially vast oil and gas deposits. The Chinese estimate that more than 200 billion barrels of oil lie below the South China Sea, making it the world's largest oil reserve outside of Saudi Arabia.

China, which consumes daily about 9.9 million barrels of oil, is using force to assert its claims in the contested waters. For instance, it has announced the deployment of combat-ready patrols in the South China Sea, stationed soldiers on islands there, and harassed Vietnamese fishing boats and oil exploration teams working in the area. China's aggression should ebb as Vietnam grows stronger and draws closer to the U.S. To that end, recent efforts to open a U.S. naval base in a Vietnamese port are more likely to materialize if the free trade agreement is signed.

Economic engagement offers an opportunity to change Vietnam's behavior for the better. The TPPA will increase contacts between the U.S. and Vietnam, which will further inject U.S. values into Vietnamese society. And as Vietnamese citizens prosper, they will demand greater political freedoms. The countries' deepened relationship will also enhance U.S. leverage over Vietnam, allowing the U.S. to press the emerging nation to improve its human rights record. Indeed, the free trade agreement should require signatories to enact better human rights protections, and their records should be reviewed periodically to ensure improvement.

We have seen the opposite approach fail in several countries, notably Uzbekistan. In 2005, the Uzbek government undoubtedly went overboard when it responded violently to internal protests. At the time, the U.S. had a military facility in Uzbekistan, which it used to aid its Afghan operations. The U.S. nevertheless set aside the facility's importance, and vigorously attacked the Uzbek government for its misconduct. The Bush administration's argument was noble, but it resulted in Uzbekistan closing the U.S. facility, which hurt our efforts in Afghanistan. The approach also hardened Uzbekistan's defiance, eliminated what little leverage we had to modify its behavior, and pushed it closer to China and Russia.

We cannot allow a similar calculus to forestall the TPPA. Vietnam, along with other regional players currently embroiled in territorial and maritime disputes with China, want assurances that the U.S. will back them in the face of Chinese power grabs. A weak showing will erode our allies' confidence in U.S. staying power, and embolden China to act more aggressively. Signing the TPPA will help to balance China's rise.


Alexander Benard is Managing Director of Gryphon Partners, an advisory and investment firm forcused on the Middle East and Central Asia.  He recently wrote an essay for Foreign Affairs about U.S./China competition in emerging markets.  Paul J. Leaf is an attorney in Los Angeles, and a former editor of the Stanford Law Review. 

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