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Clinton Eases Restrictions on Trade With Vietnam : Commerce: His action falls short of lifting a longstanding embargo. Fate of MIAs remains an issue.


WASHINGTON — President Clinton eased the U.S. trade embargo against Vietnam on Monday by clearing the way for American companies to take part in projects financed by international institutions such as the World Bank and the Asian Development Bank.

The action marks the first time since the downfall of the former South Vietnam that American companies will be permitted to do actual business inside the country. Last year, the Bush Administration opened the way for U.S. firms to open offices and bid on contracts for future work.

It was the furthest the Clinton Administration has gone in the gradual move toward normalization of relations with Hanoi. Informed sources said it is privately contemplating fully lifting the U.S. trade embargo before the end of the year.

The big development projects that Clinton will now allow U.S. companies to participate in may mean work for at least one Orange County company, the giant Irvine-based Fluor Corp. An official there said the construction firm is interested in Vietnam, but any deals are still a way off.

"We're tracking that market," the spokesman said. "But we tend to follow our clients, like the big mining and oil companies. So it could be a while before we're doing business there."

The President's announcement was disappointing news, at least for now, to a handful of the county's smaller companies, which had already opened offices in Vietnam hoping to sell products. (Several local concerns, for instance, are vying to sell earth movers to the Vietnamese.)

It is important for U.S. companies to get a foothold there, said Ken Kraemer, a business professor at UC Irvine, before the Europeans and the Pacific Rim nations tie up the market. Still, optimistic entrepreneurs tend to forget that the Vietnamese market--especially for high technology--isn't large, said Kraemer, who has studied computer markets in the Pacific Rim.

While refusing to confirm the year-end timing, a senior Administration official said Monday night: "As soon as we see what we consider full cooperation on MIAs (Americans missing in action since the Vietnam War), the President will move on the embargo question. It doesn't have to be a full year from now but could be done whenever he wants to."

By law, the trade embargo, which dates from the end of the war in 1975, must be renewed each year by Sept. 14. Acting a day before the deadline, Clinton refused Monday to lift the embargo entirely because, he said, Vietnam has not yet cooperated fully in accounting for American MIAs. Instead, he extended his general legal authority to impose a trade embargo against Vietnam.

But the President also announced that he was making an adjustment in the embargo to let American companies compete with their overseas rivals for international development projects in Vietnam. Over the next year, Hanoi, for the first time since the 1970s, will be able to borrow from financial institutions such as the World Bank.

"The President is committed to achieving the fullest possible accounting of our POW/MIAs from the Vietnam War," the White House said in a statement. "Today's action will advance that goal."

Orange County's Vietnamese community--the nation's largest at 200,000--is still deeply divided over whether to normalize relations with their homeland. Even for business people, it's an explosive issue.

"What the President did today was the right step," said Dr. Co Pham, president of the Vietnamese Chamber of Commerce in Orange County. "We can now force them to respect human rights if we hold out a little more of this carrot.

"We have some leverage, and I think Vietnam has gotten the message."

Pham acknowledges that not every local Vietnamese agrees with him. But, he says, he is in the majority.

"Some of us are still very bitter," said Pham, a former South Vietnamese army surgeon.

Mai Cong, who chairs the Vietnamese Community of Orange County Inc. community center, said: "This is not a lifting of the embargo. This is just a test to make sure Vietnam keeps its word.

"I hope that we do not lose sight of the POW and MIA issues, and also of human rights conditions in Vietnam."

Administration officials estimated that the World Bank will finance about $300 million in loans to Vietnam over the next year and that the Asian Development Bank will lend another $200 million.

The loans will pay for projects for port rehabilitation, telecommunications, electricity generation, road construction and agricultural development, the officials said.

A senior Administration official said Monday's action will not change the situation for American oil companies, which will still be subject to the embargo. Oil exploration projects are not generally funded by international lending institutions.

The Administration has been under increasing pressure to lift the trade embargo because American companies fear that competing companies from Japan, France, Taiwan, South Korea and other countries will land big contracts while the U.S. embargo is still in effect.

This pressure has intensified over the last few months because Vietnam is in the process of clearing up its debts to the International Monetary Fund. As a result, it will be eligible this fall to begin borrowing large sums from the World Bank and the Asian Development Bank.

On the other hand, organizations representing families of American MIAs have urged Clinton to delay normal relations with Vietnam until Hanoi turns over all it knows about the MIA cases.

Times staff writers Michael Flagg and Alicia Di Rado in Orange County contributed to this report.

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