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This report surveys potential impacts of ASEAN (Association of South East Asian Nations) on inter-ASEAN affairs and its external relations when ASEAN will enlarge its members to include all nations in South East Asia, and thus fully represent the region. For this purpose, the survey was conducted on Vietnam, Myanmar, Laos and Cambodia from the viewpoint of their economic and political system, and their relations with other member countries. The following is a summary of conclusion from the survey.

ASEAN was established in 1967 to reconciliate its members relations and functioned as an association of non-communist countries in the region. It has achieved political gains which had not been possible without ASEAN for its individual member. This, in return, has contributed domestic political stability of its members.

The nature of ASEAN has gradually transformed in the 90s as the Cold War disappeared. One change is to increase all the countries in the region, and the other one is to tackle internal economic issues. Vietnam joined ASEAN in 1995, Myanmar and Laos in 1997, and probably Cambodia in 1998. It will be an association to represent all the countries in the region.

A typical example of Its new initiative in inter ASEAN economic issues is creation of AFTA (ASEAN Free Trade Area) in 1993. It has an aim to stimulate inter-ASEAN trade and induce foreign direct investment into ASEAN as a whole by reducing import duties on intra ASEAN trade.

Underlying in these new development is a concern about growing economic and military power of People's Republic of , which is a potential threat for the region. ASEAN wanted to attract foreign investment competing with China and cover all the countries in the region to alleviate the influence of China and thus contribute as a leverage against China.

The new movement is, however, a challenge against well established practice of “non-intervention in domestic affairs”. My anmar which just joined ASEAN, and Cambodia which will probably become a member in near future have problems related to ‘democracy ’ and ‘human rights ’. Especially on Cambodia, ASEAN is forced to intervene in the domestic affairs of Cambodia. “Free and fair” election in coming July will be the condition to accept Cambodia's entry into ASEAN, which ASEAN has to judge and tell it; ASEAN has avoided to engage in intra-ASEAN cooperation which has an adverse effects on some of its members through consensus decision- making process. If AFTA is an effective arrangement, it has an adverse effect through relocation of industries in the region. The intra-ASEAN cooperation of actual significance also suffered and complicated because of contagious currency devaluation and resulting recession in 1997.

New members of ASEAN has achieved considerable portion of their aims. The government increased their domestic legitimacy by the acceptance of countries in the region, and expect smooth expansion of foreign direct investment because of their new status as an ASEAN member.. For a while, there is no adverse economic influence and they are bothered to participate some 300 times a year ASEAN meetings. The differences in their level of economy and political regimes are not causing any troubles for ASEAN decision making.

What is now more important for ASEAN is an inability to come to an consensus on common policy to cope with the effects of currency devaluation. Especially Indonesia has become a headache. The inability of ASEAN will substantially reduce ASEAN’s presence, which may eventually affect its new members' attitude toward ASEAN.

If we think of future role of ASEAN such as more peaceful relations between the members and thus contribution to the regional stability, ASEAN needs to intervene in their members’ domestic affairs, and thereby keep its integrity. ASEAN solidarity will work as an leverage against China should it change toward worse, and ASEAN will function as a regional stabilization factor. ASEAN is needed for the stability of both in economic and political order in East Asia.

Thus, has to further promote its cooperation with ASEAN to help its solidarity as an association, especially on the matters related to global environmental issues especially when we consider sensitivity of human right situations in some countries of ASEAN. imm

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mm a. s $ ^ (bwe) (#&: AfMFS, W77^;W 89 90 91 92 93 94 m kxy % mm i 12 8 0 5 8 600 10 632 24.6 77>X 2 10 455 1 465 18.1 3 64 97 1 8 41 200 26 411 16.0 4 3 5 23 229 55 25 316 12.3 5 80 93 30 20 4 5 226 8.8 B# 6 40 60 1 0 6 101 3.9 7 80 3 2 83 3.2 my 8 72 1 72 2. 8 9 9 45 16 7 70 2.7 ## 10 1 11 1 14 31 7 17 64 2.5 11 50 3 4 3 0 9 61 2.4 7 k y tr> 14 0 7 1 7 0.3 47 3 0 5 1 6 20 62 2.4 ASEAN 68 102 1 31 270 261 52 733 29 'off* 449 281 6 104 377 1352 130 2569 100. 0 Myanmar Statistical Yearbook 19 9 5

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ttiBf: Myanmar Statistical Yearbook 1995

114. 8 5^>^-

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87 SE4.11 5^>V-y 3.5 1.2 2.5 0.2 0.5 1.4 1.3 1.6 2.3 1.9 <> 0.0 0.0 0. 0 0.0 0.1 0.0 1.8 0.4 1.7 15.6 y 7/ V 0.0 0.5 1. 1 0.1 0.1 0.0 0. 2 0.0 0.1 0. 0 ASEAN 16.8 18.7 15.0 6.4 9.8 29.9 26.6 18.5 23.5 33.9 ?< 5.1 5.8 8.4 10.2 14.9 13.1 19.6 16.4 17.4 10.0 *0 6. 2 5.4 9. 1 43.0 28.1 13.4 15.0 9. 3 5.0 5.1 ## 12.4 13. 6 7. 1 3.9 6.4 8.4 7.4 9.0 10. 7 5.0 OF 7. 1 6.7 16.9 16.9 12.9 17.7 11.0 16.8 15.0 12.9 0* 7.5 7.7 5.0 3.5 4.6 7.5 6. 5 4. 1 4.4 4.8 6.6 3.0 2.7 1.5 6.3 3.7 6.2 9.4 7.4 4.3 y 32.1 32.5 34. 6 14.1 . 16.4 6.3 7.1 16.4 16.5 23.9 ■ath 100.0 100.0 100. 0 100.0 100.0 100.0 100.0 100.0 100. 0 100.0 tB0f: Myanmar Statistical Yearbook 1995 m: 8 '^7mSEANOTtC^F:FA> V*„

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Academy of ASEAN Law and Jurisprudence(1985), "Vital ASEAN Documents 1967-1984), Manilla,

ASEAN (1997), “ASEAN Economic Co-operation :Trans it ion & Transformation ” ISEAS, Singapore

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PEER (Far Eastern Economic Review) (1997), “Asia 1997 Yearbook A review of the Events of 1997 ”

PEER (Far Eastern Economic Review) (1998), “Asia 1998 Yearbook A review of the Events of 1997 ” Hong Kong Goodman, Allan E. (1996), “Vietnam and ASEAN”, Asian Survey Vol. XXXVI, No. 6, June page 592-600

147 IBRD(1995), “Vietnam: Economic Report on Industrialization and Industrial Policy ” Report No. 14645—VN

Kurus, Bilton(1993), “understanding ASEAN”, Asian Survey Vo 1. XXXVI, No. 8, August, page 819-831

Mating, Mya(1997), "bnrma's Economic Performance Under Military Rule” Asian Survey, Yol. XXXVII,

No. 6, June page 503-524

Narine, Shaun(1997), “ASEAN and the ARF”, Asian Survey, Vol. XXXVII, No. 10, October, page961-978

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Stuart-Fox, Martin,”A History of Laos ”, Cambridge University Press, Britain

Whiting, Allen S(1997), “ASEAN Eyes China”, Asian Survey Vol.XXXVII, No. 4, April page 299- 322

Yuen, Ng Chee, Freeman, Nick J., Huynh, Frank E (1996), “State-Owned Enterprise Reform in Vietnam: Lessons from Asia”, I SEAS, Singapore

148 This study is carried out at the Institute of International Relations, Hanoi, Vietnam. The Director, however, stresses that arguments and findings in this study do not necessary reflect the point of view of any Vietnamese institutions.

VIETNAM’S INTEGRATION INTO ASEAN

S1S H 2 jp: Chapter One

VIETNAM’S NEW FOREIGN POLICY AND ITS POLICY TOWARD ASEAN SINCE SIS LATE 1980s AND ITS ENTRY INTO ASEAN IN 1995

A Vietnamese high-ranking politician and diplomat has remarked that with the Sixth National Congress of the Communist Party of Vietnam (CPV) held in 1986, leadership in Hanoi “began a process of reshaping its world view and reexamining the country ’s reality ”1 in order to face with challenges in a world with rules of the game quite different from the country ’s practices, perceptions and experiences. About six years after that, in a speech given at the Third CPV Central Committee Plenary Conference held in June 1992, the then CPV General Secretary Do Muoi said that “a fundamental shift in thoughts and practices”2 in foreign policy had been made, thus helping complete the search for a grand strategy for the country ’s developments in all fields. A question is, therefore, posed: How Vietnam’s relations with ASEAN were perceived and conducted in the above-mentioned process?

VIETNAM’S NEW FOREIGN POLICY

1 Nguyen Di Nien, “The World Is Changing: How About Us?” (The Gioi Dang Thay Doi, Con Chung Ta) in Vietnam Foreign Ministry, Integrating Into the World and Preserving Oar Naional Identity, (Hoi Nhap Quoc Te Va Giu Yung Ban Sac), (Hanoi: National Politics Publishing House, 1995), p. 33. 2 Do Muoi is quoted in Nguyen Manh Cam, “On The Way To Implement The Foreign Policy With New Directions, ” (Tren Duong Trien Khai Chinh Sach Doi Ngoai Theo Dinh Huong Moi) in Integrating Into the World and Preserving Onr National Identity, p. 160.

149 From the second half of the 1980s, with the renovation process starting in the former Soviet Union, with the consequent rapprochement between the United States and the Soviet Union, between the Soviet Union and China, as well as with the need for reforms getting stronger in Vietnam, Hanoi began to review major economic and foreign policies. Considering that changes in major powers ’ policies represented a golden opportunity for Vietnam to pursue the goals of peace, independence, extended foreign relations and development which were set since its foundation in 1945, 3 Hanoi quickly shifted its overall perception and that of international relations. The discussion began with, among others, a reexamination of its world view. Gareth Porter has correctly observed that trying to re-enter the world and to find a place in the world labor division became the main theme for the discussions among leaders in Hanoi at that time.4 The fast pace of regional and global changes toward the end of the Cold War and relaxation of global tension, as well as unprecedented developments in global economy toward regionalism and globalism also helped quicken the outcomes from these discussions. A general consensus was reached in the Sixth Party Congress in mid-December 1986 that while upholding the two strategic tasks of national construction and defense, Vietnam should start a process of economic reforms, accepting non-state sectors in the economy, and participate in the world labor division. In this context, documents of the Sixth Congress on the one hand attached the importance to consolidating the all-sided cooperation with the Soviet Union and considering it as a monolith in Vietnam’s foreign policy. Yet, on the other hand, they also stressed the process of “internationalization of forces of production ” that led to “inevitable demand for economic cooperation ” and peaceful coexistence between different systems. 5 This new policy had important implications to Vietnam’s economic foreign policies which in turn reflected changes in Hanoi ’s perception as far as security is concerned. It seems that geo-economics had become another source of inputs to the leadership ’s thinking. And with the inclusion of this, it also seems that Vietnam was gradually getting less committed to sticking to ties with a big power, and at the same time more inclined to see interdependence in a positive way. It thus can be collapse of

3 See Yu Khoan “ The School Of Vietnamese Diplomacy ” (TruongPhai Ngoai Giao Viet Nam), in Integrating Into the World and Preserving Our National Identity, p. 432. * See Gareth Porter “The Transformation of Vietnam’s World-View: From Two Camps to Interdependence, " Contemporary Southeast Asia, Vol. 12, No. 1 (June 1990), pp. 1-19. 5 Documents of the Sixth CPVNational Congress, (Hanoi, Su That [Truth] Publishing House, 1986), pp. 34-35.

150 the Soviet Union yet to happen. The discussion also attached importance to revision of the country ’s concept of security and international relations as one of its most important components. Against that background, it was observed that a year and a half had elapsed before a major breakthrough in foreign policy was realized, the 13th CPV Politburo Resolution adopted in May 20th, 1988, for the first time revealed contents of a new concept, namely comprehensive security which had a close relationship with international relations of Vietnam in the new context. “National comprehensive securityas it was termed according to the Resolution will be enhanced by the combination of three factors: a strong economy, an appropriate defense capability and an expanding international cooperation. 6 Influenced by the experiences in the long history of defending the country from foreign invasion, the way to think of enhancing national security mainly according to a Vietnamese General, was the one of conducting war and taking military measures, of building the people ’s armed forces and armies.7 The new approach to security represented a more balanced view. It tacitly recognized that military strength and limited external relations could not ensure effectively the country ’s security. Thus, it attached a diminished importance to the role of military strength by placing it secondly to the overall economic strength while introducing a “comprehensive view” of security. 8 In that context, an argument holding that “the global economic race is now replacing the arms race on the global scale and economic [strength] is becoming the decisive factor in the comprehensive strength of every country ”9 has been officially accepted. The collapse of the Soviet Union in December 1991 heralded a new era for the world as a whole and for Vietnam in particular. “Life without the Soviet Union ” on the one hand created a shock to the ones who were accustomed to relying on outside

6 An excellent analysis on this issue has been offered by Ogasawara Takauki, “Vietnam's Security Policy in the Post-Cambodia Period: Diplomatic Dimension, ” in Dao Huy Ngoc and Hatsunaga Nobuo (eds.) Asia-Pacific and Vietnam-Japan Relations (Hanoi: Institute for International Relations, 1994), pp. 107-108. 7 See Gen. Pham Quang Can, “Strengthening National Defense And Security And Defending The Socialist Republic" (Cung Co Quoc Phong Ya An Ninh, Bao Ye Yung Chac To Quoc Xa Hoi Chu Nghia), in Tran Nham (ed.) There Is Such A Country Of Vietnam: Renovation And Development (Co Hot Viet Nam Nhu The: Doi Hoi Va Phat Trien) (Hanoi: National Politics Publishing House, 1996), p. 322. 8 Ogasawara Takauki, p. 108. 9 See Tran Quang Co’ s article first appeared in December 1992, “The World After The Cold War And Asia-Pacific" (The Gio Sau Chien Tranh Lanh Va Chau A-Thai Binh Duong), reprinted in Integrating Into the World and Preserving Our National Identity, p. 131.

151 assistance. Yet, on the other hand, it was a chance for Vietnam to really divorce with the mentality being dependent on a big power for national construction and defense and to adopt a foreign policy of multilateralizing and diversifying its external relations. Again, it is worth noting that earlier, in June 1991, the Seventh National CPV Congress had asserted that “Vietnam wants to be a friend of all other countries in the world community ”, thus making a breakthrough in its world view, now with the absence of a defined enemy. 10 The Second and Third CPV Central Committee Plenary Conferences, which took place within the first year following the Seventh Congress and discussed foreign policy issues, developed another idea of security, namely the one of mutual security. If the concept of comprehensive security laid an emphasis on national capabilities, then mutual security attached great significance to the international context of its national security. Resolution of the Third Conference pointed out that Vietnam should do more to expand, diversify and multilateralize it foreign relations. The new orientation might come from a greater need to find new partners to fill the vacuum in Vietnam’s foreign relations left by the collapse of the Soviet Union and the absence of other former friendly socialist regimes in Eastern Europe. Yet, by the time order, it first and foremost was based on the recognition of what Hanoi considered “new and prevailing trends” in the international life. These trends include priority for economic developments, diversification of external relations and surges of regional cooperation, which lead to betterment of international cooperation between and among countries in the world regardless of differences in political and economic systems. 11 Against that background, Ogawasara has correctly argued that Hanoi came to an assertion that the security of a country depended not only on its national strength, but also on the international and regional systems that include the country. Therefore, improvement of the country ’s external relations would play an equally important role, together with that played by its economic capabilities, in building the national

10 Documents of the Seventh CPV National Congress, (Hanoi: Su That [Truth] Publishing House, 1991), pp. 36-37. This perception was more consolidated in Vietnam’s latest constitution adopted 1992 which mentioned no concrete external enemy and asserted that “the socialist Republic of Vietnam pursues a policy of peace, friendship and expanded international relations and cooperation with all countries in the world, irrespective of their political and social system, on the basis of respect for each other’s independence, sovereignty and territorial integrity, non-interference in each other ’s internal affairs, equality and mutual benefits.” See Article 14, the 1992 Constitution of Vietnam, (Hanoi: Su That, 1992). 11 Tran Quang Co, “The World After The Cold War And Asia-Pacific”, p. 131-133.

152 comprehensive strength. In other words, the role played by Vietnam’s diplomacy - which has been claimed to have the traditions of “combining national strength with that of the era”, i.e., combining all the forces of the country with the main trends of the world in order to have a comprehensive strength, in the words of a Vietnamese senior official and diplomat 12 - became superior to the diminished role played by military means.13 Hanoi has also defined the relationship between developing its economic strength and promoting its external relations. In an important article on policy, Tran Quang Co wrote:

Recognizing clearly that economic weakness is the possible sources of disadvantages in political, military, social fields and international relations, our Party is determined to lead the country out of poverty and backwardness as soon as possible, thus considering the task of economic developments the top priority. ... In this period of historic significance, everything must be serving the goal of economic developments. 14

The highest goal set by Hanoi, therefore, is to develop the country ’s economy - the most important element of national strength. To this end, its foreign policy has two tasks. First, it has to create favorable external conditions for economic developments at home by normalizing relations with major powers, especially with China and the United States and promoting relations with neighboring countries in the Asia-Pacific region. Second, it has to seek possible opportunities to expand foreign economic relations. Since global relaxation of tension has made the first task possible, the second task become more salient. Nguyen Manh Cam thus said that “foreign economic policy is now the basic contents of our present foreign policy. ”15 In a same context, another Vietnamese senior official and diplomat also talked of the relationship between security, development and influence in the country ’s external activities. The security objective of a country ’s foreign policy, according to him, includes the defense of its national sovereignty and security as well as territorial integrity, while the development objective involves making the full use of

12 See Yu Khoan “The School Of Vietnamese Diplomacy ”, p. 430. 13 Ogasawara Takauki, p. 108. 14 Tran Quang Co, “The Way Ahead” (Chang Duong Phi a Truoc), in Integrating Into the World and Preserving Our National Identity, pp. 194-95. 15 Nguyen Manh Cam, “On the Way to Implement the Foreign Policy eith New Directions, ” p. 166.

153 internationally conducive conditions to develop the country and the influence objective aims at improving its foreign posture. 16 With the impacts of the scientific and technological revolution and with internationalization of the economic life, he argues, thoughts of self-reliance has proved outdated and has been replaced by those of diversification of foreign relations and exploitation of economic comparative advantages and expansion of market, thus better ensuring an “optimal position in international relations ” and more preserving independence and sovereignty. Promotion of the country ’s international relations, politically and economically, therefore, plays a more important role against the use of force to defend national security. 17 Promotion of the country ’s international relations, politically and economically at the same time directly serves the development objective as it could create more “stable relationships ” and seek more economic partners and broaden the markets for the country ’s exports. By placing the country in the mainstream of the world affairs, and joining “its foreign policy can enhance its international posture and influence albeit its internal weakness.”18 In short, the overall objective of national economic development became the highest goal for Vietnam and opened, expanded and diversified foreign political and economic policies have been serving as the indispensable tools for enhancing national strength and capabilities which, together with an adequate armed force, help ensure its security. Vietnamese Foreign Minister Nguyen Manh Cam, therefore, pointed out: “The new external posture of Vietnam has to be fostered by its new strength and its appropriate behavior internationally ” together with its potentials geo-politically. 19 While noting that major power ’s relaxation of tension and increase of cooperation created a ‘golden chance’ for Vietnam to expand its foreign relations, Hanoi also made analysis on possible challenges to regional peace and stability with its mentioning of “complicated developments in the Asia-Pacific region ” as a perceived threat. It is not difficult to see why Vietnam is concerned over regional peace and stability even though it can feel safer by having good relations with almost all countries in the world. Firstly, successes of its new and overall policy for reforms

16 Yu Khoan, “Security, Development and Influence in International Relations ” (An Ninh, Phat Trien Ya Anh Huong Trong Hoat Dong Doi Ngoai), in Integrating Into the World and Preserving Our National Identity, p. 205. 17 Ibid ., 208-209. 18 Ibid ., 211-212 19 Nguyen Manh Cam, “On The Way To Implement The Foreign Policy With New Directions, ” p. 169.

154 largely depends on a very important condition, i.e., stability, both internal and external. At home, the consensus has been reached on the importance attached to stability, especially political stability; and in fact, internal stability in Vietnam for the last several years proved to have contributed to the achievements in economic and social fields. At the same time, when Vietnam is all the more integrating itself into the regional and international communities, its stability is closely related to that in the region and in the world to a greater extent. Secondly, even though peace and stability in the region are now relatively prevailing, the threats to regional peace and stability still exist. As it has been observed by many in Vietnam, there are three categories of threats which may originate from: (1) territorial disputes, (2) spilling-over effects of crisis, which may include economic, political, environmental ones, in external countries, and (3) uncertainties in the relations among great powers. If the above-said potential dangers develop unchecked, they will certainly lead to the regional insecurity, which in turn sabotage economic successes of many countries in the region, including Vietnam. As many have argued, territorial disputes seem to combine all possible conflicts between and among parties concerned. Vietnam still involves in'both bilateral and multilateral conflicting territorial claims. Some territorial disputes have been satisfactorily settled between Vietnam and several other member states of ASEAN. Yet, others remain, especially the one over the Spratly Islands. From national and regional perspectives, territorial disputes are closely related to the question of sovereignty and independence in the settings where nationalism is in the rise in the region. 20 This, therefore, makes territorial disputes a sensitive issue in the national agenda, and "compromises ” over territories may seem impossible at least for the foreseeable future. Thus, the threat to security, namely to territorial integrity, seems permanent and the drive to develop economic and military capabilities to address this kind of threat seems to lead to a regional “security dilemma.” Spilling-over effects of the on-going economic crisis threatens prosperity of the regional states and reveals the insecure aspects of the market, which has been unprecedentedly globalized, as well as new challenges posed by increasing interdependence. It is widely acknowledged that the on-going crisis has been in part

20 See, for example, Kenneth B. Pyle, “Old New Orders And The Future Of Japan And The United States In Asia, ” in IHJ Bulletin, A Bi-annual Publicaton of The International House of Japan, Yol. 17, No. 2, Summer 1997.

155 initiated by mistakes in many regional states’ macro-economic policies which proved to be inflexible against fundamental changes in political and economic situation regionally and globally as well by weak institutions, especially the financial ones. Yet, the pace the crisis spreads to the other regional countries and other regions indicates insecurity in the world economy. What has happened reflects the lack of a regulating body beyond the national level with regard to the international financial and stock markets which have been increasingly integrated. Instability in the regional and global economy therefore, is perceived to be a source of threat to Vietnam which is increasingly concerned over begger-thy-neighbor policies in the self-help settings. This has a close relations to Hanoi ’s talk of world order. Tran Quang Co has, for example, posed several questions about it Will the 1990s be a respite for major powers before a hegemonic struggle among them or a

prelude for an era of peace and developments for the mankind? Will the world economic and political order be the one of equality, justice and mutual benefits for all or the one

imposed by a “closed club” of big powers?21 The notion of world order reflects Hanoi ’s perception of a profound danger that Vietnam, as a small country placed in one of strategically important geographic locations, once again will be drawn into the big power ’s games as a result of their failure to respect the Vietnamese independence. As it sees that relations between and among the major powers of the world are still in the stage of fluidity, this situation gives rise to uncertainties in response to which Vietnam can not entirely devoted resources to economic developments and welfare of its people. As instability breeds insecurity, this situation also makes existing and emerging disputes, especially those involve conflicting claims over territories, more complicated, thus enabling old-aged suspicions as well as political, cultural and religious differences to grow. This thinking has been largely influenced by the country ’s historical experiences in which the pursuit of hegemony has caused negative impacts to its political independence and economic developments.

For the first time in its modern history internal and external conditions are favorable for Vietnam to focus on the process of nation-building. The Vietnamese nationalism has been consolidated with its national independence and unification and

21 Tran Quang Co, “The World Situation and The Opportunity for Our Country, ” p. 97.

156 now the country seeks to strengthen it by the policies that support economic, political reforms and promotion of international relations. These policies have become the key factors for the country to achieve the goal of “a prosperous population, a strong country, and a civilized society “which now serves as the rallying-point for the leadership and Vietnamese people. Looking from this perspective, a realist/neorealist approach to security may be a suitable tool to explain the country ’s concepts of security and threats. Making the full use of all domestic resources and expanding foreign relations for building national capabilities, first and foremost, the economic strength, seems to be the way Vietnam seeks to address threats to its security posed by the state of poverty and underdevelopment domestically and by the absence of an established order regionally and globally. In other words, Vietnam's new concept on security has become a comprehensive one, taking into account both internal and external aspects, balancing both independence and interdependence, and attaching importance to all economic, military, and other means. Yet, a greater emphasis has been laid to expansion of foreign relations, politically and economically to overcome poverty and underdevelopment which represent the biggest threat to Vietnam. Thus, the security perception is the one of internal-oriented character and has important and long-term implications to the country ’s foreign policy. The more Vietnam is occupied with its building of its own capabilities, the more it needs to enjoy friendly relations and effective co-operation with the rest of the world.

VIETNAM JOINS ASEAN-A LONG AND COMPLICATED PROCESS

It may be said that Vietnam joined ASEAN in 1995 as a result of a 10-year diplomatic process starting from August 1985 (when Vietnam announced its intention to withdraw all its troops from Cambodia by 1990) or from the end of 1986 when the renovation line was adopted by the Vlth Congress of the CPV. For a better insight of historical trends, it is perhaps necessary to go back to 1945. Indeed, in spite of historical competition and rivalry in Laos and Cambodia since the 16th century Thai and Vietnamese nations did have short and memorable period of solidarity in critical times. That was typically the case in March, 1945, when the Thai-Lao branch of the Viet Minh league could secure the cooperation of the anti­ fascist Seri Thai organization of Regent Pridi Banomyong to set up a military training

157 camp in Ban Ta Ngoi (Sakorn province, Northeast ). There, for 4 months, nearly 140 men and women were given military training and were thereafter organized into an Independence Army unit which, following Japan ’s surrender, cooperated with Free Lao forces in seizing power in Lao and fighting against the returning French colonial forces (from August 1945). In April 1946, France concentrated an important force and succeeded in routing the Lao-Vietnamese forces in Laos. Thereafter, these troops, along with the Lao Independence Government and nearly 60,000 Vietnamese residents migrated to Thailand where they were given asylum, employment by the Thai government. Also there, they were allowed to organize and train forces for fighting against the French colonial regimes in Vietnam, Laos and Cambodia. 22 After the coup d’etat of November 8, 1947, the Thai government no longer supported the liberation struggle of the 3 countries but it only openly persecuted Vietnamese residents from 1950 when the cold war was prevailing in South East Asia, following the Korean War and Sino-US confrontation in the Korean battlefield. But Burma from January 1948 and Indonesia from August 1945 and particularly from December 1949 continued to give political support to Vietnam’s struggle for national freedom, in spite of the Cold war. This period shows that in the immediate post-World Two context, marked by nationalis t effervescence and a temporary absence of cold war in South East Asia, several nations of the region, including Thailand and Vietnam, could forge ties of solidarity. In spite of its Marxist predilections, the then DRV Government, which could not expect any assistance from socialist force, did not hesitate to promote friendship with other Southeast Asian countries as reflected in the early dispatch, in July 7,1946, of a political representative to Thailand who stayed and worked in Bangkok until mid- June 1951 when he had to leave for Vietnam at the request of the host country. During the 1951 —75 period, marked by intense cold war in Asia, most SEA countries —to the exception of Burma and Indonesia — sided with the US against the Democratic Republic of Vietnam because of fear of communism, coercion and enticement by US. In addition, Thailand also saw the continued division of Vietnam as something beneficial to its position and influence in Laos and Cambodia. US first attempts to pluck the dyke against communism — in fact, against Vietnam’s nationalism — involved, among other things, the establishment of the SEATO Treaty

22 Ref. Major General Le Quoc San, “Overseas Vietnamese Battalion, ” Dong Thap Publishing House,

158 Organization which included two future members of ASEAN (Thailand, Philippines) and gave protection to South Vietnam, Laos, and Cambodia. Events in Laos soon showed that SEATO members were far from unified in their political outlook with respect to the nationalist struggle in Indochina, much to the disappointment of the US and Thailand. In order to reassure and keep Thailand in line, the US, while reacting to the Nam Tha military campaign in Laos, May 1962 —which was mainly designed to compel the Laotian rightists to agree to the formation of the neutral coalition government in Laos and the signing of the Geneva Agreements on Laos and also to retake land grabbed by the Laotian rightist troops — the US sent a contingent of troops and planes to Laos and signed the Rusk-Thanat communique wherein the US pledged to come directly to the aid of Thailand at the latter's appeal without going through consultations with SEATO. From 1965, when the US launched a full-scale war of aggression against Vietnam, Laos and later Cambodia, it was supported in varying degrees by some Southeast Asian countries, including the dispatch of Thai and Filipino troops and military bases put at the disposal of the US for bombing and conducting other operations against Vietnam and the other two countries. But the war failed to achieve the expected results. It was in late 1967, the time when the US war of aggression against Vietnam came to a stalemate and a big offensive —Tet offensive — was being prepared, that ASEAN was established. In hindsight, one could conclude that the decision to set up ASEAN was motivated, among other things, by some Southeast Asian Countries ’ disappointment with US failure in Vietnam and their sagging confidence in US capacity to protect and ensure their security. In North Vietnam, thanks to liberation from foreign rule, in the early 1960s academic circles could undertake the first real academic discussions on the country ’s history and, in particular, the origins of the Vietnamese people. The discussions resulting from research activities dating from the end of 1954 were marked by two different propositions: the first one propounded by Chinese guest researchers who asserted that the Vietnamese belonged to the Chinese family of nationalities; the second one asserted that Vietnam belonged to Southeast Asia both in terms of geography and racial connections. The discussions were very friendly, but most Vietnamese who sided with the second thesis acted in accordance with the dictum of Aristotle: “Platon is very dear to me, but the truth is much dearer”. But politics and

1989, in Vietnamese.

159 anthropological findings did not necessarily go together, and politics did prevail. The DRV must rely on the USSR and China in order to liberate South Vietnam and reunify the country and in so doing was in confrontation with the US and its allies, including a number of South East Asian countries. In fact, all through the 2nd Indochina war, the DRV regarded a number of Southeast Asian countries as anti-communist states, allies and henchmen of US, ASEAN and a US military alliance in disguise. Due to preoccupation with the anti-US war and other ideological and political prejudices, it did not make an objective study of the provisions in the Bangkok Declaration of August 8,1967, including the objectives of regional peace, freedom, prosperity and cooperation of ASEAN and its desire to recruit new members from the region. From 1967 to 1975, DRV had to real expert on ASEAN. Consequently, it did not adopt a positive attitude, as different from China, toward the ZOPFAN declaration of November 27, 1971. It not only rejected both the 5-point proposal, on the Vietnam war, put forth in July 1972 by the ASEAN Foreign Ministers Conference but also rejected ASEAN invitations for a representative of DRV to attend ASEAN foreign ministers meeting in 1973 and 1974 as observer for, among other things, the following reasons: some ASEAN countries have troops fighting for the US in Vietnam, Laos and Cambodia; the US was allowed to maintain military bases on the territory of Thailand and the Philippines in order to threaten the security of the 3 Indochinese countries; many ASEAN countries have not yet adopted a correct attitude toward the Provisional Revolutionary Government of South Vietnam. Following the victory of May 1975, the ASEAN governments, which did detect DRV- China rising contradictions since at least 1968, endeavored to win the friendship of Vietnam while firmly defending their own security and national interests and cultivating relations with China in order to use the latter in restraining Vietnam. On its part, Vietnam did send a number of delegations to promote friendly relations with ASEAN countries, but article 4 of its Four-point policy toward South East Asia (July 1976) which emphasized “real” independence, peace and neutrality for South- East Asia countries and hostile comments of the Vietnamese press sowed doubts in the minds of ASEAN governments. Thereafter, diplomatic relations were established and embassies set up and steps were taken by both sides to improve relations in 1978, but the military action of Vietnam in Cambodia from the end of 1978 brought about a new confrontation between the Socialist Republic of Vietnam (SRV) and ASEAN countries. Notwithstanding the bellicose and genocidal policies of the Khmer Rouge and

160 Chinese schemes, ASEAN countries could no accept Vietnam’s action in Cambodia which, in their view, was contrary to a pledge given by Prime Minister Pham Van Dong not to interfere in the internal affairs of other countries and had serious implications for ASEAN security. The more so because it was associated with an alliance with the USSR, to which Cam Ranh base was provided. In particular, in addition to viewing Vietnam’s troops in Laos as a threat to its Northeastern province, Thailand regarded Vietnam’s new action in Cambodia as destroying the Cambodian buffer zone and directly threatening Thai security and, moreover jeopardizing Thai historical role and influence in both Cambodia and Laos. In ordering its troops to advance into Cambodia, Vietnam only wanted to cope with the danger of China and Khmer Rouge, and failed to take into account the sensitivity of Thailand, a legacy of the competition and rivalry for power between the two countries in Laos and Cambodia since the 16th century. Following the Cambodian events, a new confrontation took place in Southeast Asia, with Thailand requesting China to launch a war against Vietnam (as testified by a meeting between Prime Minister Kriengsak Chomanan and Chinese Charge d'affairs on January 8, 1979, the immediate visit of Deputy Prime Minister Sunthorn Hongladarom to China on January 9, 1979, with a letter of his Prime Minister, and the arrival to Thailand of Chinese Deputy Premier Keng Piao who held extensive talks with General Kriengsak Chomanan) and Thailand’s subsequent decisions to give sanctuaries and assistance to Khmer Rouge and to allow China to channel supplies to the latter through Thailand’s territory. Following two formal statements on January 9 and January 12, 1979, expressing regret about Vietnam’s action and requesting the immediate and full withdrawal of foreign troops from Kampuchea, the ASEAN countries adopted a more comprehensive strategy designed to present Vietnam from threatening, directly or indirectly, the security of Thailand and ASEAN, and to compel Vietnam to withdraw all troops from Cambodia and agree to a comprehensive political settlement in Cambodia as a prerequisite for peace and stability in South East Asia and a balance in big power influence there, which would create the conditions for relations of cooperation with Vietnam. To this end, ASEAN countries strove to prevent Vietnam and PRK from consolidating their gains in Cambodia, to prevent the other countries in the world from recognizing PRK, and to bring world pressure to bear on Vietnam to agree, at an early date, on a political settlement over Cambodia on the basis of withdrawal of all Vietnamese troops from Cambodia. ASEAN did. not support the Chinese policy of long

161 drawn-out war designed to bleed Vietnam. In addition to sanctuaries and assistance to Khmer Rouge and other anti-PRK forces, the main instruments of struggle of ASEAN were diplomatic, political and economics, mobilizing the world to embargo, isolate and bring pressure to bear on Vietnam, and work out a diplomatic blueprints to bring about a solution. Its main arena of struggle was the UNO, the international conferences and discussions with various countries, as also direct discussions with Vietnam. It relied on China, Khmer Rouge and other anti-PRK elements to bring military pressure to bear on Vietnam and PRK, without involving itself directly in the military struggle. Some ASEAN countries were concerned about the rising influence of China in Thailand, and were deeply aware that China, not Vietnam, was the main danger toward Southeast Asia. These apprehensions were raised, among others, in a meeting on March 1979 in Medan between the Indonesian President and the Prime Minister of Thailand. In September 1979, at the UNGA, ASEAN countries could obtain the support of a majority in preventing PRK from occupying the Cambodian seat at the UNO, and in getting adopted a resolution demanding Vietnam to withdraw troops from Cambodia and convening an International Conference on Cambodia.

Until 1985, SRV was mainly concerned with consolidating its control of Cambodia and maintaining readiness for a new defensive war against China, while trying to reassure ASEAN countries of its peaceful intentions. This was reflected in the joint communique of the first Foreign Ministers of the 3 countries of Indochina (January 5,1980) wherein while stressing their militant solidarity the latter expressed the desire to establish long-term relations of friendship and cooperation with other South-East Asian countries on the principles of mutual respect of independence, sovereignty territorial integrity and political system, and of non-use of force or threat to use force in their relations, non-interference in internal affairs and settlement of conflicts by negotiations. Further, in the same statement, the 3 countries stood ready to discuss and sign, on a bilateral basis, a non-aggression treaty with Thailand, Malaysia, Indonesia, the Philippines, Singapore and Burma and discuss the establishment of a South-East Asian region of peace, independence, freedom, neutrality, stability and prosperity. The same message, with various readjustments, was reiterated in the Statement of the July 1980 foreign ministers conference, in which, in particular, PRK make a 4-point proposal on easing tension in Cambodia-Thailand

162 border by means, among other things, of the establishment of a demilitarized zone there. The ASEAN countries did not respond to these proposals and continued to firmly demand the withdrawal of Vietnam troops from Cambodia. But the mid- December 1979 Conference of ASEAN foreign ministers decided to send Foreign Minister Rithaudeen of Malaysia as ASEAN representative to Hanoi for discussions in January 1980. This was followed by visits of Vietnam’s foreign minister to Malaysia, Thailand and Indonesia (May and June 1980).

163 In March 1980, Malaysia and Indonesia put forward the Kuantan formula, the gist of which was: for the sake of peace in Southeast Asia, the USSR and China - pointedly cited by name in the communique — should stop intervening in Indochina. In discussions with visiting Vietnam's Foreign Minister, his Malaysian counterpart affirmed that the formula was designed to achieved a political, and not military, settlement in Cambodia, Vietnam’s security interest and influence in Cambodia was recognized but Vietnam should be “independent ” from both USSR and China. He argued that stability in South-East Asia could be strengthened if the influence of both USSR and China in the region could be eradicated. He also advocated a third choice in Kampuchea, namely, the establishment of a new Cambodian government with both Pol Pot and Heng Samrin. The formula was also designed to warn Thailand against cooperating too closely with the Chinese and their Khmer Rouge allies. The proposal was rejected by both Thailand and Vietnam.23 Further, the Noon Mark Moon incident of June 1980 — Vietnamese troops crossing the Thai border to search and destroy the Khmer Rouge Command supposedly, located there — caused the ASEAN countries and particularly Thailand to harden their attitude. Yet, Indonesia and Malaysia continued their own initiative for a solution. The January 1981 Foreign Ministers Conference of the 3 countries put forward a new proposal: a regional conference be held between the two groups — Indochina countries and ASEAN countries — to discuss the problems of mutual concern in the interest of peace, stability, friendship and cooperation in South-East Asian on the basis of the principles of equality, mutual agreement, and strictly respect for independence, sovereignty and territorial integrity of each country non-imposition of the will by one group on the other and non-interference from outside; after the countries of the two groups conclude a treaty on peace and stability in South-East Asia, a broad international conference will be convened with the purpose of recognizing and guaranteeing the treaty. This was rejected by ASEAN countries, some of which contended that the initiative was designed to legalize the PRK government and secure acceptance for Vietnam’s action in Cambodia. Further discussions were held during the Conference of Non-aligned foreign ministers in Delhi (February 1981), and immediately thereafter Laotian Foreign Minister Phun Sipaseuth made a visit to Indonesia, Malaysia and

23 Indonesia Times, March 22, 1984. See also Richard J. Filings and Sheldon W. Simon, eds. Southeast

164 Philippines to give further explanations. Thereafter, the June 1981 Foreign Ministers Conference of the 3 countries made further readjustments to their previous proposals: to hold a regional conference between the two groups for discussing regional matters of mutual concern with the participation as observers of the UN Secretary General in a personal capacity and representatives of some other countries to he mutually agreed upon. The agenda will be raised in turn by the Indochinese and ASEAN countries on an alternate and equal basis; in case the ASEAN countries are not yet prepared to participate in a regional conference as mentioned above, regional consultation as proposed by some ASEAN countries between countries in the region should be continued to discuss and reach agreement on regional issues of mutual concern; an international conference with a broader participation to be agreed upon by both sides will be convened to acknowledge and guarantee the agreements reached in the regional conference or regional consultation; if the UNO stops recognizing Khmer Rouge, the Indochinese countries will consider the possibility of this international conference being convened by the UNO. And in July 1981, Deputy Foreign Ministers of Vietnam Vo Dong Giang and Thailand's counterpart Arun Panupong held talks in Rangoon in July 1981. ASEAN also failed in its I OK project. The ICK (International Conference on Cambodia) held in New York in July 1981 at ASEAN initiative resulted in greater tension and more impediments to the process of peace: at this Conference, all ASEAN proposals designed to reassure Vietnam and induce Vietnam into talks for a settlement were rejected by China which firmly tried to protect the legal standing and predominant position of the Khmer Rouge and to prevent any solution until the timing thereof fits in with its own scheme. Thereafter, at the September 1981 UNGA, the Lao foreign minister, on behalf of the three countries, put forward “The basic principles of peaceful co-existence, stability, peace and cooperation in South-East Asia”, proposed the establishment of a permanent agency for conducting dialogue between Indochinese and ASEAN countries. While rejecting the new initiative of Laos, the ASEAN countries from 1981 strove to reach agreement with China and the Khmer Rouge on the setting up of a three-party “coalition government of Democratic Kampuchea ” - comprising Khmer

Asian Security In The New Millennium, (M. E. Sharpe, New York, 1996).

165 Rouge and two non-communist Khmer factions - in order to canvas support from the world in order to pressure Vietnam to come to a settlement on Cambodia and also as a means to strengthen the military and political clout of the two non-Communist Khmer parties which, ASEAN hoped, would be able to balance or perhaps outstrip in strength the Khmer Rouge some time in the future. Following the first conference held in Singapore, in 1982, the CGDK Government was set up at a Conference in Kuala Lumpur. At the same time, one could see, since 1981, the new Malaysian Prime Minister Dr. Mahathir announcing that Vietnam was not a major threat to ASEAN. On its part, the July 1982 Foreign Ministers Conference of Indochinese countries proposed a number of non-aggression arrangements with Thailand: reassuring Thailand that Vietnamese troops in Cambodia do not threaten Thailand, reiterate the previous proposal for the conclusion of bilateral treaties of non-aggression with Thailand, readiness to discuss with Thailand measures designed to ensure security of all relevant countries, if Thailand does not allow China to use Thai territory for supplying arms and food to Khmer Rouge for operations against PRK Vietnam would carry out partial troop withdrawal but would take necessary measures in case such action would be taken advantage of, proposal for the establishment of a zone of security on either part of Cambodia-Thai border; the conference also proposed to ASEAN countries the convening of an international conference on South-East Asia with participation from countries of Indochina, ASEAN countries, Burma, 5 permanent members of the UN Security Council and India. Also, from July 1982 Vietnam started partial withdrawal, on an annual basis, of its troops from Kampuchea. In February 1983 the first Summit Conference of Indochinese countries was held. With respect to ASEAN countries, the Summit declaration affirmed that the three countries consistently stand for peace, friendship and good neighbor relations which, in their view constitute an important factor guaranteeing peace and stability in the region, all differences between the two groups must be settled by means of negotiations, all of them, must together oppose outside interference and divisive maneuvers, must not allow foreign countries to use their territories for activities directed against others, and must together build a zone of peace, stability and cooperation in South-East Asia. In particular, the Summit issued a statement which said that all Vietnamese volunteer troops will be withdrawn after an end is put to Chinese threat, to the use of Thai territory for supporting Khmer Rouge and other Khmer reactionaries and against the PRK and when peace and security of PRK,

166 particularly, on Cambodia-Thai border, is assured; yearly withdrawal of Vietnamese troops has been and will be carried out, depending on the security in Cambodia, but measures will be taken in case such troop withdrawal are taken advantage of. Further on September 15, 1982, Lao Foreign Minister Phoune Sipaseuth addressed notes to the 5 ASEAN foreign ministers explaining that Vietnamese troops were in Cambodia to cope with the Chinese danger, Thai perception of threat from Vietnamese troops stationed at the Cambodia-Thai border could be settled by PRK proposal on a demilitarized zone, and reiterated the proposal for a regional conference between the two groups of countries. Thereafter, at the Conference of Non-Aligned foreign ministers held in New Delhi in March 1983, the Malaysian foreign ministers proposed to Vietnam a conference between ASEAN, Vietnamese and Laotian government (minus PRK). Then, in September 21, 1983, the ASEAN Foreign Ministers in a joint statement advocated the enforcement of the right of self-determination and national reconciliation in Cambodia, implied the members of the PRK government would have a political role in Cambodia, reiterated the demand for Vietnam troop withdrawal but added that the next troop withdrawals of Vietnam should be carried out gradually, from each specific part of Cambodia starting from the extreme Eastern part on the Thai-Cambodia border. In February 1984, Indonesian Commander-in-Chief General Murdani paid a visit to Vietnam and stated that Indonesia did not believe Vietnam was a danger to South-East Asia. At almost the same time, a similar statement was made by President Soeharto while receiving the visiting West German president. When Vietnam's foreign minister visited Jakarta in March 1984 President Suharto proposed a negotiation formula involving no participation of the PRK Government but giving Vietnam a peace-keeping role in Cambodia. But Vietnam declined. By then, it was clear that the struggle conducted by ASEAN did give Vietnam substantial difficulties and caused Vietnam to seriously take into account the interests and stand of ASEAN. But most ASEAN diplomatic initiatives for a settlement came up against numerous difficulties and were deadlocked because of the reaction of the Khmer parties, China, some ASEAN members as also Vietnam, and thus ASEAN could not by itself being about a solution acceptable to all. That was a substantial weakness of ASEAN, which was further compounded by the fact that the war in Cambodia had

167 become a low-intensity war and cotdd hardly be described as a serious threat to Thai and ASEAN security. But Vietnam, for reasons of its own (prolonged war both in Cambodia and on Vietnam-China border, economic stagnation, diplomatic isolation, a start in the normalization process of Sino-Soviet relations, obvious desire of ASEAN and Western countries to normalize relations with Vietnam provided a political solution is given to the Cambodian problem) came to find that a political settlement in Cambodia was possible and desirable. In August 12, 1985, it announced its intention to withdraw all its troops from Cambodia in 1990 provided there were a political settlement. Thereafter, in March 1986, an 8-point proposal was put forward by the CGDK after a conference held in Peking, which proposed, among other things, talks on a time table for the withdrawal of Vietnam troops from Cambodia, the setting up of a four- party government which would include the Phnom Penh government and would be led by Sihanouk as President and Son Sann as prime minister, elections to be held by the four-party government under the watching of UN observers. This shows that China wanted to win the support of ASEAN countries in imposing its solutions. On the part of Vietnam, the VTth CPV National Congress was held in December 1986 and its resolutions emphasized the CPVs determination to renovate its leadership and listed a series of new policies of renovation in all fields. The renovation line on foreign relations, including the settlement of the Kampuchea problem and improved relations with ASEAN countries was covered by three, important documents, namely the CPV Plenum Conference ’s Resolution No. 32 adopted in July 8, 1986, the Resolutions of the Vlth Congress in December 18, 1987, and the above-said Resolution No. 13 in May 20, 1988. While still emphasizing close relations with the socialist countries, the relevant important ideas in these 3 documents are as follows:

■ in view of the politics of Western and ASEAN countries, as also of China, it is possible to achieve peace in Southeast Asia, ■ reach a settlement in Kampuchea, and readjust the relationship among Vietnam, Laos and Kampuchea, i.e., the situation of the 3 countries and the relations among them have entered a new stage, the party of each independent country must be responsible to its own nation, whether Laos and Kampuchea would advance to socialism or develop along the line of nationalism and people ’s democracy is for

168 them to decide, continuing the old pattern of relations is not in keeping with the changed situation and cannot strengthen friendship among the three countries, to withdraw Vietnam troops form Kampuchea as also from Laos, ■ switch to a new stage of peaceful coexistence, preserve peace in Indochina, South East Asia and Asia-Pacific (Vlth), turn Southeast Asia into a zone of peace, stability and cooperation, create a framework of peaceful coexistence, friendship and cooperation among Southeast Asian nations, ■ develop relations with all countries on the basis of peaceful coexistence, ■ have more Mends and less enemies, to diversify relations, with particular attention to India, Indonesia, and other Southeast Asian, East Asia-Pacific nations.

In fact, troop withdrawal was the only item over which Vietnam could more or less take independent action, work out and implement its own time-table in spite of Phnom Penh's desire to see it delayed: in November 29, 1987, 6th withdrawal of Vietnam troops; in May 26, 1988, 7th withdrawal of Vietnam troops (50,000 troops including the High Command, and withdrawal of the remaining Vietnamese troops 15 km from the western border); statements of January 6, 1989, and April 5, 1989, on complete withdrawal by September 1989 even in the absence of a political settlement, a promise which was fully carried out in September 26,1989 in spite of the failure of the Paris International Conference of July and August 1989. This was also coupled with the complete withdrawal of Vietnam troops from Laos in 1988. The achievement of a political settlement involved delays because of the differences among Cambodian parties and foreign powers. While continuing periodic private discussions with USSR to find out the latter’s policy and tactics (with regard to Cambodia solution and in particular, Sino- Soviet relations), Vietnam tried to and helped to promote talks on a Cambodian solution through several forums and, in particular, through the ASEAN-Vietnam channel, the Sino-Vietnam, US-Vietnam channels which took place in tandem with talks among Cambodian parties (Sihanouk-Hun Sen talks, 3-party and 4-party forum): The cocktail formula, agreed upon between Vietnam and Indonesia in July 29, 1987, was, after some initial difficulties, carried out in the forms of JIM 1 (July 1988) and JIM2 (February 1989) which, for the first time, brought together the 4 Cambodian parties, resulted in two final declarations which noted that the Cambodian problem

169 must be solved by political means and by the Cambodian people itself, 2 key issues (withdrawal of Vietnam troops, an end to military assistance and intervention form outside; eliminating a return of the policy to genocide). In September 1989, ASEAN and Vietnamese representatives submitted a joint draft resolution on Cambodia to the Non-aligned summit. And in October 1990, ASEAN and Vietnamese representatives again cooperated on a joint draft UN resolution concerning Cambodia. Private talks between Sihanouk and Hun Sen started since early December 1987 and talks among the three Khmer Parties started in November 1988. But until mid-1991, talks among Khmer parties could not reach agreement on internal Cambodian issues mainly because Sihanouk experienced tremendous pressure form China and the other 3 Khmer parties, Khmer Rouge tried to block agreement, while PRK, while expressing a certain good will (amending its Constitution with respect to the name of the state, flag, religion, foreign policy) was still lukewarm toward a political settlement which, in its view, might involve division of power, defeat in elections, slaughter of the people and its officials by Khmer Rouge and even advocated long drawn-out military struggle to win victory. PRK was also reluctant to cooperate with Sihanouk. From mid-1991, it agreed to enter the path of real negotiations for a settlement24 and agreed to giving Sihanouk considerable powers at the June 1991 Pattaya conference. Mainly because of the differences among Khmer parties, the Paris International Conference, held prematurely in July and August 1989, ran into deadlock. Vietnam and PRK perceiving the other side’s proposal as designed to abolish the PRK government and the status quo. The same deep differences also accounted for the failure of an international meeting on Cambodia held in Jakarta from February 26-28, 1990. In spite of Chinese military action in the Spratlys in March 14, 1988, Vietnam endeavored to open talks with China, which stared from mid-January 1989. At the third round of talks, both sides agree on 4 basic issues: political solution, respect for the sovereignty and right of self-determination of the Cambodian people, equality in strength between both sides in the SNC, inspection of troop withdrawal and an end to assistance. But China reserved its stand at the 4th round in Hanoi (June 1990) when it demanded, contrary to the Tokyo agreement between Hun Sen and Sihanouk a SNC

M The Foreign Ministry of Foreign Affairs Southeast Asian Department Chronology.

170 having the authority of a provisional government, in which all 4 parties were equally represented and Sihanouk standing above all the parties. This resulted in a deadlock. Soon thereafter things could move more quickly. The vacuum created by Vietnam troop withdrawal, which was perceived as militarily beneficial to Khmer Rouge, and the collapse of Eastern European government in 1989 made the US feel that it was essential and possible for it to manipulate the big powers in imposing a Cambodian solution. Early in 1990, talks among the 5 big powers, with US playing the main role, started discussing concrete terms of a Cambodian settlement. In July 16,1990, the big five finalized two frame documents for a comprehensive settlement, and in July 18, 1990, the US Secretary of State Banker came out with a statement in which he recognized that Vietnam had withdrawn troops from Kampuchea and, as a result, Phnom Penh government had become the main force likely to prevent Khmer Rouge from returning to power, decided not to vote for the CGDK to take the Cambodian seat at the UNGA in the fall and proposed US-Vietnam talks on the question of Cambodia as a condition for normalizing US-Vietnam relations. US- Vietnam talks stared in August 6, 1990, but moved very slowly because Vietnam must respect PRK views concerning internal Cambodian problems. Then in September 9, 1990, Hun Sen, who attended the 4-Khmer-party talks in Jakarta, agreed with the other 3 groups to accept P5 decuments and to set up a Khmer Supreme National Council. As a result, the US-Vietnam talks in September 21, 1990, could achieve agreement on a Cambodian settlement.

It was in the context of progress in US-Vietnam talks that China, reverting its stand of August 24, 1990, rejecting any possible summit meeting with Vietnam, took the initiative in inviting Vietnamese top leaders to a summit meeting in Cheng Tu in early September 1990. The aim of China was, however, to pressure Vietnam into accepting Sihanouk as Chairman of SNC and as the 13th member thereof. This would serve to enhance the status of China among the big powers. Thereafter, talks among the Cambodian parties faced new difficulties, including the State of Cambodia ’s objection the second set of UN documents of November 26, 1990 (Proposed structure of the agreement on a comprehensive political settlement of the Cambodian conflict) which was perceived as aimed at the de facto abolition of the government and army of SOC, direct UN rule over Cambodia with no guarantee to prevent a return to power of Khmer Rouge. Those difficulties were solved

171 some time later through several rounds of talks among Khmer parties and, particularly, between Hun Sen and Sihanouk which could a solution whereby SNC request P5 to let Cambodian internal problems be decided by SNC (thus leading to the deletion of provisions in UN documents about abolition of SOC and its armed forces). From June 1991, general agreement was achieved among the 4 parties in the SNC and by July 26, 1991, SOC leaders welcomed the result of the July 17, 1991 SNC informal meeting in Beijing with Indonesian representatives (reiterated acceptance of UN frame documents, Sihanouk as SNC Chairman, representatives cease-fire by troops of SNC members, a stop to foreign military assistance to be respected by all parties, withdrawal of foreign troops and cease fire and no more foreign military assistance to be effectively controlled by the UN.) In October 23, 1991, the Paris agreement on Cambodia was signed and in mid-November Sihanouk returned to Phnom Penh. While at the latest stage it was the Permanent Representatives of the UN Security Council which played the decisive role in bringing about a settlement on Cambodia (although Indonesia co-chaired the Paris Conference), Vietnam had shown all along its desire to see ASEAN and Vietnam cooperating for the sake of peace in Cambodia. Since 1987, as Vietnam implemented its line of renovation and proceeded toward a political settlement of the Cambodian conflict, ASEAN countries also took steps to combine the solution of the Cambodian problems with broader attempts to cope with the post-cold war situation that was about to emerge in the Asia-Pacific region, while gradually improving relations with Vietnam in order to encourage Vietnam’s new policy trends and to preempt the access to the Vietnamese market. The year of 1987 saw the third ASEAN Summit which took note of the establishment of economic blocks and increasing protectionism that are likely to affect ASEAN economies and took a number of interim measures to cope with this situation, including increased cooperation with industrialized countries and increased intra- ASEAN trade, and the holding of the first Round Table Conference in Kuala Lumpur on Asia-Pacific Cooperation. In the same year, Mr. Vo Van Kiet, as deputy prime minister was invited to visit Indonesia, while President Aquino of the Philippines stated that Vietnam was not a threat to her country. Malaysia also hosted a Malaysia- Vietnam symposium in Kuala Lumpur. In 1988, while Vietnamese top diplomats and their ASEAN counterparts

172 continued visits and talks in connection with Cambodia, there were also mutual visits by defense ministers of Indonesia and Vietnam, visit by the Chairman of the Defense committee of the Philippines, by the Minister of culture to Thailand. But more important things were the desire expressed by Prime Minister Chatichai of Thailand to turn Indochina from battlefields to markets and the statement by the Philippines foreign minister agreeing to Vietnam joining ASEAN in the future. (One could hear similar statement in the following years from other ASEAN statesmen.) An important event in 1989 was the successful visit of Thai foreign minister Sitthi Savetsila to Hanoi in January. The visit was considered very successful by Thai opinion as reflected in the cordial atmosphere, a breakthrough on Cambodia including a joint pledge to work together in resolving the conflict, and in particular the view of the accompanying officials and academics who no longer saw Vietnam was a threat to Thai security. Thailand also organized a symposium of transfor ming Indochina into market. Mutual visits by two parliamentary delegation of Thailand and Vietnam. Also two big groups of Thai businessmen visited Vietnam. Malaysian prime minister Mahathir also welcomed Chatichai statement on transforming Indochina into markets. Air links were established between Jakarta and Ho Chi Minh City. The complete withdrawal of Vietnam troops from Kampuchea in 1989 coincided with the fall of East European socialist regimes and acute economic and political crisis in the USSR, which deprived Vietnam of almost all of its traditional markets, sources of aid and imports. Vietnam had to fend for itself by switching to the market economy (improving the contract system in agriculture with attendant freedom to trade in agriproducts, liberalization of internal trade, raising the bank lending rate to combat inflation), attracting EDI (promulgation of the December 29, 1987, law on foreign investment) and trading with Asia-Pacific countries. The latter, including many ASEAN countries, in spite of US official embargo and Chinese de facto embargo, did increase trade with and investments in Vietnam even before a settlement was reached over Cambodia.

In 1990, while military goodwill visits continued to be exchanged between Thailand, Malaysia and Indonesia and Vietnam, economic relations received distinct attention: Prime Minister Chatichai stated that as a settlement was in sight it was necessary to put a gradual end to the policy of isolating Vietnam, and a few months later the Thai Minister of Trade visited Vietnam; Lee Kuan Yew and Singapore

173 promised to allow businessmen to invest in Vietnam following the conclusion of an agreement over Cambodia; but Malaysia and Philippines went a step further: Malaysia established air links between Kuala Lumpur and Ho Chi Minh City, called on its businessmen to invest in Vietnam, and started negotiating with Vietnam agreements on protecting and guaranteeing investments; the Philippines bought half a million tons of Vietnamese rice; several companies and banks of Indonesia requested to be allowed to establish Representative offices in Vietnam. In the political field, the most important event was a state visit paid to Vietnam by President Suharto. While the Philippines concluded an agreement with Vietnam on yearly exchange of views between the two Foreign ministries, Malaysia held talks with Vietnam on the problem ofrefugees. In 1991, as they came near to the conclusion of the Cambodia agreement, ASEAN countries and Vietnam developed further their political and economic relations. Prime Minister Mahathir called on the remaining Southeast Asian countries to sign the Bali Treaty of Amity and Cooperaton, and Foreign Minister Alatas said in the forthcoming future there should not be two blocks of countries in South-East Asia but only one. Prime Minister Vo an Kiet was invited to attend a symposium on economic strategy held in Kuala Lumpur, while two symposiums were held in Hanoi with the participation of ASEAN academics on Vietnam’s renovation, ASEAN experience, economic and political cooperation between ASEAN and Vietnam. Visits by military and political figures continued. On a multilateral level, Indonesia start holding workshops on the solution of the dispute in the South China Sea, with participants from all countries concerned, including China and Vietnam. Also, in early November 1991, Vietnam and China officially normalized relations. With the signing in October 23, 1991, of the Paris Agreements on a Comprehensive Political Settlement of the Cambodia Conflict, Cambodia ceased to be a major hindrance to development of ASEAN-Vietnam relations, while ideological barriers were seriously eroded by the collapse of many socialist regimes and the attendant end of the cold war which gave rise to new challenges that all Southeast Asian countries had to face together. In particular, ASEAN countries felt deep concern at the increasing ability and willingness of China to project military power across maritime Southeast Asia on behalf of its claim to sovereignty over the entire South China Sea. Thus, ASEAN concerned shifted from Cambodia to the Spratly Islands and the South China Sea. Further, the normalization or improvement of Vietnam’s

174 relations with many countries in the world, and particularly the big power (normalization of relations with China in November 1991, relaxation of US opposition to the settlement of Vietnam’s international debts and new lending to Vietnam by IMF and World Bank in April and July 1993, lift of US embargo against Vietnam in February 1994.) That is the setting which led to the entry of Vietnam into ASEAN. While the years from 1992 were marked by mostly good news in the field of foreign relations, including renewed economic assistance from Japan in the end of 1992, Vietnam concentrated on improving relations with ASEAN states. Inl992, Prime Minister Vo Van Kiet completed his successful visit to ASEAN countries and received high-level missions in Hanoi, and particularly Prime Minister

Mahathir and Senior Minister Lee Kuan Yew. Most ASEAN countries took steps to promote business relations and signed a number of agreements to that end. Further, at the ASEAN Ministerial meeting in July 1992, Vietnam signed the 1976 Bali Treaty of Amity and Cooperation and was immediately granted “observer ” status in ASEAN. The same ASEAN Foreign Ministers Meeting adopted a joint declaration on the South China Sea asking all parties to the dispute to exercise restraint and settle their differences peacefully. As a result of this, China is on the diplomatic defensive with ASEAN seeing China and not Vietnam as a threat to the region. This indeed represented a big difference with the situation in the 1980s when Vietnam was regarded as the danger to Southeast Asia and China as one of the region ’s protectors. Vietnam’s leadership could see how close and friendly relations with ASEAN were beneficial to the country. Encouraged by the post-1991 situation, while attending the July 1993 ASEAN foreign ministers conference in Singapore, Foreign minister Nguyen Manh Cam told the press that Vietnam would like to become a full member of ASEAN and APEC. This along with other soundings received encouraging responses. Further, many friends from Western countries, including Japan, also advised Vietnam along the same line. As a result, it was with full internal consensus that Vietnam made an application for ASEAN membership.

In January 1989, in a round-Trade Conference of Asian-Pacific Journalists held in Ho Chi Minh City, the then CPV General Secretary Nguyen Van Linb announced that “the Socialist Republic of Vietnam is willing to develop relations with the ASEAN countries and other countries in the region. ” Also in this conference the

175 then Foreign Minister Nguyen Co Thach stated that “Vietnam is ready to join ASEAN.” Momentum had gathered in favor for Vietnam’s admission into ASEAN. In October 1991, the Paris Peace Accords on Cambodia were signed. Together with the collapse of the Soviet Union and reduction of global tension, “golden opportunities ” were available for Vietnam to implement the policy of multilateralization and diversification win with a greater emphasize was laid on “developing relations of friendship with Southeast Asian nations and striving for a Southeast Asian of peace, friendship and cooperation, ” as spelled out by the Seventh Congress. Important landmarks in the improvement of Vietnam-ASEAN relations include the visit by Prime Minister Vo Van Kiet to Indonesia, Singapore, Thailand in December 1991, to Malaysia January 1992 and to the Philippines and Brunei in February the same year. Since then, developments of relations could he felt in many fields. Within the span of two years, exchanges of visits took places in which about 40 agreements including those on scientific, technological cooperation, mutual investment protection, Post and Aviation, avoidance of double taxation, etc. The volume of two-way trade greatly increased. As of 1994, ASEAN countries consumed or re-exported about 30-40% Vietnam’s goods. Out of 9 $ US foreign direct investment, about 15% came from ASEAN countries. 25 In response to suggestions by ASEAN leaders regarding Vietnam’s signing of the Bali Treaty since 1990 and the statement in this regard by the ASEAN summit meeting in January 28, 1992, in Singapore, in July 22, 1992, in the 25th ASEAN AMM, Vietnam together with Laos officially signed the Bali Treaty and were admitted as observers to ASEAN.

As an observer of ASEAN, since 1992, Vietnam attended ASEAN annual AMM and since 1993, it joined the ASEAN-Vietnam and invited to take part in the ABF as one of the co-founders of this forum. The year of 1993 also witnessed the country being invited to take part in joint projects under ASEAN Functional Cooperation Schemes in 5 fields, namely science and technology environment, health care, culture and information, social development. As far an membership in ASEAN is concerned, since February 1993, Vietnam stated that it would join ASEAN in “appropriate time”. To respond to this statement,

25 Yu Khoan, “Vietnam and ASEAN, ” Commnist Review, November, 1994, p. 31.

176 ASEAN announced that it would want Vietnam to join the organization as early as possible. In April 1994 during his official visit to Indonesia, Vietnam’s President Le Due Anh announced that Vietnam was preparing to join ASEAN. ASEAN leaders also positively resonated, even saying that social and political differences did not represent obstacles to Vietnam’s membership into ASEAN.26 In the 27th ASEAN AMM held in Bangkok in July 1994, ASEAN came to a consensus that it would welcome Vietnam to the organization and decided to set up a working group to consult an assist Vietnam to conclude the necessary formalities for admission. In October 17, 1994, Vietnamese Foreign minister send a letter to his Brunei counterpart, incumbent president of ASEAN Standing committee, officially filling the application to join ASEAN. And the process reached its destination when in July 28, 1995, Vietnam was accepted as a full member of ASEAN. Incidentallly, the US quickly took the final decision to normalize relations with Vietnam in July 11, 1995, with full awareness of Vietnam’s scheduled admission to ASEAN in July 28. Also the year of 1995 witnessed new expressions of solidarity from ASEAN to the Philippines when the latter discovered in February Chinese installations in the eastern extremities of the Spratlys only 100 miles from Palawan Island. The strong ASEAN declaration of support for the Philippines ’ appeal to prohibit the occupation of additional island led to a more conciliatory Chinese stance. For the first time, China agreed to multilateral discussions on the South China Sea islands. Following this China also agreed to discuss the disputes on the basis of recognized principles of international low, including the 1982 Law of the Sea. Added to this was a July 24, 1995, statement of the US State Department emphasizing US interest in ensuring “the freedom of navigation in the South China Sea... and in the principle that international disputes be resolved by peaceful diplomatic means”, a statement which, by its timing, was designed to suport ASEAN’s position on the Spratlys. Should also be mentioned the conclusion, in the same year, of a framework agreement between Vietnam and EU, which opened the way for the further integration of Vietnam into the world economy. Thus, Vietnam’s entry into ASEAN was immediately preceded or accompanied by a series of gestures of friendship and support from various powers which show that for Vietnam, friendship with ASEAN is indeed a prerequisite for friendly relations with and support from many other countries, including important powers.

26 Chronology of Vietnam-ASEAN Relations, The Vietnam Foreign Ministry Southeast Asian Department.

177 Chapter Two

INTEGRATION INTO ASEAN: POLITICAL, ECONOMIC CHANGES IN VIETNAM FOLLOWING ITS MENBERSHIP IN ASEAN

POLITICAL INTEGRATION AND FUNCTIONAL COOPERATION

After Vietnam jointed ASEAN in 1995, a National Committee for coordination of Vietnam’s multifaceted cooperation within ASEAN frameworks was established. The National Committee, headed by a Deputy Prime Minister, is an organ for coordinating activities of Ministries, other institutions as well as of Massive Organizations taking part in cooperation with ASEAN. It is supported by the ASEAN National Secretariat (placed in the ASEAN Department of the Foreign Ministry) and the Office of the National Committee (placed in the Government Office). It thus can be said that all the political, economic and social establishments of Vietnam have been mobilized for increased cooperation with ASEAN. Besides, other important establishments within the ruling Party and National Assembly frameworks have also been actively taking part in the process. This chapter will study how Vietnam’s institutions have been organized and adapted to activities of Vietnam since its membership to ASEAN. Our study will focus on two main sections: political and functional; and economic cooperation and integration.

POLITICAL COOPERATION

IfS 1The Government Structure

1.1. ASEAN Summit Meetings: In December 1996, the then Vietnamese Prime Minister Vo Van Kiet attended the official ASEAN Summit held in Thailand. In December 1997, new Prime Minister Phan Van Khai attended the unofficial ASEAN Summit in Malaysia. According to the 1996 Summit decision, Vietnam will host the next ASEAN

178 Summit Meeting in December 1998 in Hanoi. Preparations are underway for the Summit. A National Preparation Committee thus has been held under the chairmanship of Mr. Nguyen Manh Cam, Deputy Prime Minister and Minister of Foreign Affairs. Vietnam is responsible for drafting a “Plan of Actions “ for the ASEAN Heads of States and Governments to approve during the Summit.

1.2. ASEAN Ministerial Meetings: Following its membership into the organization, Vietnam is playing a more important role in the AMMs. Its role was significantly played in the process of admitting the two new members, namely Laos and Myanmar. Both Foreign Ministers of these countries had visited Vietnam for consultations and support before the two countries could join ASEAN. Vietnam also contributed to the ASEAN decision made during the Unordinary ASEAN AMM in the aftermath of July-1997 events in Cambodia. In that meeting, a consensus was made to postpone the membership of Cambodia as well as to facilitate a group of foreign ministers of Thailand, Malaysia and Indonesia acting on behalf of ASEAN to help stabilize political situation in Cambodia.

1.3. ASEAN Regional Forum (ARF) : Vietnam now takes part in ARF as a full-fledged member. In ARF, Vietnam has been assigned to coordinate relations of ASEAN with New Zealand and Russia as ASEAN dialogue partners and from 1997, Vietnam has chaired meetings the ASEAN- New Zealand and ASEAN-Russia dialogues.

1.4. ASOM and ASEM: Senior officials of Vietnam regularly attend ASOM meetings. With regard to ASEM, Vietnam now is a member of this framework of ASEAN-Europe dialogues, having participated the first meeting of this kind in Thailand in March, 1996, and going to be a participant in the second meeting held in London in 1997.

As far as organizational structures for political cooperation are concerned, the Ministry of Foreign Affairs (MOFA) has held the principal coordinating responsibility. In 1995, the ASEAN Department was established with the followings functions: 1. to facilitate Vietnam’s participation in AMM, ASOM, ARF and Summits.

179 (Specifically for ASEM, a body consists task-force groups from the Second Asian Department, North- and Western European Department, and the ASEAN Department was established to deal with the ASEAN process) 2. to facilitate and coordinate functional cooperation of all the institution of Vietnam in ASEAN 3. to facilitate and coordinate economic cooperation of Vietnam in ASEAN. This function, however, by the end of 1998, will be the main responsibility of a newly established Department for Integration in the Ministry of Foreign Affairs.27

Since 1991, The Institute of International Relations (IIR), an academic body of the MOFA, has participated activities of ASEAN Institutes of Strategic and International Studies (collectively known as ASEAN/ISIS). ASEAN/ISIS represents an important venue for discussion on policy issue among scholars closely affiliated with their respective governments. In 1996, the IIR held the position of Chairmanship of ASEAN/ISIS and was actively playing an important role in drafting the Bangkok Declaration for the ASEAN Bangkok Summit and the ASEAN 2020 Vision which the ASEAN leaders adopted in their meeting in December 1997.

The Vietnamese National Assembly

The National Assembly of the Socialist Republic of Vietnam enjoys the supreme right to adopt the constitution and laws, and the right to make Vietnam’s fundamental domestic and foreign policies, thus playing an especially important role in Vietnam’s process of jo ining ASEAN. The two main activities of Vietnam’s National Assembly in participating in the process of Vietnam’s integrating in ASEAN include its direct participation in the amendments of, and additions to Vietnamese laws so that they confirm to Vietnam- ASEAN cooperation activities; and Vietnam’s National Assembly joining ASEAN Interparliamentary Organization (AIPO).

Participating in Law Makting. To serve Vietnam’s cause of industrialization,

27 Interviews with Vietnamese Dilomats and officials.

180 modernization and economic development expand economic cooperation with foreign countries in general and to promote economic cooperation with other ASEAN countries in particular Vietnam’s National Assembly has adopted, amended and supplemented the Law on Foreign Investment in Vietnam, the Law on Import and Export Duties, and the Law on Commercial Taxes.

■ The Law on Foreign Investment in Vietnam, adopted in December 29, 1987, by Vietnam’s National Assembly, twice amended in 1992 and 1996, aims to encourage foreign investors into Vietnam on the basis of respect for Vietnam’s independence, and sovereignty and for the respect of Vietnam’s lows, of equality and mutual benefit. The Law ensures that the Socialist Republic of Vietnam protects the ownership of investment capital and other legitimate rights of the foreign investor; create favorable conditions and provide simple and brief procedures for foreign investors investing in Vietnam. The Law clearly defines the fields for investment, the areas for investment, the forms of investment, the measures to ensure investment, and the rights and obligations of foreign investors. In 1996, after Vietnam became ASEAN member, the amended and supplemented Law laid emphasis on investment on the sphere of producing exports, supplemented the areas for investment in rearing, growing and processing agricultural, forestry and aquatic products, which are areas in which Vietnam can promote cooperation with other ASEAN countries. ■ The Law on Impact-Export Duties, first introduced in December 26, 1991, and later revised in July 5, 1993, aims to increase the efficiency of export-import activities, to expand international economic relations, to boost, domestic consumption, and provide a source of capital for the state. The Law provides for the goods enjoying tax exemption, the goods which have to pay taxes, and the levels of taxes. After Vietnam joined ASEAN, this Law was amended and supplemented. But, on the basis of this Law, the Government issued a Decree on Customs, the Commerce and Finance Ministries worked out a list of goods exempt from taxes for each stage, which is in conformity with AFTA program and with the development of Vietnam’s economy. Together with Vietnam’s participation in drawing up the ASEAN Agreement on Customs, Vietnam’s National Assembly is preparing to adopt the Law on Customs on the basis of the existing Decree on Customs.

181 ■ The Commercial Law, adopted in May 10, 1997, by the National Assembly, aims to develop the State-controlled, socialist-oriented multi-sectoral commodity economy in the direction of the market mechanism. It also aims to develop the domestic goods and commercial services market, expand trade exchanges with foreign countries, help increase accumulation, and promote the whole country ’s rapid economic growth rate. The Commercial Law is a major contribution to the development of trade relations between Vietnam and ASEAN, Vietnam and the US and other countries, paving the way for Vietnam’s joining APEC and WTO.

While taking part in cooperation with ASEAN Vietnam’s National Assembly must consider the amendment and supplementation of the other existing laws to suit the process. For example, on the problem environment, ASEAN is considering raising the environment standards to international standards, or creating a common standards for ASEAN. Therefore, Vietnam’s National Assembly must also consider the amendment and supplementation of the Law on Environment which was adopted by it on 27 December 1993. Taking part in extended political-social cooperation in ASEAN, Vietnam has participated in the program against corruption, and the program for cooperation against crimes and drugs. The Criminal Code of the Socialist Republic of Vietnam, adopted by the National Assembly on June 27, 1985, has referred to these two crimes. However, after Vietnam joined ASEAN, the need to bring to perfection the Part on Crimes in the Criminal Code, especially on the two above-mentioned crimes, has led to the Law on Amendment of and Addition to a Few Articles of the Criminal Code, which was adopted by the National Assembly on 10 May 1997. Regarding crimes of corruption, the amended and supplemented Law further stipulates the degree of penalty for specific cases. On drug-related crimes, the amended and supplemented Law adds a new Chapter, namely “Crimes on Drugs ” to the “ Part on Crimes” of the Criminal Code, raises the degree of penalty and makes more detailed the penalties regarding specific amounts in all forms of storage, trading, transporting, producing and using drugs. The amendment of and additions to the crimes of corruption and the crimes of drugs have contributed to the struggle against and prevention of crimes, to increasing the efficiency of the state, to the building of a just society, security and order, for the people ’s comfort, freedom and happiness, and meeting the ASEAN common program

182 for development. Besides the above-mentioned laws, the National Assembly and the Standing Committee of the National Assembly must draw up laws and ordinances aimed to concretizing these laws. For example, the Ordinance against Corruption will be adopted in 1998, the Law on Added Value aimed at speeding up Vietnam’s Joining AFTA program, etc. In the process of taking part in ASEAN cooperation programs, in many fields, such as tourism, financial and banking cooperation, Vietnam has had no specific laws

to regulate. Therefore, in the time to come Vietnam’s National Assembly will have to consider making laws for these newly emerging fields of cooperation.

Joining A1PO. Vietnam's National Assembly has taken part in AIPO activities, attending sessions of AIPO General Assembly, Secretariat, and AIPO’s special sessions. Regarding AIPO’s general activities, Vietnam’s National Assembly is taking part in the setting up of AIPO’s Standing Committee. Under AIPO’s constitution, there is an Article on the strengthening of the activities of AIPO’s Secretariat. In order to implement this article, AIPO is speeding up the setting up of AIPO’s Standing Committee aimed at supervising the implementation of AIPO’s resolutions and ensuring the interests of ASEAN countries. Vietnam’s National Assembly is also taking part in AIPO activities in promoting dialogue between AIPO and the European Union (ASEP). In its own activity, Vietnam’s National Assembly has set up of AIPO secretariat within the national assembly in order to help realize a close connection between ASEAN office of the National Assembly and made it coherent to the other offices in Vietnam dealing with ASEAN cooperation. The activities of Vietnam’s National Assembly are still constrained for several reasons. Firstly, a mechanism for the coordination between the National Committee on ASEAN and the ASEAN Secretariat, and the National Assembly is lacking, thus limiting the activities of Vietnam’s National Assembly at AIPO. Secondly, as it does not enough budget, Vietnam’s National Assembly can only attend a number of AIPO special sessions most necessary for Vietnam. Thirdly, at present, the load of work with regard to participation of Vietnam’s non-governmental organizations in ASEAN activities, also falls on the Vietnam’s National Assembly shoulder.

183 Developing Relations Between The Communist Parly Of Vietnam And The Ruling Parties In ASEAN Countries

The Communist Party of Vietnam is the main body for introducing major guidelines with regard to economic and foreign policy. It on the one hand plays an essential role in initiating important changes in policies with regard to ASEAN as discussed earlier. On the other hand the Party also tries to further develop party-to- party relations with other ruling parties in ASEAN countries, establishing a full Party-Government-National Assembly political relationship between Vietnam and other ASEAN countries, thus further promoting economic cooperation and security- national defense relations.

Before the collapse of the Soviet Union and the system of East European socialist countries, in the context of the Cold War and in the spirit of the “class struggle, ” the Communist Party of Vietnam only developed relations with Communist and Workers ’ parties of socialist countries and a number of Western countries. 28 After the end of the Cold War, conscious of the change in the world situation and international relations, the Communist Party of Vietnam advocated expanding international relations, starting from “establishing and expanding relations with social-democratic parties in the world” to “ establishing relations with the ruling parties in a number of countries ”.29 Under these policy changes, relations between the Communist Party of Vietnam and the ruling parties in ASEAN countries have entered a new stage. After Vietnam became full member of ASEAN, the development of relations between the Communist Party of Vietnam and the ruling parties in ASEAN countries has become a necessity for a full political cooperation and integration. One important landmark in the relations between the Communist party of

28 Official CPV documents, for example, reads “As a contingent of the international communist and worker ’s movement, our Party actively contributes to strengthening the unity of the movement on the basis of Marxism-Leninism and proletarian internationalism, to strengthening cooperation among fraternal parties in the struggle for the common ideals, namely, peace, national independence, democracy and socialism. ” See, Documents of the IV National Congress of the Communist Party in December 15, 1986, (Hanoi: Truth Publishing House, 1986), p. 102. 29 See, Documents of the VI1 National congress of the Communist Party of Vietnam, June 24, 1991, (Hanoi: Truth Publishing House 1991), p. 88; and Documents of the VIII National Congress of the Communist Party of Vietnam, June 24, 1996, (Hanoi: National Political Publishing House, 1996), p. 62.

184 Vietnam and the ruling parties of ASEAN countries was the visits by the then General Secretary of the Communist Party of Vietnam, Mr. Do Muoi, to Thailand and Singapore in October 1993, and to Malaysia in March 1994. During these visits the Communist Party of Vietnam established relations with the ruling party of Singapore, namely the People's Action Party (PAP), and the ruling party of Malaysia, namely the Unity of Malaysia National Organization (UMNO). As for Thailand, since the ruling party was the coalition of five parties, the Communist Party of Vietnam has not yet established relations with all the parties in the coalition, because it failed to determine whether it has to develop relations with all the parties in the coalition or with one main party. In May 1996, on the occasion of the 50th anniversary of the UMNO Party, at the invitation of the UMNO Party, the Communist Party of Vietnam sent a Secretary of the Central Committee to attend the ceremony. In Junel996, at the VIII National Congress of the Communist Party of Vietnam, UMNO sent a party's high level delegation led by its General Secretary to attend the Congress. It can be said the relations with the UMNO Party are the most developed ones among the relations between the Communist Party of Vietnam with the ruling parties of other ASEAN countries. The Communist Party of Vietnam has sent many delegations to Malaysia to learn the UMNO experiences in the organization of the party and its leading role the nation's political system. Also, delegations of the CPV Central Committee for Mass Mobilization went to Malaysia to study policies for national unity, as well as those for solution of ethnic and religious issues in a multi-nationality and multi-religion country like Malaysia. The Central Committee’s Ideology and Culture Commission, likewise, sent its cadres to Malaysia to learn about the information and propaganda work of the UMNO Party. Relations between the Communist Party of Vietnam and Singapore ’s PAP have been also developed. PAP sent a high-level delegation to Vietnam to attend the VIII National Congress of the Communist Party of Vietnam, thus making the UMNO and PAP the first two parties of ASEAN countries to attend a National Congress of the Communist Party of Vietnam. In order to exchange experience with Singapore ’s party, the Communist Party of Vietnam sent a delegation of the Central Committee Organization Commission to Singapore to study the party ’s grassroots organizations. The delegation of the Hanoi ’s Party Committee Secretary delegation also went to Singapore to study the method of urban management. The Ho Chi Minh City ’s Party

185 Committee ’s Secretary delegation went to Singapore to study the experience in economic management. Besides, delegations from provincial and municipal party committees were sent to Malaysia and Singapore to visit these countries and seek possibilities for cooperation between parties at lower levels. Party relations, therefore, have greatly contributed to the promotion of economic relations and political cooperation between Vietnam and ASEAN. At the VIII National Congress of the Communist Party of Vietnam, apart from the UMNO and PAP, Indonesia ’s GOLKA, for the first time sent a message of congratulations. This was the first sign of the development of relations between the two ruling parties of Vietnam and Indonesia. In October 1996, at he invitation of Indonesia ’s ruling party, the Communist Party of Vietnam sent the Head of the Office of the Central Committee to Indonesia to attend the 32nd anniversary celebration of the foundation the GOLKA party and initiate official relations between the two parties. This was the first time the GOLKA party had invited the ruling parties in the region, namely those from Malaysia, Singapore, the Philippines, Thailand and Vietnam, to attend the party ’s annual anniversary. Previously the GOLKA party had only had relations with UMNO, PAP, and the Philippine National Party. In October 1997, Vietnam was again invited to attend the ceremony of the 33rd anniversary of the GOLKA party. The ruling party of Laos, the Lao Revolutionary People ’s Party, following the country ’s membership in ASEAN, was also invited. Relations between the Communist Party of Vietnam and the GOLKA, however, are facing with a number of difficulties. Indonesia ’s ruling party, due to events in the past, still has some reservation about communists, and is preoccupied with internal problems, chiefly the election in March 1998. The GOLKA party is making use of the threat of communist recovery to get the upper hand of the opposition parties. Therefore, it does not want to tighten relations with the Communist Party of Vietnam. For these reasons, having accepted the invitation of the Communist Party of Vietnam, GOLKA has not sent a delegation to visit Vietnam. The CPV Vietnam is also wishing to develop relations with the ruling parties in Thailand and the Philippines. As it is the case in Thailand, the ruling party of the Philippines is a coalition of many parties, relations with these parties, therefore, have not yet been initiated. On the other hand, these countries themselves have not yet wished to establish relations with foreign parties for internal political reasons.

186 Experiences in the field of party-to-party relations over the last few years, have shown that Vietnam has established good party relations with the ruling parties

of ASEAN countries, and these relations continue to be promoted. Vietnam’s ASEAN membership has created conditions for the development of party relations, despite political differences, as well as those in organizational structures and the mode of ruling the nation. At the same time, development of party-to-party relations helped diversify Vietnam-ASEAN relations, making Vietnam go deeper in political relations and confidence building, thus creating more favorable conditions for promotion of economic cooperation. Yet, quantitatively, these relations still have not developed to the desired level. It is obvious that Vietnam has not yet had party-to-party relations with Thailand and the Philippines, relations with the ruling parties of Malaysia, Singapore and Indonesia have been developed, yet they have been confined to irregular visit by party organizations and officials and not yet formalized or routinized in specific forms of relations. They have been confined to exchanges of information and experiences. Commitments or agreements have not yet been made with a vie WTO tightening the relations between ruling parties in the working out of orientation for cooperation in ASEAN, as well as in the settlement of regional issues. This is a new point that the Communist Party of Vietnam should adapt itself to in the context of the characteristics of external relations and while the ruling parties are non-communist ones. There are several causes to explain limitations in development of relations between the Communist Party of Vietnam and the ruling parties of ASEAN countries. Firstly, relations between the parties are newly established, and at the same time, differences in political-social systems as well as ideological suspicion have not been overcome. Secondly, several parties in the region have their priorities to internal political issues, thus having no impetus for, as well as experiences in developing party-to-party relations. Lastly, ruling parties in ASEAN countries have refrained from signing documents of cooperation and making official co mmitments while making contacts and exchanges with each other. Despite of these reasons, however, relations between the Communist Party of Vietnam and political parties of other ASEAN countries have shown their significance in promoting general relations in all fields between Vietnam and other ASEAN countries, especially in the field of political cooperation. That explains why the Communist Party of Vietnam will continue to seek

187 for more party-to-party relations and consider it a means to strengthen Vietnam’s all- rounded relations with the rest of the region as well as the country ’s commitments to the region. The CPV, in this regard, has set promoting this kind of relations a target of its activities. A CPV high-ranking official, thus has talked of the orientations for developing party-to-party relations with other ASEAN countries in the years to come as follows: ■ continuing developing and widening relations with foreign parties, focusing on those of neighbor countries; ■ party relations will not affect governmental relations; ■ party relations should be at the service of the development of political and economic cooperation with other counties; ■ maintaining the balance in the relations with other parties; ■ party relations should not affect the internal political issues of other counties; ■ establishing party relations with Thailand and the Philippines, as the first step with a number of parties in the ruling coalition. 30

FUNCTIONAL COOPERATION

In 1993, ASEAN invited Vietnam to participate in programs and projects within the framework of ASEAN Functional cooperation in the following five fields: Science and Technology, Environment, Health Care, Culture and Information, Social Development as well as other joint projects of functional cooperation in handicrafts, anti-drug, promotion of tourism... . Vietnam’s participation in these projects, however, have been made official and routinized following its membership into ASEAN. Perhaps, all the important Ministries and Departments in the country ’s bureaucracy have been mobilized for cooperation with ASEAN.31 (The studies on organizational

30 Interview with a high-ranking official in the CPV Department of External Relations. 31 The list of Ministries and other Departments include: Ministry of Foreign Affairs, Ministry of Trade, Ministry for Planning and Investment, Ministry of Finance, Ministry of Industries, Ministry of Agriculture and Rural Development, Ministry of Aquaculture, Ministry of Transportation and Communication, , Ministry of Science, Technology and Environment, Ministry of Culture and Information, Ministry of Justice, Ministry of Labor, Invalid and Social Affairs, Ministry of Education and Training, and Ministry of Public Health Care. The list of Organizations with the Ministerial level include: The Commission for Organization of Bureaucracy under the Vietnamese Government, The State Bank of Vietnam, The Committee for Ethnic and Mountainous Affairs, General Department for Civic Aviation, The Vietnam’s Chamber of Commerce

188 structures for Vietnam’s economic cooperation with ASEAN will be the focus of the next session.) As far as functional cooperation is concerned, Vietnam has been implementing projects and programs in the following six fields: Science and Technology, Environment, Culture and Information, Social Development, Drug Prevention, and

Public Administration. Accordingly, in the government structure of the country, six national and inter-disciplinary committees have been established to carry out the task. 1. The Committee On Science and Technology (COST-VN}. COST-VN was formed in November 13, 1995, and is headed by a Deputy Minister of the Ministry of Science, Technology and Environment. Under COST-VN, there are eight sub-committees under supervision of eight national coordinators (ranked Department Director) supported by eight secretaries. 2. The Committee of ASEAN Officials for Environment (ASOEN-VN}. ASOEN-VN was established in February 1996, also headed by a Deputy Minister of the Ministry of Science, Technology and Environment. The Department of Environment under the Ministry of Science, Technology and Environment is serving as the ASOEN-VN standing committee. Six sub-committees under supervision of six national coordinators have accordingly been appointed. 3. The Committee of Culture and Information (COC1- VN} In February 1996, COCI-VN was formed and headed by a Deputy Minister of the Ministry for Culture and Information. Four national sub-committees headed by four national coordinators were named. The standing body of COCI-VN is associated with the Department for International Relations and Cooperation of the Ministry. 4. The committee on Social Development (COSD-VN}. A Deputy Minister of the Ministry for Labor, Invalid and Social Affairs chairs COSD-VN which was established in February 28, 1996. Seven sub-committees, headed by seven national coordinators, are in charges of various projects under supervision of COSD-VN. The standing body of COCI-VN is associated with the Department for International Relations and Cooperation of the

and Industries, General Department of Customs, General Department of post and Communication, General Department of Statistics, The Ho Chi Minh Central Committee for Vietnamese Youth, and The Central Committee for Vietnamese Women.

189 Ministry. COSD-VN projects involve participation of other Ministries, such as Ministry for Education and Training, Public Health Care, as well as that of The Ho CM Minh Central Committee for Vietnamese Youth, and The Central committee for Vietnamese Women. 5. The ASEAN Committee on Drug (ASOD- VN) was formed in November 16, 1995, and is chaired by the Director of the National Program for Drug Prevention and Control, an affiliation of the government ’s Commission for Ethnic and Mountainous Affairs. 6. ASEAN Conference on Civil Service Matters (ACCSM) is under supervision of the Government ’s Commission for Organization of Bureaucracy. A special body accordingly was established and headed by the Director of the Commission ’s Department for International Relations and Cooperation.

Apart from these committees, a task-force on ASEAN, cooperation in the field of Legal Affairs was formed in September 19, 1995, under the direct supervision of the Minister of Justice. TMs task-force consists of eleven officials and the director of the Department of International Laws and International Cooperation heads tMs body. Lastly, although formal framework has not been established in Vietnam, officials from Ministry of Domestic Affairs and General Department for Tourism, Post and Communication have been taking part in ASEAN meetings. Since 1994, Vietnam has sent its athletics to the ASEAN Games and is hosting the 12th ASEAN Games in

2000. The following table shows how Vietnam participated in the ASEAN Funcitonal Cooperation in the first year after it became an ASEAN member.

Committees Conferences Attended Projects In Implementation S3S COST 18 9 ASOEN 10 4 COCI 14 32 COSD 19 25 ASOD 2 3 ACCSM 3 2 Legal Affairs Task-Force 3 Total 69 75 (Source: September27, 1996, Report by the Ministry ofForeign Affairs ASEAN Department)

190 The number of projects Vietnam undertakes in ASEAN Functional Cooperation increased to 122 in 1997. 32 Taking part in this form of cooperation allows Vietnam to have access to various sources of funds created by ASEAN and other countries for such kind of activities. For example, cultural and information activities of Vietnam have been funded by the ASEAN Fund, and the country ’s benefits almost all the fund worth of CAN$ 2.5 million in the third phase for maritime studies that Canada financially supports ASEAN to have a study on maritime resources in the country ’s sea-zone under its jurisdiction. Besides, Japan, New Zealand, Republic of Korea have increased amounts in their Overseas Development Assistance to Vietnam for the country to enhance its participation in ASEAN cooperation.

Vietnam's assessments on the country ’s political integration and functional cooperation in ASEAN and its role in the country ’s integration into the organization as well as into the rest of the world have largely been positive. In the main, all the political objectives in joining ASEAN have been met. This has been reflected in several aspects. Politically, the trend toward peace and cooperation with other regional countries has gained a considerable boost in Vietnam’s domestic politics. Moreover, Vietnam is now moving toward incorporation of its policy-making process into those of other ASEAN countries in order to form a common regional policy with regard to regional security, peace and cooperation. Besides, its participation in ARF and ASEM, being the multilateral forums, greatly enhances relations of Vietnam with external countries including the United States, Japan, China as well and the European Union. In this context, following its membership in ASEAN in 1995, there have been a phrase of "diplomatic gains ” achieved by Vietnam, largely referring to the normalization of relations with the US, the signing of Treaty of Cooperation between Vietnam and EU, reduction of debts by the London Club for Vietnam as well as increase of ODA by international donors to Vietnam.... Last but not least, with the strong support by ASEAN and other countries, Vietnam was accepted in late 1997 to be a new member of

32 Report on Functional Cooperation of Vietnam by the Ministry of Foreign Affairs (MOFA) ASEAN Department, in July 1997.

191 the Asia-Pacific Economic Conference (APEC) in 1998. Association of leaders and elites is another positive gain with the country ’s membership and increased integration into ASEAN. For an organization like ASEAN, with somewhat - loose organizational structures and inclination to political cooperation, that leaders and elites from its member countries get to know of and find ways of accommodation with each other became an important criteria for the success of the “ASEAN ways of doing things ” Leaders of Vietnam, in the main, have found comfortable commonalties with their colleagues in other ASEAN countries. At least with some top leaders, English is no longer an obstacle for them to communicate with their counterparts while personal contacts among them widened and strengthened. Singing Karaoke and playing golf are perceived the common ways of ASEAN leaders to get to know one another more and discuss policy issues as well. Vietnam’s leaders, therefore, have been improving these practices. 33 Within the framework of ASEAN- ISIS, think-tanks, security specialists, and other scholars associated with policy ­ making processes in Vietnam have chances to set regular contacts with their ASEAN counterparts, thus making the ASEAN Track-Two (the reference to ASEAN semi­ official dialogues on policy issues a venue for promoting comfortability among ASEAN leaders and elites). Vietnam also gains considerable in the assimilation of its procedures and on- the-job training of its officials in the integration into ASEAN. From beginning, the majority of Vietnam’s officials have not been well-informed and well-practiced the ASEAN ways. Yet, incrementally, through the experiences in participation in ASEAN activities they have learnt and now can better perform their parts in the joint projects as well as in the other common activities of ASEAN. Moreover, this broadens the scope that Vietnamese officials participate in cooperation with other countries outside Southeast Asia. It has been widely acknowledged in Vietnam that the countries practices within the ASEAN framework helped the country greatly join other multilateral forums such as APEC or possibly the World Trade Organization (WTO). Publicizing ASEAN activities and increased education about ASEAN among the public at large also brought about a better understanding of ASEAN among Vietnam’s population. Every week, the government-owned TV network runs an ASEAN program. ASEAN studies now become an integral part of many universities

33 Several golf training courses for Vietnamese top leaders have lately been organized. Interview

192 and colleges curriculum. Beside, Vietnam athletes participating in the ASEAN Games also helps the population get to know more about their neighbors. These activities, therefore, the sense of “belonging ” to the rest of the region has considerably develops in Vietnam. Overall, increased integration into ASEAN has brought about tangible benefits for Vietnam, which in turn encourages the leadership as well as the population to more and more to support betterment of relations with the other ASEAN countries individually and with ASEAN as an organization and at the same time to enhance the level of mutual trust and confidence in each other. Thus, it can be said that Vietnam’s integration into ASEAN, being in the forms of increased political and functional cooperation lays a solid foundation for security as well as economic cooperation between Vietnam and ASEAN. Moreover, ASEAN has to many extents, become a “springboard ” for Vietnam to further renovate the country and to deeper go into integrating itself with the rest of the world.

Vietnam’s political integration and functional cooperation into ASEAN, however, is not without problems. A report released by the Government Office on the one hand acknowledged that Vietnam’s participation in ASEAN joint efforts and projects have been “faster and smoother than expected. ” Yet, on the other hand, it emphasized that there were the needs for Vietnam to participate on a “more equal ­ footing stance” since the “reason of a newly admitted member was becoming less and less persuasive.”34 Problems for Vietnam, thus, have arisen after two years in ASEAN. They however, are considered to be those of technical matters and hoped to be overcome with time. In concrete, these are the question of coordination, funds, personnel.

Coordination:

The National Committee was set up and supervises the activities at the national level. Yet, due to the time and personnel constraints, the Committee has not routinized the processes where reports from other committees should be circulated and analyzed and where regular meetings should be held. In the near future, the Committee considers "strengthening the two-way reporting procedures, and with Vietnamese diplomats.

193 routmizing regular meetings ” important organizational tasks.3435 Coordination in COSD-VN also faces with difficulties due to the gamut of its activities and complexities of organization it involves. COSD-VN has held only one meeting since its foundation.

Fund: In general, Vietnam lacks fund for participating all the ASEAN activities that include, among others, about 250 ASEAN meetings a year. As the above-mentioned table has shown, in the first year after joining ASEAN, Vietnam could attend only 69 meetings in functional cooperation, many of which, however, were supported by external sources. Setting up and running offices to support activities of Sub­ committees also require additional funds for office machinery and equipment. Funds are more critically lacking for the Vietnamese organizations that hold the hosting posts in Functional Committees. For example, the Sub-Committees on Environment and Meteorology are running out of their working funds just for coordinationg costs involving faxes and other kinds of communication. In addition, since massive organizations, namely the Ho Chi Minh Central Committee for Vietnamese Youth, and the Central Committee for Vietnamese Women, are not enjoying their shares in the state budget, they have to apply for governments grants to enter joint projects of ASEAN, which is causing more pressures on the already limited state budget.

Personnel As discussed earlier, a great number of ministries and other institutions in Vietnam as well as their officials have been mobilized for cooperation with ASEAN. In 1996, MOFA organized a workshop introducing ASEAN for 50 top leaders from 47 ministries and government offices as well as from provinces. A similar workshop was also organized for middle-ranking official from these institutions. 36 The Office of the ASEAN National Committee organized a workshop on AFTA for 128 middle-ranking officials and experts from ministries and provinces in the North and a similar

34 The Government Office, September 1997. 35 Report released in September 5, 1997, by the Sub-Committee for Functional Cooperation, MOFA ASEAN Department. 36 The Government Office, Report in September 3, 1996, on “Implementing ASEAN Cooperation. ”

194 workshop for 134 middle-ranking officials and experts in the provinces of the South of Vietnam.37 In the structure of any government institution, an official holding Deputyship is assigned, and a regular body set up to supervise the work of ASEAN cooperation. Yet, the report by the Vietnam National ASEAN Secretariat assessed participation of the country ’s officials after one year in the organization as follows:

Our participation in ASEAN functional cooperation has somewhat passive, our officials at

ASEAN meetings have been mainly listening and taking notes; our contributions and

initiatives have been rare. The reasons for this fact include our lack of knowledge of issues

in ASEAN cooperation as well as of it procedures and formats. Our officials dose not have been accustomed with multilateralism; at the same time, best-suited officials have not

been assigned as well as working level of Englis h has not been adequate.”38

In. the second year, apart from participating in the ongoing ASEAN projects, Vietnamese institutions began to build projects on their own initiatives for ASEAN’s approval. For example, CO Cl, ASOD, COSD and COST-VN have proposed 8 projects. Yet, these projects are found difficult to be accepted, because they either reflect Vietnam’s interests, thus lacking a regional perspective, or overlap with the projects other had proposed, or unrealistic in terms of funds.39 English language still poses a main problem for Vietnamese officials. More than 300 officials have been trained in Vietnam and about 200 other sent abroad to improve their working level of English. Yet, in almost all ASEAN meetings, Vietnamese delegates have been accompanied by interpreters. Moreover, limited usage of English among Vietnam’s officials in ASEAN meeting makes them refrain from participating other, yet equally important activities of ASEAN that include receptions, golf plays, etc.

VIETNAM AND ASEAN: ECONOMIC INTEGRATION

37 Ibid... 38 The National ASEAN Secretariat, Report on “Reviewing Vietnam’s Participation of Vietnam after one year of Functional Cooperation. ” Hanoi, October 2, 1996. 33 Report on Functional cooperation of Vietnam by the Ministry of Foreign Affairs (MOFA) ASEAN Department, in July 1997.

195 The reform process started in the mid-1980s laid an emphasis on economic development along the line of market economy. The first phase of economic reform concluded with achievements in stabilization, growth, domestic savings and increases in foreign trades and investments. Since 1995, the second phase of reforms commences with the focus on strengthening the institutional, legal, economic as well as social frameworks with a vie WTO achieving sustainable and equitable growth. Since the benefits of opening the country ’s market to the rest of the world became undisputed, another focus of the second phase was also laid to improving legal and institutional frameworks and building capacity to further integrate the national economy into the regional and global economies. This phase also coincided with Vietnam's membership in ASEAN in 1995, its subsequent joining AFTA in 1996, in APEC in 1998 and possibly in WTO in 2003. Therefore, integration became the catch-word for the leadership in Vietnam and efforts have been made toward this goal as the country perceives that it can not stand out of the mainstream of regionalism and globalism. Changes in Vietnam to meet the requirements of AFTA, therefore, should be seen in that broader context. In other words, Vietnam’s commitments to AFTA are not only those to its comprehensive reform process at home, but the ones to the co mmon endeavor of the region as well as the country ’s necessary preparations for taking part in wider economic groupings. At the same time, the process of reform and integration is not without difficulties and challenges. Economically, costs and benefits have been more tangible with Vietnam’s joining AFTA. It has been clearer that the country ’s economy, which is still small in size, weak in comparative advantages, is more vulnerable to “trade liberalization, ” thus making leadership more receptive to protectionism. Yet, the general consensus in Vietnam was reached that the country should see challenges in joining AFTA as short-term difficulties, and the necessary costs paid for longer-term benefits. In other words, the process of economic reforms require similar efforts towards more liberal trade and investment policies, even if jo ining AFTA were not in the question. Looking from that perspective, many thought that AFTA is in fact a “blessing in disguise, ” for it encourages Vietnam to further integrate into the trend of regionalism and globalism, and serves as a catalyst for greater changes in the economy and makes it more effective.

Since the introduction of reforms, Vietnam made efforts to boost its foreign

196 trades. Control regimes imposed on foreign trades have been in the main abolished and Vietnam has been more committed to liberalization of its trades. All sectors in the economy can involve in foreign trades. Procedures for export/import activities have been made simpler. The export/import tax systems have been introduced to replace administrative measures to control foreign trades. In the period before Vietnam’s membership in the organization, Vietnam- ASEAN trade relations have been benefited much from these changes in Vietnam’s economic policies. Vietnam’s exports to other Southeast Asian countries rose from $US 524 million in 1991 to $ US 892 million in 1994. Its imports from these countries mounted up to $ US 1,689 million from $ US 84 in 1991. The percentage that exports to ASEAN occupies in Vietnam’s total exports was around 21-25% in the period from 1990 to 1994 while that of imports was 29-37%. In balance, ASEAN enjoyed trade surplus with Vietnam. The following table will show more details:

197 1991 1992 1993 1994 Countries exports import exports import exports imports exports import s s s Cambodia 6.3 5.2 6.4 6.7 96.2 7.6 77.3 17.7 Indonesia 16.5 49.4 10.9 39.8 22.9 84.5 35.2 116.3 Laos 3.6 3.3 16.0 7.7 14.4 41.9 20.9 102.9 Malaysia 14.5 6.2 68.4 35.9 55.8 24.8 64.8 66.1 Philippines 0.7 10.6 1.0 0.5 1.6 1.9 3.6 15.0 Singapore 425.0 722.2 401.7 821.6 380.3 1,050.3 593.5 1,145. Thailand 57.7 14.2 71.5 41.2 71.8 99.5 97.6 8 S.E.Asia 524.4 811.1 576.0 953.4 642.8 1,318.5 892.9 225.7 1,689. 6 Percentage in 25 35 22 37 21 33 22 29 Vietnam’s total Unit: $ US million. Source: The General Department of Statistics, The General Department of Statistics Publishing House, 1996, pp. 427-31.

Vietnam’s membership in ASEAN brought about more economic gains. Trade turnover — both exports and imports — between Vietnam and ASEAN countries rose to US $ 1,056 million in 1991, from US $126 million in 1986. After joining ASEAN, Vietnam’s two way trades with ASEAN increased by an average of 26.8 per annum since July 1995 and now made up 34.4% of Vietnam’s total trade. ASEAN investment (248 projects valued at US $3.56 billion), accounted for 20% of total investment in Vietnam as of June 1996. 40

Vietnam and AFTA

As mentioned earlier, the renovation process of trade policy is of principle and strategic nature. In essence, the most significant reforms in Vietnam’s trade policy are those which have been implemented since its adherence to ASEAN (July 1995) and its official admission to the ASEAN Free Trade Area (AFTA) since 1996. Since then, Vietnam has been committed to trade liberalization with the other ASEAN countries. This is a common trend taken by the member countries of the Asia-Pacific Economic

40 Carlyle Thayer, Australian Defense Studies Center, “ASEAN’s Expanding Membership, ” Paper submitted to the Foreign Affairs Sub-committee Joint Standing Commit tee on Foreign Affairs, Defense and Trade, Canberra, 1997, pp. 10-12.

198 Cooperation Forum (APEC) and the World Trade Organization (WTO), the organizations that Vietnam wishes to adhere to. This trend is, moreover, a requirement of the International Monetary Fund (IMF), the World Bank (WB) and other members of the international funding community when they provide ODA to Vietnam. The pivotal issue of AFTA41 is that the ASEAN countries are committed to abolish non ­ tariff barriers and reduce tariffs for imported commodities from member countries (commodities which have at least 40% of the value-added contents within ASEAN) on the basis of the common effective preferential tariffs (CEPT). According to CEPT, plans to reduce tariffs for imported goods within ASEAN are as follows:

- The immediate tariff-reduction program - The common tariff-reduction program - Products which are temporarily excluded from the tariff-reduction program - Products which are included in the list of sensitive commodities - Products which are completely out of the list of tariff reduction forever.

For Vietnam, due to its recent adherence to ASEAN, the deadline to accomplish AFTA is, therefore, three years later than the other member countries (i.e. the year 2006). As far as Laos and Myanmar are concerned, since they were admitted to ASEAN in 1997, and started to implement AFTA from 1998 they would have to accomplish AFTA in 2008.

According to the provision on original sources, the tariff level of commodities in the immediate tariff-reduction program, which stands at 20%, will be reduced to below 5% beginning from January 1, 1998; those commodities which have a tariff level of above 20% will have a tariff level of below 3% commencing from January 1, 2000. Commodities in the common tariff-reduction program with the current tariff rate of 20% will have a rate of below 5% in January 1, 2000, and those with the current rate of 20% will have a rate of 20% in January 1, 1998, and their tariff rate continues to be reduced to below 5% in January 1, 2000. Commodities which are in the temporary

41 This agreement on the establishment of AFTA is laid down in the three documents: (i) The 1992 Singapore Statement (ii) The framework Agreement on the Enhancement of Economic Cooperation in ASEAN (iii) Agreement on the Common Effective Preferential Tariffs (CEPT) for AFTA.

199 non-tariff reduction program will be gradually transferred to the tariff-reduction program, and as a result, the tariff level will be reduced to below 5% in January 1, 2003 (for Vietnam, all the above deadlines are three years later). Agricultural products, basically non-processed products, will be included in the list of “sensitive” commodities and will be liberalized according to a certain road-map in year 2010 at the latest. Those in the list of “sensitive” commodities include rice, sugar, wheat, garlic, flour. As such, these commodities will be liberalized sooner than those in the agreement on agricultural products in WTO. Those commodities which are excluded in the tariff- reduction program are kinds of goods that cause social insecurity and violate moral standards such as cigarettes, alcoholic liquid of various kinds and commodities that are included in Article 20 of GATT/WTO, namely weapons and ammunition... .

At present, 15 groups of commodities consisting of 38,655 items of different types accounting for 88% of the CEPT list and 98% of internal trade within ASEAN have been agreed upon to be included in the immediate tariff-reduction program and the co mmon tariff-reduction program. These 15 groups are comprised of vegetable oil, cement, chemicals, pharmaceuticals, fertilizer, plastics, leather, paper, textile and garment, ceramics and crystals, copper and wooden products, bamboo and rattan products, and precious stones. The commodities that are temporarily excluded from the tariff-reduction list account for 7% of CEPT items. Shortly after its adherence to ASEAN (July 1995), in August the same year, the Vietnamese Prime Minister decreed the Financial Ministry to set up a study group on Vietnam’s joining AFTA. Among 3,211 commodity items which are subject to Vietnam’s current import taxes, more than half of them are compatible to the tariff standard rate laid down by CEPT. This implies, in essence, that Vietnam only has to implement tariff reduction for nearly 50% of the total commodity items in the current import tariff list. In comparison to the other ASEAN members which had begun implementing the tariff-reduction programs in accordance with CEPT, Vietnam has many more advantages (When Indonesia began joining CEPT, only 9% of the total commodity items have the export tax level of below 5%, Thailand: 27%, the Philippines: 32%). This is a favorable condition for Vietnam when it participated in the implementation of tariff reduction provided for by CEPT. The second advantage stems from the technical aspect that the current import tax rate is established on the basis of the harmonized list of items set by the Customs

200 Cooperative Council, which stands at six digits.

However, when Vietnam began integration into AFTA, there appeared a number of difficulties:

(i) In the structure of Vietnam's import tax indices, the lowest tax rates are levied on input materials that serve production and export, i.e. materials that Vietnam is in short of supply. The higher tax rates are mostly applied to commodities that are produced domestically with a vieWTO protecting manufacturers at home, or to commodities that are discouraged for import. The tax rates of over 60% are mainly levied on luxurious goods, appliances, equipment in order to adjust consumption. As a result, at present when domestic production in Vietnam has developed to some extent and partially met the requirement of necessary products in service of production which had previously been imported from foreign countries, the need to raise the tax rates and import tariffs designed for protection of domestic production is really required. This is, to some extent, conflicting with the contents of AFTA. (ii) The second difficulty lies in the fact that in Vietnam’s import tariff rates at that time consisted of various tax rates only applied to every imported commodity regardless of original source from any countries. The tax rates completely ignored the distinction of preferential tax rates, general tax rates or temporary tax rates, though there had existed in Vietnam’s import-export tariff law provisions stipulating various preferential tax rates under international agreements. (hi) Another problem is that Vietnam’s import tariff index has some points that are not in conformity with international norms. It is not until January 1, 1996, Vietnam has only applied one type of import duty at a rather high rate compared to the other countries. What is worth of stating here is that this import duty rate included the value added tax VAT (currently the business tax) and the special consumption tax. Consequently, when Vietnam reduced import taxes before separating these two kinds of tax, that means it reduced in part both the special consumption tax and the VAT.

201 However, acting upon its commitments, at the conference of the AFTA Council, Vietnam announced in December 10, 1995, this list of items and the road-map to cut down tariffs for the whole 1996-2006 period comprising 1,622 items.42 Looking at Vietnam’s list of items, one can see only nearly 2,000 lines of taxes while the list of items of each ASEAN country amounts to approximately 4,000 lines. The main reason is that Vietnam is setting up various lists of items under the system of six digits. These lists will be translated into the system of eight digits recently established by concerned institutions. Earlier at the ASEM Conference in Osaka, Vietnam promulgated in November 15,1995, the list of items having tariffs to be reduced at the first phase beginning from January 1, 1996, 43 including 857 items (of which 57% is already at the rate between 0 and 5%, those at the rate of 20% only account for a small percentage between 17% and 21%)44. As a consequence, it can be said that Vietnam has met the requirements of AFTA at the first phase. These announced lists of items aim at respecting the demand on time set by CEPT, and at the same time reducing to the minimum “the negative impacts on the Vietnamese economy, ” providing “a certain extent of reasonable protection of domestic production ” and “a relaxing period to prepare for greater challenges posted by AFTA”45. In response to the requirements set by AFTA and those of the tax reform program at home, according to the financial ministry, Vietnam splits the import-export tax rates into three categories general, the most favored nation (MFN), specially preferential tax rates for each specific sector or country that has a separate agreement (for instance AFTA). This process is being carried out following the National Assembly ’s promulgation of the VAT law and other tax laws in the second tax reform program in 1997.

In order to implement the preference for the AFTA members, the trade ministry has proposed maintaining temporarily the current tax rates as the MFN tax

42 The World Economic Issues Magazine, No. 44 (June 1996), p. 3. 43 Ibid. p. 3. 44 Nguyen Anh Tuan (1996), “Some Aspects of the Vietnamese Economy, ” (Mot Vai Khia Canh cua Kinh Te Viet Nam,) Issues of World Economy Journal, June 1996, p. 3. 45 Financial Ministry (1996), Vietnam Toward AFTA; Challenges, Advantages, and Expected Developments.

202 rate. Goods from other countries which are yet to be offered the MFN by Vietnam will be levied with a higher tax rate. The Trade Ministry opines that this is an urgent matter and it is discussing with the financial ministry on options of setting up Vietnam's import-export tax rates.

As far as non-tariff barriers are concerned, the Trade Ministry is assigned with the task of serving as a coordinating body in economic cooperation and responsible for working out trade policy for non-tariffs in implementation of AFTA. Since September 1995, upon the proposal made by the Trade Ministry, the Vietnamese Government has agreed to announce that both non-tariff trade policies and policies which are under way (if not confidential) at the request of ASEAN. Vietnam’s non ­ tariff measures include the following main forms: (i) the system of issuing import-export permits: Import-export business permits: only business enterprises which have obtained import-export business issued by the Trade Ministry are entitle to import and export goods. Conditions for obtaining import- export business permits include: - Having the legal person status provided for by the law. Having a minimum liquid asset equivalent to US $ 200,000. - Only importing and exporting commodity items that are registered for business in Vietnam. - The document permitting import and export issued by the Trade Ministry: Compared to the past, at present the system of issuing batch permits for every lot of imported and exported goods is abolished. However, concerning a number of commodities such as imported and exported goods by quota, consumption goods approved by the Prime Minister, machinery and equipment imported with budgetary capital, trade fair and exhibition goods, semi-processed goods, goods of enterprises set up under the Law on Foreign Investment... documents permitting import and export issued by the Trade Ministry must be obtained. The 89/CP Decree issued by the Government in December 15, 1995, does not stipulate clearly the procedure of requesting and issuing permits for the above-mentioned items, nor does it provide for the maximum deadline for the hosting institution to approve the

203 application for permits. Commodities that require verification by the specialized management institutions: this can be seen as a form of permit for import and export. (ii) Measures to limit quantity: Import-export quotas for goods are proposed by different ministries and branches to the Prime Minister for approval and distributed by the Trade Ministry. Goods controlled by quotas must apply for permits to be imported and exported. Business enterprises are limited by the volume of their imported consumption goods (equivalent to 20% of the amount

of their exported goods obtained so far). Great balancing: On the basis of the balance of ministries and branches under the Government ’s approval, the Trade Ministry issues import permits. The commodities that are controlled by great balancing include fertilizer, steel and iron, automobiles, motorcycles, sugar. (iii) Technical measures: Specialized management mechanism: When goods are imported specialized institutions on standard and quality must be consulted. Qualify test: Goods that belong to the list of items must undergo state testing on quality when they are imported and exported. Hygienic and anti-epidemic test: This is applied to animals and plants when they are imported into Vietnam. (iv) Administrative measures of management on import and export. - The right to import and export business: Only business enterprises which have satisfied a number of requirements by the Trade Ministry and obtained permits for import and export business are entitled to do import and export business. Import contact: Apply to commodity items that fall into the category of great balancing (to he concentrated in major specialized companies, general corporations). - Inspection prior to loading commodities on board ships: This is a regulation applied to a lot of Vietnamese exported goods such as crude oil, rice, rubber, tea, ground nuts, coal, textile and garment..., which must be inspected regarding size, quality, quantity and price before exporting.

204 - Customs procedures: This is a customs additional revenue and tax defined according to the minimum buying index approved by the Financial Ministry under the 20 November 1995 decision. (This price index is established for a certain period and based on the average GIF price of each item at the import border pass).

However, according to the Trade Ministry ’s opinion, the announcement of Vietnam’s non-tariff trade policy is cautions and step by step. In the immediate future, it is required to review, assess and define non-tariff policies and projectionist measures currently compatible with the cooperative mechanism in ASEAN and assisting domestic production. In reality, Vietnam has yet, for nearly two years no WTO undertake this job. The other ASEAN countries continue to request Vietnam make public its trade policy, specify its obligation to reduce taxes and move toward abolishing non-tariff barriers on the principle of transparency not only in AFTA but in APEC and WTO as well.

When joining AFTA, Vietnam is naturally requested to participate in another important area with the other ASEAN members. The ASEAN customs have determined that it is necessary to work out and sign a framework agreement on ASEAN customs similar to that on service and intellectual property sectors, which include the following:

(i) United regulation of the list of tariff indices among tide ASEAN countries: Vietnam’s list of import-export tax indices is based on the harmonized list set by the Customs Cooperative Council, but only at the HS level of 6 digits and the list of imports and exports at the HS level of 8 digits (issued by the General Department of Statistics). This would create favorable conditions for the Vietnamese customs to proceed with the other ASEAN members to participate in working out this co mmon list for ASEAN. However, Vietnam would face numerous difficulties in its participation in composing the ASEAN list of tax indices due to a big difference between Vietnam’s current list of tax indices and list of imports and exports laid down by the General Department of Statistics and the lists of tax indices of the

205 other ASEAN countries. The unified regulation of the ASEAN list of tax indices would require Vietnam re-adjust its list of import and export taxes. This is huge volume of work that requires the coordination by various ministries, economic, general and production branches in addition to taxation, customs and statistics. (ii) Regulation of the custom price system: The ASEAN member countries have agreed to apply the customs price identification system according to GATT/WTO in late 1997. As far as Vietnam is concerned, however, by virtue of the fact that it has not yet been a member of GATT/WTO and it has just become an ASEAN member for a short time, the other ASEAN members have agreed to let Vietnam have a necessary flexibility in applying and identifying prices under GATT/WTO and it is expected to be implemented after the year 2000.

(in) Publication of guidebooks on custom procedures: In order to promote internal ASEAN trade in service of the regional trade community and spreading out legal policies of the customs, the ASEAN customs have agreed to publish a guidebook on custom procedures in the ASEAN countries. The book contains a great number of customs procedures as well as import-export policies, commodity policies, tax policies of all the members. In preparation for the publication of this book, the Vietnamese customs has made great efforts in meeting nearly all the contents required by the book. However, due to Vietnam’s policies which are in the process of perfection, there may remain issues which have been introduced into the book, but soon become out of date.

(iv) The green corridor for CEPT products: In order to express a preferential attitude toward CEPT products, the Customs of the ASEAN countries have agreed that all countries have regulations on the green corridor on customs procedures for these products. CEPT products which go through customs in the green corridor enjoy every advantage over procedures applied to

206 other commodities. All counties have, so far, announced their green

corridors. Vietnam has also announced its green corridor with the main contents that preference is reserved for CEPT products, using a specific mark to distinguish from other commodities, reserving separate reception tables to take procedures for CEPT products and ASEAN passengers at international airports. The General Department of Customs has issued instructions to local customs to carry out the green corridor for CEPT products with a vie WTO creating favorable conditions and implementing rapidly customs procedures for CEPT products.

(v) Common customs forms: The study to move toward the application of co mmon customs forms for the ASEAN countries is actively under way. As for Vietnam, due to the difference in the list of tax indices, the application of common customs forms can only be implemented after unifying the list of tax indices at the level of 8 digits. In addition, this is rather a difficult problem for Vietnam, because forms expected to he applied will be suitable for the modern means of management rather than by the manual means of management. However, this unification will encourage Vietnam to perfect its legal system and methods of management.

(vi) The ASEAN agreement on customs: At present, the agreement on customs of the ASEAN countries is in the process of drafting. As for Vietnam, the participation in the signing of the ASEAN agreement on customs is feasible, but there is a number of problems that need further study such as the coordination in investigation against smuggling, recommendations for issues to be noted.

(vii) Areas to he given priority in customs procedures: At present, in the issues on customs procedures, there are five areas

207 to be given priority; these are: Customs procedures prior to submitting customs forms Procedures on imported commodities for domestic consumption Procedures in customs inspection - Transportation Free zone With regard to Vietnam, the issues of transportation and free zone are still in the process of study and there are no specific regulations. As regards the rest, although Vietnam has laid down a number of regulations, they have not yet systematized, sufficient and unified. As a result, the Vietnamese Customs may have only introduced them the ASEAN countries. At present, the General Department of Custom is, however, undertake various procedures so that Vietnam can join the signing of the Kyoto Convention on customs procedures. Vietnam’s participation in this convention will facilitate its implementation of the issues in the ASEAN priority area on customs procedures. The ASEAN Industrial Cooperation Agreement (AICO signed in April 1996): It is intended to strengthen cooperation, absorb foreign direct investment (EDI) and technological transfer for economic development, and at the same time to establish a legal framework, create conditions for business of the ASEAN countries to cooperate on industrial production on the basis of mutual benefit. The AICO is, in fact, a step of pre-scheduled implementation by CEPT in the industrial field.

The Vietnamese Government is proceeding with drafting and promulgating documents guiding businesses to participate the AICO program, thus formulating regulations and a machinery to approve businesses and their products to see whether they fit the criteria for preferences under the AICO program. Due to the fact that AICO is essentially pre-implementation of AFTA concerning industry, the Vietnamese Government has required there be an integrated policy in import and export and industrial protection. The Industry Ministry has been appointed as the contact institution to preside over the consideration of permit issuance to join AICO; the Financial Ministry is responsible for the level of referential taxes; and the Trade Ministry for non-tax preferences and verification of the source of goods.

208 With regard to the agreement on service cooperation: The ASEAN framework agreement on service cooperation is related to numerous areas, including sensitive areas. The first negotiated agreement, which is the agreement on service cooperation in such areas as market penetration, national preferences in 7 service sectors of tourism, aviation, shipping, finance, construction, telecommunication and business, will be carried out within three years beginning from January 1996. Among these sectors, issues related to service, telecommunication and finance (banking and insurance) would be completed sooner, in mid-1997 (18 months). The principal mode is based on the way of negotiation of GATT in WTO. The proposals made by the members will be forwarded to the Secretariat to send them to individual members for study to prepare for negotiation.

The Vietnamese Prime Minister has approbed and permitted the Planning and Investment Ministry to announce to ASEAN a number of legal documents of mechanism in the areas of tourism, telecommunication, information. The government has assigned the ministries concerned, for dealing with cooperation in the following services: • Financial services: Ministry of Finance and the State Bank, • Maritime Transportation services: Ministry of Transportation and Communication, • Telecommunication services: General Department for Post and Telecommunication, • Tourist services: General Department for Tourism, • Aviation services: General Department for Civil Aviation • Ministry of Planning and Investment (MPI) is in charge of a very broad range of other services that include business, professional, informatics, research and development, real estate, rental/leasing (without operation) services.

Beside, MPI has been assigned to supervise coordination of Vietnamese economic relations with ASEAN. MPI is advising other ministries and institutions on ho WTO build a project of economic interaction and what negotiating strategies they should take to deal with their ASEAN counterparts. MPI also acting on behalf of the government to inform the ASEAN Secretariat of the latest changes in Vietnam’s economic policies with regared to cooperation with ASEAN in general, and with AFTA

209 in particular.

In short, in the context of globalization and regionalization of the world economy, the Vietnamese Government has implemented major policy reform to integrate the Vietnamese economy into the world economy in general and South east Asia regional economy in particular.

Impacts of regional integration on the Vietnamese economy

1. Impacts Of The Process Of Integration Into ASEAN On The Economic Reform In Vietnam

There are worries that the integration into ASEAN will lead to “liberalization” to such extent that the State cannot control the economy. It is true that in transitional econoomies, the managing and guiding role of the State plays a very important role. There are many countries who have to pay a dear price for the lax State management which has led to uncontrollable economies. In other words, the economy was controlled by outside forces and thus manipulates the State. Integration into ASEAN, however, is not a process for only Vietnam but all other countries in the organization. A program initiated by ASEAN must originate from the interests of its members, not from the interests of other forces. And the economic goals of ASEAN have shown that the removal of non-tariff barriers will not affect State management rights. It only requires that member countries must reform and eliminate administrative and bureaucratic ineffective measures.

To enjoy preferential treatment from ASEAN, each commodity each enterprises must meet certain standards which are supervised by State agencies. The main issue is to take appropriate steps in accordance with the legal framework and in conformity with domestic policy and plan.

ASEAN itself is not a financing organization for its members but all ASEAN countries are making the best use of the strength of the organization to achieve great results in their development. As with other member countries, Vietnam carefully studies regional situation and domestic development need to make initiatives and

210 programs for cooperation within ASEAN to create favorable conditions for domestic development.

Through ASEAN institutions, Vietnam has found a common voice to defend its interest in world's economic forum and organization. Being a member of ASEAN, Vietnam will enjoy great support in applying for membership in WHO and APEC which are important economic organization thus paving the way for it to enter other markets. Taking part in cooperation committees such as ASEAN-US, ASEAN-Japan, ASEAN-EU, ASEAN-China and other dialog organizations within the ASEAN framework, Vietnam has more opportunity to develop trading relations with major partners in the region.

One of the focus which is considered to be a breakthrough in the administrative reform in Vietnam is to remove complex and bureaucratic procedures in the management of enterprises and foreign investment. The results of the administrative reform will have considerable impacts on the effectiveness of the integration into ASEAN and conversely, participating in ASEAN activities will create incentive as well as provide important information for the implementation of domestic administrative reform.

2. Impacts Of The Integration Into ASEAN On Industrial Policy

It is reasonable to worry that the joining of AFTA is equal to the open to the influx of ASEAN goods into Vietnam while the domestic industries are in the infant stage, not capable of competing even in the domestic market. Those factor, however, should be taken into consideration: Firstly, as with other ASEAN countries, Vietnam does not have to list all types of goods in the tax reduction program. For those goods which need more time to promote domestic production, tax reduction can be done later. Secondly, when one type of goods has tax reduction, the non-tariff barrier can be removed 5 years after that. This interval is enough to "strengthen ” domestic industries. Thirdly, the reduction of import tax for material, semi-product will reduce input price and hence improve the competitiveness of many industry products.

Moreover, the participation in AFTA (and the industry cooperation program of

211 ASEAN-AICO) will create favorable condition for expanding production cooperation with ASEAN and attract foreign investment to promote domestic production, gradually improve the quality of goods and service to compete in domestic and regional markets. On the other hand, those programs also create the chance to “select’ domestic enterprises so that profitable ones have the incentive to expand their production and market while weak enterprises must build convincing plan for protection in a reasonable extent and time frame and at the same time they have to change technology and upgrade management to survive in the marketplace.

Apart from protection of domestic production, not letting imported goods to kill infant industry enterprises, there should be policy to encourage and protect enterprises which produce export goods. Priority given to the protection and development of import substitution in comparison with export industries must be considered most carefully. It is important to note that domestic market in Vietnam has great potential, much bigger than the market of those “exported ” countries such as of Taiwan, and Malaysia. This market is flooded with imported goods - among them smuggled goods account for a significant proportion. The turnover (not to mention profit) of export of many enterprises, even many industries for export is not equal to the import turnover of one single goods.

3. Impacts Of Regional Integration From Trade Perspective

In recent years, imported goods from ASEAN account for about 30% of total import. Among them, material used for the production of industry goods take the major share. With the policy to promote import of material for production of industry goods, most of those materials were subjected to the tax rate under 5% before the implementation of CEPT. Participating in AFTA, therefore, will not have indirect impacts through the import and export of those enterprises. Moreover, ASEAN exporters will feel more comfortable with “ASEAN like” common regulations such as “green corridor ”, exempt of entry and exit visa... It is difficult, however, to quantify the overall impacts. Some important imported goods such as petroleum, motorbikes are not listed in the tax reduction program and thus will not be affected in the near future by AFTA.

212 Export to ASEAN accounts for 20% of total export of Vietnam. The main commodities are crude oil, agricultural products which are not included in the tax reduction program and therefore not subjected to preferential treatment of AFTA. The main commodity in the tax reduction program of ASEAN is manufactured product which Vietnam does not have competitive advantage. Vietnam can only take advantage of the preferential treatment of AFTA to expand its export market after investing to upgrade quality, reduce pride and transform export product structure. It is not a simple task given that the structure of production in ASEAN is rather identical and similar to current as well as future production of Vietnam. So the problem is that both Vietnam and ASEAN must seriously study and adjust accordingly their composition of export product. In general, AFTA does hot have great and direct impact to export of Vietnam. Put it more concretely AFTA will not create great leap forward or qualitative change in the structure of trade of Vietnam if there is no substantial change in the domestic structure of production.

It is generally accepted that participation in AFTA in particular and in ASEAN in general, all ASEAN member can find and make the full use of new advantage in trade realations with countries outside the organization, especially major countries.

4. Regional Integration ’s Impact On The Attractiveness Of Foreign Investment

In the Ninth National Assembly session in November 22, 1996, a draft of a new investment law was introduced and adopted. 46 It has been said that the new investment law is in need to meet three requirements for the new period of greater integration: • to replace the 1987 law which was so general that more than 110 government regulations were issues to explain specific cases, • to introduce a new and unique legal framework for the period beyond 2000, and

<6 The law includes 6 chapters and 68 articles in which 29 articles are refined and 26 other are first introduced. The new points of the proposed law focus on encouragement of investment and tax privileges, the consensus principle in the board of executives, reinvestment and establishment of new joint ventures, State management on foreign investment.

213 • to conform to AFTA, APEC and WTO criteria with regards to trade and investments and at the same time, to consolidate comparative advantages of the country ’s economy.

Facing with the fact that investment capital inflows from developed countries is decreasing, ASEAN is losing its attractiveness to foreign investment as compared with transitional economies such as China, India, Eastern Europe and Latin America. By setting up a common and adaptable market with the trend and conditions of the modern world economy and combining with other cooperation programs, ASEAN wants to maintain its position as an attractive market to foreign investors.

214 • Implications to other ASEAN members’ investment into Vietnam In December 1987, the Vietnamese National Assembly adopted a foreign investment law, thus constituting the first legal framework for activities relating to FDI which has been more and more positive viewed in the development of Vietnam. After being effective in January 1988, the Law was twice reflect realities and create more favorable conditions for foreign investment in Vietnam. According to this Law, both state-owned and private businesses can enter joint-ventures with and receive investments from foreign companies. The states ensures equal treatment among foreign and local businesses, guarantees repatriation of gains and non-nationalization of foreign assets. Besides, it introduces, among others, a more flexible income tax and export-import tax systems, the mode of BOT (Building Operation and Transferring investment) in infrastructure projects. It also allows the introduction of commonly used accounting systems. Until 1995, FDI from ASEAN countries, mainly Singapore, Thailand and Malaysia, amounted to $ US 2,851 million, accounting for 14% total FDI in Vietnam; ASEAN countries invested in 232 projects, accounting for 17% of total FDI project in Vietnam. According to statistical figures, ASSEAN countries are now investing into foreign markets with the investment capital of up to US $3 billion while intra-ASEAN investment accounts for about 15% of the total foreign investment capital. Since Vietnam became the 7th ASEAN member, there has been seen drastic changes in ASEAN investment into Vietnam. ASEAN investors play a considerable and fairly important role in Vietnam. By the first three months of 1996, licensed ASEAN investment projects were up to US $ 3.2 billion accounting for over 17% of projects and total investment capital. In late 1996, Singapore surpassed Taiwan to become the number one foreign investor in Vietnam with 155 projects and US $ 5 billion-worth of capital. In Southeast Asia, Singapore ’s runner-up was Malaysia with 55 projects of US $ 1.1 billion. Thailand ranked the third with 13 projects of US $ 1 billion. By June 1997, projects from Southeast Asian investors into Vietnam numbered 366 with the total capital of US $ 7.86billion accounting for over 25% of Vietnam’s FDI capital in the same period. ASEANs investment projects which focused on the fields of industry, reassembling, construction. .. (except for oil exploration and refinery) were cumbersome, sometimes uncoordianated and bureaucratic, thus

215 generally reducing attractiveness to foreign investors. By joining AFTA and Asian’s cooperation programs and activities, cooperative relations at a national, sectoral and enterprise level between Vietnam and ASEAN countries play a special role and create considerable advantages for ASEAN investors compared with other foreign investors. AFTA regulations on trade and customs also facilitate ASEAN investors especially in projects requiring exchange and coordination on products between ASEAN manufacturers and Vietnam-based ones. ASEAN agreements such as Agreement on Investment Protection, Agreement on Avoiding Double Taxation ... and the establishment of ASEAN Investment of Area program will make an active contribution to help Vietnam to improve the legal system and investment environment and at the same time making its regulations on investment compatible with other member countries.

■ Implications to Investment of non-ASEAN countries in Vietnam Considering Vietnam as a part of ASEAN market (for conditions to enjoy preferential treatment of AFTA is 40% value of the product must have origin from one ASEAN country) will help foreign investor to formulate their strategy in ASEAN according to a co mmon network to optimize comparative advantage in each country and specialize the use of resources. This also helps ASEAN countries to have intensive investment projects coupled with real technological transfer based on which to achieve sustainable development.

The other side of the coin should also he considered. In the long run, investmment projects in Vietnam can be calculated on the basis of the ASEAN market, but there is a possibility that a foreign investor, instead of investing in Vietnam to capture market as before now may make new investment or continue to expand its base in another ASEAN countries with more favorable condition to export to Vietnam based on AFTA preferential treatment. Especially for production line, which almost fully armotized, but still run well and projects producing goods for seasonal and fashionable taste. This negative impact depends to a large extent on the improvement of domestic investment climate.

5. Impacts Of ASEAN Integration On Budget Revenue

216 1995 statistics showed that import tax accounted for 12% of total budget revenue, among which import tax from ASEAN was 10 thousands billion Vietnamese Dong (VND). According to one estimate of the Ministry of Finance, with the assumption that the import amount in 2006 equal to that in 1995, when tax reduction is implemented according to the “most liberal ” list and schedule, the “loss ” to budget revenue is about 2134 billion VND, equal to 21% total import volume. If implemented according to the "careful” list and schedule, the amount is 935 billion VND, equal to 9.35% total import volume. Obviously, import volume after 10 years will not remain the same. Studying statistical figure of other ASEAN countries we can see that the inclusion of one type of goods into the tax reduction list will increase significantly the volume and hence value of export, import of that goods (from 1991 to 1995, import tax of Thailand was reduced on average 25% annually but the value of trade increased 30%). Since the implementation of CEFT, the value of trade within ASEAN increased on average 26% annually. Vietnam can have the growth rate equal to that level. Therefore, on calculation alone, reduction of import tax rate with the increase of trade value will not necessarily reduce income.

Those estimates are only for imported goods from ASEAN regardless of their origin. Statistical figure showed that imported goods from Singapore accounted for a great proportion of total import value from ASEAN (80%). At the same time, most imported goods from Singapore have no ASEAN origin. So the real loss to budget revenue is lower that the above estimation, other things remain unchanged.

From an arithmetic point of view, the impact of AFTA on the value of import from non-ASEAN countries should also be taken into consideration. In general, the impact of AFTA on budget revenue depends on a number of variables and hence difficult to provide exact number. However, as the above analysis shows, in reality AFTA will not have negative impact on budget revenue as some people worry.

One positive impact of AFTA on budget revenue is that it will generate conditions for Vietnamese enterprises to enjoy preferential treatment on tax, trade policy etc. from other members countries. These preference will help enterprises to increase turnover, profit and increase budget revenue accordingly.

217 Chapter Three VIETNAM’S VIEW OF AN EXTENDED ASEAN-10 l.An Overview Of Why Vietnam Joined ASEAN Many Vietnamese officials referred to the difference in ideologies and expressed happy surprise at the event which in their view was impossible some five or six years ago. Then, are Vietnam and ASEAN countries strange bedfellows? That is not entirely the case if one tries to get into the bottom of things. Indeed, because of poor research and ideological blinkers Vietnamese officials could not understand that in spite of anti­ communism, several ASEAN countries since the end 60s already thought about promoting friendship with North Vietnam and even having her as member some time in the future. To summing up our study on the extended ASEAN, let us try to answer the following question: What are the reasons which account for Vietnam’s decision to join ASEAN?

Vietnam joined the Association of south East Asian nations (ASEAN) in July 1995. Since then, a general view was held in Vietnam that the country had made the right decision. There have been various to why Vietnam did so. Perhaps, one of the main] reasons in that Vietnam has made a good analysis of the nature of ASEAN and held a positive acknowledgment of where the association has been and of its relevant importance to the new course of development in Vietnam after renovation program had begun.

To start with, many people in Vietnam see ASEAN as an organization for political cooperation. Differences in social and political preferences did not prevent the country from observing ASEAN political cooperation, among other things, as a positive factor for promoting good neighborliness and forging an open regionalism, which serve the needs for peace, stability an development of ASEAN members as well as those of other countries yet to become its members. The course of renovation in Vietnam needs first and foremost external favorable conditions that could ensure peaceful and friendly relations with its neighboring countries. Experiences and practices of ASEAN in dealing with each other thus could ensure Vietnam of such conditions. As many scholar observed ASEAN both from within and without. ASEAN had been formed in 1967 in the first phase of reconciliation that ended the period of confrontatsia between Indonesia and Malaysia.

218 ASEAN political cooperation, therefore, started with building good neighborliness ' among neighbors. The success of ASEAN in this regard lies in the fact that ASEAN has found the ways to manage to differences among its members, especially the ones involve territorial disputes and encourage the parties concerned to use peaceful means of settlements. Since 1967, inter- ASEAN disputes have turned into military conflicts. (Meanwhile, disputes and contradiction in Indochina, which were not handled in a timely and appropriate way, together with superpower rivalry led to the war in Cambodia and rising tension in southeast Asia.) This ASEAN “formula ” for inter­ state relations among its members was anchored in the treaty of amity and cooperation in southeast Asia, known as the Bali Treaty signed in 1976. This is primarily a non-aggression pact which sets out principles for ASEAN inter-state relations and emphasizes for political independence and territorial integrity, non ­ interference in domestic affairs and renunciation of the or the use of force as well as measures for peaceful settlements of conflicts between countries being parties to the treaty. Thus, the same formula was applied to relations between Vietnam and the ASEAN countries before Vietnam became a member of ASEAN in the late 1980s. Moreover, it officially became a cord of conduct for the countries in southeast Asia with Vietnam and other countries including Laos, Myanma and Cambodia acceding to the Treaty and later joining the Organization. This cord of conduct proves effective for softening disputes between individual parties to the Treaty and possibly even for resolving them or transforming potentials for conflicts into those of cooperation. Vietnam have been negotiating with some other ASEAN countries on the demarcation of the continental shelf, on overlapping sea zones, fishing and other issues. Some issues have been satisfactorily settled and prospects for solving others are promising. Thus, by acceding to the Treaty and later by joining ASEAN Vietnam and the other ASEAN members, to use the words by Malaysian Prime Minister Mahathir Mohamad, “entered the second phase of reconciliation, ” and therefore, will not have to worry and spend much on defense and security matters with respect to its Western and Southern borders. This fact alone contributes greatly to the new course of renovation in Vietnam. More resources, thus, can be focused on development of economy and welfare of the people. ASEAN way of solving disputes was once again highlighted in its 1992 Declaration on the south China Sea which called on the parties concerned “to exercise

219 restraint and resolve all sovereignly and jurisdictional issues pertaining to South China Sea by peaceful means; to explore the possibility of cooperation there on safety of maritime navigation and communication etc.; to apply the principles of the Bali treaty as the basis for establishing a code of international conduct of the South China Sea; to subscribe to this declaration ” As far as ASEAN members involved in the dispute are concerned, the declaration is serving as a guideline for their policies. At least, the disputes over the Spratlys do not represent an obstacle to improving relations between Vietnam, Malaysia, the Philippines and Brunei nor do they become a hindrance to ASEAN cooperation and a source of possible military conflicts between and among several ASEAN members. Moreover, what ASEAN has done since 1991 concerning the South China sea dispute, and the support given to ASEAN's stand by countries inside and outside Southeast Asia shows that friendship with ASEAN has helped to strengthen Vietnam’s position and to compel China to adopt a conciliatory attitude, that did not happen in 1998 and before that. In sum, for Vietnam, the importance of relations with ASEAN has been attached to the creation of an environment of peace and security at time of greater chance and a greater need for such an environment following the end of the Cold War. Let us refer to an old saying of Vietnam: “To forget relatives living far away, and to cultivate close neighbors ”. For nearly 40 years, Vietnam’s foreign policy, mainly for reasons beyond its control, ran counter to this conventional wisdom which now happily fits in with the present situation. Moreover, facts show that even when Vietnam could rely on a Superpower, the USSR, antagonizing ASEAN was indeed a prerequisite to utter isolation and facilitate the schemes of South, a lesson which many Vietnamese would not easily forget. Instead, happy ASEAN-Vietnam relations the development of relations between Vietnam and the remaining part of the world. It also does not hinder Vietnam’s relations with China as the latter also assiduously cultivate ASEAN friendship and did welcome Vietnam’s ASEAN membership. Regionally, ASEAN has been able to moderate and coordinate with major countries outside the region including the United states, Japan, China Russia and other external states, at a relative good level, on major policy issues concerning the security of Southeast Asia. Since 1992, ASEAN has begun to discuss security issues at various at various for a that include the annual ASEAN Ministerial Meeting (AMM), and the ASEAN Regional (ARE). ARE so far represent the only convene for all the regional states and major powers of the world where all of them are committed to peace, stability and

220 development of the region. In other words, good ASEAN-Vietnam relations do facilitate the development of relations between Vietnam and the remaining part of the world. Clearly, improved relation between and other ASEAN countries, among other things, help bring about normalized and improved relations between Vietnam and the US, Japan and China as well. Good relations with ASEAN can also help Vietnam form and carry out a more balanced foreign policy with regard to major powers. Here, it should be noted that for the first time, VIETNAM has given to its relations ASEAN countries a priority enjoyed by its relations with Laos, Cambodia and China, putting all of them in the category of close neighbors with whom friendship must be cultivated as important aspect of the diversification of its foreign relations. This new geopolitical approach, therefore, represents a new advance in the foreign policy thinking of Vietnam, showing that the improved VIETNAM- ASEAN relationship led to a broader context on which Vietnam’s long-term foreign relations now was based. It further has been proved the in cultivating better relations without ASEAN, Vietnam did not have to ‘ sacrifice ’ any of its relationship with external countries. Instead bettering relations with ASEAN and becoming its member helped the country develop and improve its relations with all other countries in its effort to a “friend of all nations in the world community. ” In addition, conservatives in Vietnam also noted that Vietnam and ASEAN share common points in terms of limited democracy and human rights, and therefore, in spite of differences in ideology, joining ASEAN world not jeopardize the one-party regime in Vietnam. Moreover, ASEAN also help the member countries find a common position to face the challenges of interference posed by the west. Therefore, Vietnam also finds a source of support from ASEAN to the maintenance of its political cohesion and stability. Lastly, with Vietnam’s membership ASEAN, the ASEAN will become more united with more strength to deal with external actors economically and politically. As and when actual and/or potential conflicts between and among Vietnam and other ASEAN members arise, they will likely be best dealt on an Intra-ASEAN basis, leaving no possibility for outside powers to manipulate, thus exerting greater negative influence in the region like what they did in the past. This also give rise to a more united posture by ASEAN in the broader region of Asia-Pacific and global affairs with the hope that ASEAN will be one of the polars in the world politics.

221 ASEAN is also an organization for economic cooperation. The policy of reforms in Vietnam has created favorable conditions for the ASEAN to trade, invest or engage in economic cooperation with Vietnam, which is, of course, also beneficial to Vietnam’s development. One could detect a genuine feeling of admiration for ASEAN economic successes and a sincere to learn from ASEAN experience, as reflected, among other things, in the following statement of a vice minister of Vietnam at an international seminar December 1995 in Kuala Lumpur: “the experience of development from other ASEAN members,., your successes and failures will help our country the course of development”. This was indeed a common thought among many officials who reasoned that Vietnam and ASEAN has almost the same starting point in 1954 and therefore the existing development gap must be due to war in Vietnam versus peaceful conditions in ASEAN countries but also to unpractical models of development. ASEAN countries ’ experiences in economic development, both positive and negative, may be relevant to the situation of Vietnam, in view of similar climatic conditions and of the fact that ASEAN countries were formerly less developed as Vietnam now is. Trade and investment by other ASEAN countries in Vietnam play an important role in developing the country ’s economy. Even before Vietnam joined ASEAN, economic its relation with ASEAN countries helped Vietnam to find new sources of market and investment to replace the ones that were dried up with the diminished role played by its traditional markets and economic partners in the former Soviet Union and Europe. Vietnam’s membership in ASEAN brought about more economic gains. Trade turnover - both export and imports - between Vietnam and ASEAN countries rose to US $1056 million inl991, from US $126 million in 1986. After joining ASEAN, Vietnam’s two way trades with ASEAN increased by an average of 26.8 per annum since July 1995 and now up 34.4% of Vietnam’s total trade. ASEAN investment (248 projects valued at US $3.56 billion), accounted for 20% of total investment Vietnam as of June 1996. In more informal discussions, some Vietnamese officials even went to the length of saying that “joining ASEAN is also the opportunity for us to push forward the reform process ’’ . This feeling was not be shared by conservative elements in the regime who didn’t want to see reforms going too far, but it was certainly the view of an increasing number of young and middle-aged people in and outside the officialdom. Yet, in deed, Vietnam’s participation in the ASEAN’s scheme of AFTA does require the

222 country ’s policies for further market-oriented reforms as well as the developments of its human resources to facilitate effective cooperation with ASEAN partners. The economic dealings with other ASEAN partners, thus, help Vietnam to get accustomed with principles and practices of the market mechanisms. This on the one hand, promotes further understanding of the market and more introduction of market oriented policies, and at the same time is an effective way to train Vietnamese officials in managing a market economy. On the other hand, it help Vietnam take bolder steps in economic dealing with other partners outside the regions. In this regard, Vietnam foreign minister Nguyen Manh Cam said that: “ASEAN represents another channel for us to integrate into region and allows us to join the processes of globalization ”. The statement showed that a driving force behind the decision was the necessity to open the economy and attract foreign direct investment, which could he possible only if normal and friendly relations prevailed. The ASEAN backing of Vietnam to join APEC was successful as Vietnam was admitted to become a member of APEC in 1998. ASEAN support for a membership for Vietnam in the World Trade Organization (WOT) is also crucial. Above all, Vietnam’s participation in AFTA is a necessary step in preparation for its participation in these broader organizations.

In short, there have been strategic implications of the joining of Vietnam into ASEAN. Economic and other considerations, including trade, a common market for southeast Asia etc., are very important. Yet, they are not as overriding as the long­ term political and strategic considerations. Vietnam’s membership in ASEAN help, in the words of an external observer, increase its geo-political weight in global affairs and enhance its leverage in political dealings with such major power as the US, EU, China, Japan, Russia etc.,; enhance prospects for more bilateral and multilateral cooperation thus contributing to continued peace and stability in southeast Asia and the broader region of Asia Pacific; encourage more economic reforms; and forge a new sense of regional self-confidence and identity.

Answers to questions of why Vietnam joined ASEAN can also be found in exploring why ASEAN accepted Vietnam as a member. While a number of politicians and officials in ASEAN countries ware still wary about Vietnam’s penchant for Marxist ideology, its military bias, its possible vulnerability to Chinese influence and pressure and the attendant weakening of ASEAN in terms of organization due to the broadened

223 membership, a unanimous decision was taken to accept Vietnam as a full member. Several reasons for this unanimity. Firstly, the decision was motivated by a long-term and basic consideration: There can be not peace in southeast Asia so long as Vietnam is left aside, isolated and ostracized. As the 1980s have shown, .a Vietnam which is allied to a hostile power represents a grave danger for southeast Asia. In fact, the geographical location of Vietnam - lying in between China and the remaining part of mainland southeast Asia - has a great strategic importance that should not be ignored. Creating the conditions so that Vietnam could serve as both a dyke against the Chinese threat and a conduit for more constructive relations with China should be a good alternative to be pursued. Further, co-opting more members makes the ASEAN more representative of the region or strengthens its claims to such a capacity Which is what growth usually involves. The 1950-1986 period has also taught the Vietnamese that as policy, independence and peace, are the best guarantee for their sovereignty safety and welfare and a respected place in the comity of nations and that is what is essentially involved in ASEAN membership. Further, having shown to Vietnam that enmity toward ASEAN does not pay, the ASEAN countries, by new and different policy decisions form 1987 and culminating in the 1995 decision, have tried to help Vietnam to solve its difficulties and find a new alternative, thus proving that they are real friends in need.

By so doing, they are marking along-term investment, with the hope that present and, in particular, future leaders and officials of Vietnam would remember for a long time to come these acts of good will. As and when Vietnam members strong, which may take a long time in view of its low economic starting point, troubles may perhaps arise, but it would be easier to deal with Vietnam as by the ASEAN countries would already know quite well its strength and weaknesses and would already have a big number of Vietnamese friends whom they could rely on. These were also roughly the considerations related to ASEAN membership of Indonesia although comparisons are bound to be lame, more or less. Further, actual and/or potential rivalry between Vietnam-Thailand, Vietnam-Indonesia, and among Vietnam-Indonesia-Thailand are perhaps best dealt on an intra-ASEAN basis, otherwise such rivalry might be manipulated by outside powers. Some ASEAN countries undoubtedly hoped that by joint ASEAN and cooperating on along-term basis with all its members, Vietnam will

224 deviate and ultimately abandon the path of socialism. In fact, in the view of many, by the of 1989 Vietnam did abandon the main recipes of socialist economics without gun fire or bloodshed. But the choice should be best left to Vietnamese to decide their own affairs thus preempting any possible accusation of Vietnamese conservatives about ASEAN1 s interference internal affairs. Thereafter, came economic and other considerations, including trade, investments, a common market for Southeast Asia. They are also very important, but are not as overriding as the first strategic long-term consideration.

In short, the above decision of both ASEAN and Vietnam mainly proceeded from strategic considerations of national interest (ideological components were ignored or hardly played any substantial role on the part of Vietnam). The ASEAN countries were guided by long-term and comprehensive calculations, while Vietnamese leaders obeyed more immediate but nonetheless basic requirements, mainly because renovation as a broad political line does involve many different shades of opinions regarding its final outcome (as reflected for example by different viewpoints on the adoption of ASEAN model of capitalism) and also because of the absence of a modern civil service. But above all, it is necessary to dwell more deeply into the fact that Southeast Asian countries did come together during the period of no-cold war (1945-1949), and they are now coming again together during the post-Cold war period. Thus, something like a full circle has been accomplished. One can argue that history repeats itself, but the point is that the present coming together involves less naivete and more mature political thinking, a factor which may reassure us of a lasting link. This also long as the ASEAN countries, including Vietnam, its new member, uphold the policy of peace and independence, cultivate relations of cooperation with big powers without owing allegiance to them, the newly found friendship and solidarity could last. Of course, to this should be added what they have been doing among themselves for the last 4 decades: to promote intra-ASEAN friendship on the basis of strict respect for national independence and sovereignty, peaceful solution of disputes, consensus building through calm and thorough discussions, not allowing contradictions in national interest to jeopardize the common ASEAN goals. Further, what would unite Vietnam and all ASEAN countries is not only peace and development but the threat of the Chinese juggernaut. So long as ASEAN is of one mind in countering effectively the Chinese threat, ASEAN unity, as far as Vietnam is

225 concerned, is assured. This is, of course, easier said than done. Inside the Vietnamese establishment, there usually exist a pro-China group which tries to distort Vietnam’s policies, and some other ASEAN countries, which need not be named, are also more or less vulnerable to Chinese threats and cajolery. This would involve a good amount of intra-ASEAN discussions, mild and tough. But even with all that, such a situation is still much better than “each one for himself’.

2.Vietnam’s View On Impacts Of An Extended ASEAN to The Organization ’s Future Developments Throughout the thirty years of its development, ASEAN has become the most successful organization for cooperation among countries and an important partner of various international organizations, other regions and major powers. Celebrating its 30 anniversary of birth, ASEAN is moving closer to its goal set by the organization which will embrace all ten Southeast Asian countries, a dream that has been nurtured by the ASEAN founders since 1967. The expansion of ASEAN is further propelled by the trend of globalization and regionalization, the trend of peace, and cooperation for development, and the trend of regional integration that all countries, big or small, are actively participating in this process. With the expansion of the organization embedding all ten countries in the region, ASEAN will have a promising potential. At present, ASEAN-9 has population of 480 million people and the general domestic output (GDP) of US $632billion. In the next century, ASEAN, as an economic region, will have 500 million people and its GDP is estimated at US $1,000 billion. ASEAN-10, in a full sense as the regional organization of the Southeast Asian countries, will enhance its strength, its voice and its diplomatic negotiating position of the whole organization as well as of each member country. However, this process of extension will also generate concerns about difficulties confronted by ASEAN at present and in the future. These problems are: the level of less development of the new member countries that will affect the common pace of cooperation in the whole bloc, the existence of two ASEANs (one rich and the other poor), the different abilities of the member countries in participating in common activities of ASEAN, and the diversity, an outstanding characteristic of ASEAN-10, that will also affect, to some extent, the cooperation of various realms in ASEAN.

226 The implementation of the member countries. Nevertheless, with the varied deadlines concerning the accomplishment of AFTAin the year 2003 (or even 2000) for the old members, 2006 for Vietnam, December 2007 for Laos and Myanmar and an unclear deadline for Kampuchea, there have appeared worries about the result of implementation of AFTA, since whether the implementation of AFTA is successful or not it will have a direct on the next plan of cooperation of ASEAN on the free on the extended ASEAN or the ASEAN economic region (AER). ASEAN is well-known for its code of conduct that has become a symbol for the organization, namely the principles of consensus, non-intervention into each other ’s internal affairs, equality. With ASEAN-10 and the recent developments in Kampuchea, the above-mentioned principles seem to he challenged. With 10 member countries which have much difference in area, population, level of development, political system, religion, geographical position. .., their economic and security interests also vary. The achievement of consensus on major economic and political issues will become complicated and requires much time from the member countries to accommodate national interests and shared interests of the region. In addition to this, the principle of consensus of ASEAN will help the new member countries, Vietnam included, safeguard their own interests, and at the same time find ways to reconcile with national interests of the other member states, thus balancing national interests and shared interests of the region. With 10 member states, the internal affairs of ASEAN will also increASEANd become further complicated. Therefore, ASEAN, as the organization integrating the Southeast Asian nations, will have to spend more time and efforts to continue playing a mediating role foe differences and internal disputes among the member countries. There remain border and territorial disputes between Vietnam and some other Southeast Asian countries. ASEAN is an organization which is commonly appreciated as successful in settling internal relations and differences among its member countries by the basic principles as laid down in the Bali Treaty and the ASEAN Declaration on the Disputes in the South China Sea. The inclusion of all 10 Southeast Asian countries into ASEAN will bring about an interest to security of the region and that of Vietnam, thereby creating a stable environment in the region so that Vietnam is able to concentrate all its material and strength on the cause of modernization and industrialization, and moving the nation to keep up with the region and the world. Following the recent incidents in Kampuchea in July last year, it can be said

227 that the ASEAN principle of non-intervention into the internal affairs of other countries is being most severely challenged. Extra-regional countries were waiting and watching how ASEAN would react and within ASEAN different opinions appeared. A number of ASEAN official and scholars raised the problem that ASEAN should undertake a “policy of constructive intervention ” or “intervention with ASEAN characteristics, with ASEAN ways ” in Kampuchea. This view has not yet been accepted by ASEAN, but the ASEAN-Kampuchea relations should be handled with great care and wisdom, otherwise it will affect not only the internal unity of ASEAN but on the relations between ASEAN and other partners as well. The expansion of ASEAN membership will partially affect the relations of ASEAN with its partners. When admitting Myanmar to the organization as a member. ASEAN had to overcome strong pressures from outside the region. At present, the ASEAN-EU becomes tense again the membership of Myanmar at the Asia-Europe (ASEM) Conference to be held in London in March 1998. As an ASEAN member, Vietnam always respects the principle of non ­ intervention into the internal affairs of other countries and supports the admission of Kampuchea as the 10 member of ASEAN so that ASEAN will ultimately accomplish its dream of including ten countries of the United southeast Asia as enumerated in the Bangkok Declaration of founding ASEAN in 1967. The new members when jo ining ASEAN time to acquaint themselves with and integrate into the operational structure of the organization and implement their commitments to AFTA, so it is hard for them to bring into full play their active roles in the first period of time. As a result, they may be full members but not yet active and comprehensive members. With the extension of ASEAN to all Southeast Asian countries, this is the first time that the sub-regions of Southeast Asia are in a United ASEAN. It will increase regional unity and mutual sympathy among the regional countries, thus, resulting in more benefits to the regional security and to the security of each member state. However, this strength must be accompanied with one condition that the member countries must have a sense of respecting the community and act the common interest of the region.

ASEAN with its posture and prestige will raise the membership position of each country in the organization including Vietnam and strengthen and expand

228 Vietnam’s relations with major powers and other regional and international organizations. However, Vietnam’s and other member counties ’ responsibilities are to contribute to maintaining and enhancing the strength of ASEAN both economically and politically. This requires Vietnam and the other new members, in addition to promoting the development of their national strength, to seriously implement their commitments to the ASEAN community, and in the first place, their commitments to the implementation of AFTA as scheduled. The implementation of AFTA will make the ASEAN region increase the internal trade volume, and ASEAN will turn out to be more attractive to the foreign investment flow into the region, but is a matter of the future. At resent, according to the common assessment of experts, the members have to suffer some losses in domestic production and national budget revenue. The difference is only the matter of more or less. The competitiveness of Vietnam’s products is not very high, so apart from making efforts to increase the competitiveness of its commodities, the improvement of the investment conditions and environment in Vietnam to make it more appealing to foreign investment is an important matter since Vietnam will face an acute competition in this regard from the old members as well as the new ones in ASEAN. Since the new member countries joined ASEAN at different points of time, the deadlines for accomplishment of their commitments to AFTA also vary. This reality will have an effect on the common plan of implementation of AFTA of the whole bloc and on the achievement of compromises among the member countries on sensitive items. This matter is also perceived by Vietnam which has to work out a plan or a road-map to participate in AFTA in conformity with its interests but not detrimental to the common goal of the entire bloc. Vietnam is also aware that with ASEAN-10, the diversity in economic and political interests will have a stronger impact on the unanimity of positions of the whole organization concerning the issues of regional cooperation as well as the thorny security and political problems. Vietnam’s attitude is that it will strive to contribute to the unity of ASEAN and demonstrate its constructive position on each specific case. However, with ASEAN-10, Vietnam is not longer the only new member country in ASEAN, but besides it are Laos and Myanmar at present and Kampuchea in the immediate future. As such, the assistance given by the ASEAN countries, various international organizations and the ASEAN partners to the new member countries in

229 the process of integration into ASEAN will be shared by Vietnam and the other three new members. Vietnam will have to make greater efforts to rely on its own resources and make the maximum use of the assistance from outside in the processof integration into the region and the world. The mid-term Congress of the Communist Parly of Vietnam in 1994 pointed out that one of the four biggest challenges to Vietnam at present is the danger of lagging behind economically. Vietnam has a level of less economic development than the old member countries of ASEAN, so without a correct development strategy in the future, Vietnam will also face the danger of lagging behind compared to the other new member countries which may have better infrastructure, a rather perfect legal system and a staff of officials better trained in specialization and foreign languages compared to Vietnam.

In the situation of the financial and monetary crisis which is exerting both economic and political impacts on the ASEAN countries, even on the counties which have been classified as newly industrialized and ready to take off, the assistance accorded by the ASEAN countries to the new member countries will certainly be limited. The lesson drawn from the crisis is very precious for both old and new member countries. However, through this it is also clear that the ability of the ASEAN countries to provide mutual help and support is very limited and ASEAN still lacks cooperation mechanisms to cope with the situation effectively, and this is also an urgent matter posed to the member countries to have a second thought in search for more effective cooperation methods in the future. It can be said that with an extended ASEAN, this regional cooperation organization will enter a new stage of development. A new step of movement will always be accompanied by changes and thoughtful ideas for self-perfection to meet the requirements of the regional and international situation and the new position of ASEAN in the region and the world. There is a common belief in Vietnam that “ the ASEAN companionship ”, “the ASEAN unity ” and the ASEAN sensitivity to cope with the situation, which had contributed to the success of ASEAN in the past years, will help move ASEAN cooperation to a new high posture in the future in order to implement the goal of further economic integration and more political unity.

230 The Australian observer has also cited six possible disadvantages of an expanded ASEAN. These include: • Danger that the inclusion of so many new members will erode the traditional ASEAN spirit of solidarity, give and take, mutual accommodation and impede consensus making. • Danger that an expanded ASEAN may not be able to move with the speed of a smaller ASEAN in launching new initiatives such as the ASEAN Regional Forum and the Asia-Europe Summit Meeting • Danger that the historical suspicions between certain countries may infect ASEAN. • Danger that the admission of new members will slow down the implementation of AFTA and the expansion of its scope. • Danger of creating an ASEAN which is divided into groups on certain issues. On possibility is a two-tier ASEAN based on level of development (i.e., rich and poor.) There is also the possibility of a political divide based on level of democratization, or a strategic divide (mainland versus island or based on attitudes towards China).

• The expansion of ASEAN may complicate ASEAN’s relation with the US and EU member because of their views towards certain potential members such as Myanmar. In general, one can agree with these perceived disadvantages. Yet, they are the “opportunity-costs ” of any organization ’s expansion, and perhaps have been carefully thought of by the ASEAN members. Looking from Vietnam’s perspective, the question of a country ’s continued comfortability being an ASEAN member is more relevant. To date, Vietnam's expectations in joining ASEAN have been in the main met. Thus, the country is now feeling comfortable being a member of the organization. The next question thus posed is whether this feeling of comfortability can be sustained with more countries being added to the organization, and what factors can influence its perspective of what ASEAN is or should be going to? Debates in Vietnam have generally pointed to three possible developments along which Vietnam does not see ASEAN developing. Firstly, recent ASEAN response to developments in Cambodia poses a question of whether ASEAN will remain committed to its principles that proved to be essential to the successes of ASEAN as well as to what have been called “the ASEAN ways of doing

231 things. ” Building consensus among members, strictly respecting individual state’s sovereignty, and refrain from interfering in domestic affairs of member states proved to be the basis for ASEAN activities. As a new member of ASEAN with low level of economic developments, long history of fighting foreign intervention, as well as short records of involving in the decision-making process of the organization, and with more focus on domestic problems, Vietnam is more sensitive to deviation from the principles of making consensus among ASEAN members. Moreover, recent development toward advocating “ASEAN constructive intervention ” in domestic affairs of a regional country did cause some eyebrow-raising among several circles in Vietnam. Being committed to the cohesion of the organization is also a direction that Vietnam wishes to see ASEAN developing. Yet, this cohesion seems to be affected by inclusion of more members. On the one hand, for all the reasons that have been discussed, the inclusion of all ten countries into ASEAN is welcome. On the other hand, from ASEAN-6 to ASEAN-7, the perceived gap between a “rich” ASEAN and a “poor ” one emerged, and seemed to be one of the topic for discussions of the organization ’s observers. Here, a scrutiny to the question needed.

There have been great efforts by ASEAN members with low level of economic developments to get rid of poverty and there have also been efforts to increase ASEAN economic cooperation to benefit all the parties concerned. Yet, this gap will for a long time to come exist and lead to different agendas and priorities for all the members. Thus, finding a relevant way to address the needs of the members and at the same time introduce a common agenda for the organization as a whole will be a task for ASEAN in the decades ahead. This task has some connections with the pace that ASEAN will take in adopting major decisions both economic and political. The gradual approach and the practice of building consensus, therefore, should be upheld. Some have argued that the presence of some new members in the organization in effect slow downs the decision-making and consensus building processes of ASEAN. This argument is somewhat misleading, for the reason that ASEAN first and foremost is a political organization and the inclusion of new members serves geopolitical purposes of ASEAN to build the organization politically united, to build regionalism of Southeast Asia, and to make ASEAN as a whole a considerable political force in the broader region of Asia-Pacific and the world. At the same time, with new members, consensus on major issues within ASEAN

232 concerning regional peace, security and stability, relations with outside powers and AFTA have any way been reached without great difficulties. Thus, ASEAN should make it clear that at least, all the members are politically, and strategically as well, enjoying the same level of equality and importance, and each member has comparative advantages of its own in term of economics. Otherwise, the feeling of being something like a burden to the organization will develop, which is not at all healthy to participation of a certain number of members, as well as leads to possible division within the organization. This prospect, at the same time, will have greater implications to cohesion of the organization in the context of on-going developments in Asia-Pacific and the world toward emerging new regional and global orders. Being of small- and medium-sized countries. ASEAN’s interests can be best served if all the member countries are united as a whole. The present situation is conducive for ASEN to forge such a unity as, on the one hand, major outside powers have been easing tensions and increasing cooperation among them, and on the other hand, the ASEAN members have been exploiting this golden opportunity to realize the dream of its founders to build a family of all the Southeast Asian nations, friendly with each other, open to

positive influence of major powers, yet free from their rivalries. The history of international relations in the period of 1945-1949 has shown that such a dream could be realized if there had been no outside power rivalries taking place in the region and their intervention in the regional affairs. History seems to repeats itself in the second half of the 1990s and the next decades. Moreover, the present coming together in Southeast Asia involves less naivete and more mature political thinking, a factor which may reassure the organization of a lasting link. Yet, the danger still lies in the possibility that the outside major powers could not agree on a formation of an order which would reflect their capabilities and intentions and then hostilities among them, not in a foreseeable future, could renew. This scenario would represent a serious threat that the member states of ASEAN might be divided along the new line of major power ’s hostility. This division, moreover, would likely fueled by historical suspicions as well as existing disputes and cultural, ethic and religious differences, thus bringing to an end of the Asian solidarity and unity. Such a scenario is of course not welcome. Yet, it makes the task of building

233 greater consensus in ASEAN, and more importantly, a greater sense of belonging to vigorously develop in the region. In that context, more people-to people contacts should be encouraged along with developments of more official and semi-official channels within ASEAN. In other words, more understanding the neighbors, seeking all possibilities for cooperation, avoiding of all possible conflicts, and making ASEAN cooperation more efficient are the important measures of making ASEAN a shared value, taken together with the upholding of the basic principles that made ASEAN as it is today. It means that so long as the ASEAN countries, including Vietnam, its new member, uphold the policy of peace and independence, cultivate relations of cooperation with big powers without owing allegiance to them, the newly found friendship and solidarity could last. Of course, to this should be added what they have been doing among themselves for the last four decades: to promote intra-ASEAN friendship on the basis of strict respect for national independence and sovereignty peaceful solution of disputes, consensus building through calm and thorough discussions, not allowing contradictions in national interest to jeopardize the common ASEAN goals. In short, as long as every member state and its citizens feel comfortable with its membership in ASEAN, one can measure the organization ’s successes. Thus, the extension of ASEAN, possibly to embrace all countries in Southeast Asia reflects on the one hand, the high degree of comfortability of its members, old and new and potential, with the organization; and on the other hand the best acknowledgments of what the organization has been.

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