Trade issues hamper US-Vietnam trade

Following a visit to Vietnam and Laos, four U.S. Senators, all Democrats, including Al Franken (Minnesota), TomHarkin (Iowa), Bernie Sanders (Vermont), and Jeff Merkley (Oregon), said that

Vietnam must allow free workers' unions if it wants to liberalize trade with the United States. The senators want issues of labor rights and freedom of organization to be essential factors in determining future agreements with the United States. The visit was an indicator of Democratic Party concerns that will likely affect further movement on Vietnam trade issues in Congress, including the Trans-Pacific Partnership (TPP) agreement currently being negotiated by eight nations, including the United States and Vietnam.

Vietnam and the EU expected to sign a Partnership and Cooperation Agreement (PCA). According to the European Union (EU), it will sign a PCA with Vietnam later this year. The agreement came on July 6 in Hanoi after the eighth round of talks in two years. At this point, the parties have agreed on such issues as nonproliferation, migration, taxation, and employment. Notably, PCA will lay the groundwork for EU-Vietnam free trade agreement negotiations.

Inflation risk in Vietnam. The government of Vietnam continues its battle against inflation. Inflation rose by 9.44 percent from January to June, with an average monthly rise of 0.84 percent. To remedy the situation, the government has made loans worth $8.4 million to 13 major enterprises. Vietnamese people have been hoarding U.S. dollars as a hedge, and as result, analysts warn that the country's central bank, the State Bank of Vietnam, is at risk of running out of greenbacks. Analysts fear that efforts to control inflation will be ineffective, as the Communist Party aims to hit its ambitious growth targets before the 11th Party Congress planned for early 2011.