Hanoi (AsiaNews/SCMP) – Vietnam and the US have reached an agreement on Hanoi's accession to the World Trade Organisation (WTO), making it possible for Vietnam to join the group before the year is out, this according to official sources who still say that work remains to be done before the formal signing in June.

The accord was announced on Sunday after the two countries concluded a round of talks in Washington that began last Tuesday. It would entail both countries knocking down tariffs and greater investments in telecommunications.

Two-way trade between Vietnam and the US grew to more than US$ 7.8 billion last year, an increase of more than 400 per cent since 2001.

Vietnam agreed to end subsidies to its textiles and apparel makers that are illegal under WTO rules by the time it joins; otherwise the US will be able to re-impose quotas.

The elimination of quotas is expected to lead to an export boom from Vietnam as it did for China.

Vietnam, which is already the world's biggest producer of pepper and ranks second in the production of rice and coffee, is likely to increase its agricultural exports.

Hanoi, which has been pressing for WTO membership for a number of years, wants to join the trade body before hosting the Asia Pacific Economic Co-operation (APEC) summit in November. US President George W. Bush is expected to attend the event.

The Communist country has already implemented a series of laws on enterprises, taxes and investment. Radically new legislation has also been passed in areas such as tourism, the railways, intellectual property, education, pharmacy services, import and export duties to conform to WTO rules. It will also have to streamline its administrative practices and fight the endless red tape and widespread graft and corruption.

Hanoi expects that WTO membership will lead to a surge in exports (currently often limited by quotas) as well as a place around the table where trade issues are discussed. It is also hoping for greater foreign direct investment but is concerned about the harsh competition its smaller companies will face.

"The biggest challenge is competitiveness—that will determine whether WTO membership is a good thing or bad thing for businesses at the end of the day," said Tran Dinh Thien, of the Vietnam Institute of Economics

Many state-owned enterprises will be privatised but senior government economic adviser Le Dang Doanh noted the opening of sectors such as telecommunications would be gradual and some businesses would not be able to compete in the new era. "The government should come up with social policies to help workers who lose jobs," he said.

Before securing entry into the WTO Vietnam must be granted permanent normal trade relations (PNTR) by the US Congress. And US House of Representatives Speaker Dennis Hastert on a visit to Hanoi in April, an Illinois Republican, called on Congress to pass a deal because the "greater good" outweighed human rights concerns.  (PB)