Pompeo’s Vietnam visit focuses on security and trade as US aims to bolster Indo-Pacific bulwark
US Secretary of State Mike Pompeo used his last stop in a five-country tour of Asia to rally support from a key Indo-Pacific ally just days ahead of the US presidential election.
Pompeo arrived in the Vietnamese capital of Hanoi on Thursday for a two-day visit. On Friday, he held talks with Vietnamese Prime Minister Nguyen Xuan Phuc, Deputy Prime Minister Pham Binh Minh and Public Security Minister To Lam.
But unlike his comments at the previous stops that included India and Indonesia, Pompeo did not lash out at China, instead urging Vietnam to play a greater role in the region.
“We look forward to continuing to work together to build on our relationship and to make the region — throughout Southeast Asia, Asia and the Indo-Pacific — safe and peaceful and prosperous,” Pompeo said before his meeting with Phuc, Reuters reported.
Phuc replied that he was looking for “sincere cooperation” in support of peaceful relations in the region.
A report on an online Vietnamese government news portal said the US committed to continuing stable relations and cooperation with Vietnam to further advance the bilateral ties so as to contribute to security, peace, cooperation and development in the region and the world. It also made no public mention of the issues in the South China Sea or of an American citizen who was released from Vietnamese prison on Friday.
Minh said on his official Twitter account that he welcomed the presence of Pompeo in Hanoi to celebrate the 25th anniversary of the normalisation of ties between the two countries in 1995.
“I am confident that the Vietnam-US Comprehensive Partnership will record greater achievements in the time to come. Our shared resolve and joint action for mutual benefit will surely take us far,” he wrote, referring to the framework agreement the two sides signed in 2013 for advancing bilateral relations.
Vietnam was a late addition to Pompeo‘s itinerary, with the announcement of his visit coming a week after the release from prison of US citizen Michael Nguyen, who was accused of enticing anti-government protesters in Vietnam to attack government offices in 2018 and sentenced to 12 years in jail for “attempting to overthrow the state”.
The Southeast Asian nation has become a key ally in Washington‘s efforts to push back against China’s increasing assertiveness in making territorial claims in the South China Sea and development efforts along the Mekong. Vietnam has also been the most outspoken Southeast Asian nations against China for what it sees as Chinese overreach in the region.
In a statement released upon Pompeo’s arrival in Vietnam on Thursday, the State Department said the US supports a free and open Indo-Pacific Region, including the South China Sea. “We respect Vietnam’s rights and interests and seek to preserve peace and uphold freedom of the seas in a manner consistent with international law,” it said.
The statement also mentioned that earlier this year, Pompeo had rejected nearly all of Beijing’s maritime claims in the South China Sea, saying that “the United States was prepared to take firm action to oppose Beijing’s campaign of bullying.”
Vietnam and the US have come a long way since the two-decade Vietnam war, which ended in 1975 and saw millions of Vietnamese citizens and nearly 60,000 American killed. Today, their relationship flourishes on many fronts. The country also shares a 1,400-kilometre border with China, with exchanges between the two going back millennia.
US-Vietnam trade topped $77 billion in 2019, a 32 per cent year-on-year increase “stimulated, in part, by trade diversion caused by the Sino-US trade dispute and trade stimulation from the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership”, according to a report published by the US’s Congressional Research Service.
Vietnam‘s exports to the US reached US$61.35 billion last year, climbing 29.1 per cent from 2018, while its imports from the US reached US$14.37 billion, up 12.7 per cent from the previous year, according to the General Department of Vietnam Customs.
In comparison, Vietnam’s exports to China only hit US$41.41 billion in 2019, up 0.1 per cent compared with the previous year, while Vietnam imported far more from China – US$75.45 billion worth of goods, or a year-on-year increase of 15.2 per cent – than any other country. Vietnam is heavily dependent on imports from China for production inputs.
Vietnam is also one of the favourite tourism destinations for Americans – about 747,000 travelled to Vietnam last year, up 108.6 per cent from the previous year. But the figure pales in comparison with Chinese tourists, 5.8 million of whom travelled to Vietnam in 2019, or an 116.9 year-on-year increase, according to the General Statistics Office of Vietnam.
Earlier this month, the US Trade Representative (USTR), as directed by President Donald Trump, said that it was opening an investigation into whether Vietnam has been undervaluing its currency, the dong, and harming US commerce. Earlier this week, Prime Minister Nguyen Xuan Phuc asserted that Vietnam was not manipulating its currency.
Murray Hiebert, a senior associate of the Southeast Asia Programme at the Centre for Strategic and International Studies (CSIS) in Washington, said Vietnam would likely have discussions with Pompeo about the issue, although any final decision on the matter comes from the US Treasury Department and not the State Department.
“To be sure, the Trump administration is frustrated about how rapidly Vietnam‘s trade surplus with the US is growing, so it wants to send a warning to Vietnam. I personally do not know if Vietnam is manipulating the dong exchange rate,” Hiebert said.
After Beijing and Washington began their trade war and started to impose tit-for-tat sanctions in 2018, there has been a movement of production and supply chains away from China, benefiting several Southeast Asian countries, including Vietnam.
However, some analysts said this diversification trend was inevitable regardless of the trade war.
“Arguably, some diversion would have happened anyway (even without the trade war and political deterioration of US-China relations) because simply it is cheaper costs in Vietnam than in China, so some investors were on the trajectory to move anyway,” Huong Le Thu, a senior analyst at the Australian Strategic Policy Institute (ASPI), said to This Week in Asia in a message, adding that Vietnam needs to maintain the long-standing balance it has between the US and China.
“It’s a matter of a harder balancing act in more challenging circumstances,” she added.
Pompeo’s visit coincided with the Indo-Pacific Business Forum in Hanoi on Wednesday and Thursday that showcased “high-impact” private-sector investment from the US. The US State Department touted the event as a way to promote the “United States’ vision of the Indo-Pacific as a free and open region composed of nations that are independent, strong, and prosperous.”
Vietnamese and American companies signed several big deals in the energy and food sectors during the event.
On Wednesday, AES Corp, a Virginia-based power distribution company, signed a deal with state-owned PetroVietnam Gas to build a US$2.8 billion liquefied natural gas (LNG) terminal and power plant in Vietnam’s south central province of Binh Thuan. Another three other American companies also recently finalised plans to build a US$3 billion LNG plant in Mekong Delta’s Bac Lieu Province, which is home to Vietnam’s biggest wind power project – a 62-turbine facility.
The two sides also signed a US$500 million pork trade deal this week, mostly for the greater allowance of US pork to enter Vietnam.
Vietnam has been seeking to import more US goods, including liquefied natural gas, coal and crude oil, to help narrow the trade gap following last year’s threats by Trump to impose tariffs on its products.
Le Hong Hiep, a fellow in the Vietnam studies programme at the ISEAS-Yusof Ishak Institute in Singapore, said Vietnam was interested in the outcome of the US presidential election because it may have certain important implications for US policy towards the region as well as Vietnam-US relations, but he added that the bilateral relationship would continue be strengthened no matter the election result. He added, though, that under a Biden presidency, “bilateral ties may face some setbacks if his administration emphasises democracy and human rights issues’’.
“No matter who wins the election, it’s likely to be business as usual for both sides,” Hiep said, adding that the two countries will continue to work on areas of mutual interest – especially in dealing with China’s rise and its assertiveness in the South China Sea.
Pompeo was the second high-profile figure to court Vietnam recently, following Japanese Prime Minister Yoshihide Suga, who chose the Southeast Asian country for his maiden overseas trip last week. Prime Ministers Suga and Nguyen Xuan Phuc agreed in principle on a pact that would see Tokyo export arms and military technology to Hanoi. The agreement is seen as part of Japan’s attempts to counter Beijing’s assertiveness in the South China Sea, while Vietnam is also ready to support Japanese investment.