The World Trade Organization has voted to accept Vietnam as a member. WTO accession is a long sought goal of Vietnam's government, which needs it to compete on an equal footing with other export-oriented economies.
Vietnam's journey toward World Trade Organization membership has taken more than decade of negotiations. But the effort paid off Tuesday, when the WTO accepted the Asian nation as its 150th member.
Vietnam will officially join the WTO 30 days after its national assembly ratifies the accession agreements.
WTO membership will give the surging Vietnamese economy increased access to foreign markets. In return, the country will have to drop high tariffs on foreign imports and eliminate subsidies for state-owned companies.
Adam Sitkoff is the head of the American Chamber of Commerce in Hanoi. He says WTO membership will also help bring more foreign investment to Vietnam.
"We're going to see lower tariffs, better market access, better rule of law, and generally just international standards of doing business in Vietnam, which is going to improve the investment and economic climate here," Sitkoff said.
Not all Vietnamese businesses will benefit from the increased openness of the economy. Robert McNown is a lecturer at the National Economic University in Hanoi. He says some local companies may lose out to more efficient foreign rivals.
"If we look at the particular sectors where Vietnam is most vulnerable, I think one of them, a very important one, is in banking and financial services," McNown said.
But McNown says, while some Vietnamese banks may be unable to compete, overall, the banking sector in Vietnam will improve.
Oxfam's Vietnam country representative, Steve Price-Thomas, also thinks WTO accession will be positive for Vietnam, but he worries about its effects on poor farmers.
"For example, people who grow maize will have to compete with subsidized imports from the United States. And U.S. maize farmers currently receive subsidies of up to $10 billion a year. Although of course, people who grow other agricultural products will probably benefit," Price-Thomas said.
Vietnam's WTO accession comes just before the country hosts the Asia Pacific Economic Cooperation summit in Hanoi next week. President George Bush's is among the leaders expected to attend.
One trade hurdle remains. The United States has not yet granted Vietnam permanent normal trading relations, or PNTR.
But, Sitkoff explains, that is chiefly a problem for American businesses.
"All members of WTO are required to give other members non-discriminatory treatment," Sitkoff said. "So if it wants to participate in the benefits of Vietnam's WTO accession, the U.S. is required to grant PNTR to Vietnam."
If the U.S. fails to grant Vietnam PNTR, WTO rules allow the country to discriminate against American businesses. A bill to grant Vietnam PNTR is currently stalled in the U.S. Congress.