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45–505 CC








JUNE 18, 1997

Printed for the use of the Committee on International Relations

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BENJAMIN A. GILMAN, New York, Chairman
HENRY J. HYDE, Illinois
CASS BALLENGER, North Carolina
EDWARD R. ROYCE, California
JAY KIM, California
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
ROY BLUNT, Missouri
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SAM GEJDENSON, Connecticut
TOM LANTOS, California
PAT DANNER, Missouri
WALTER CAPPS, California
BRAD SHERMAN, California
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
RICHARD J. GARON, Chief of Staff
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MICHAEL H. VAN DUSEN, Democratic Chief of Staff

Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAY KIM, California
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
WALTER H. CAPPS, California
MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
DAN MARTZ, Counsel
HEIDI L. HENNIG, Staff Associate
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    Mr. Jeffrey Bader, Deputy Assistant Secretary for East Asian and Pacific Affairs, U.S. Department of State
    Ms. Susan G. Esserman, The U.S. Trade Representative
    The Honorable David Lambertson, University of Kansas
    Ms. Ann Mills Griffiths, National League of Families
    Mr. Adam Schwartz, Johns Hopkins University
    The Honorable Michael A. Samuels, President, Samuels International, Inc.
Prepared statements and biographical sketches:
Mr. Jeffrey Bader
Ms. Susan G. Esserman
The Honorable David Lambertson
Ms. Ann Mills Griffiths
Mr. Adam Schwartz
The Honorable Michael A. Samuels
Additional material submitted for the record:
Information submitted to the record by Mr. Bader at the request of Congressman Berman
Information submitted to the record by Ms. Esserman at the request of Congressman Hastings
Information submitted to the record by Mr. Bader at the request of Congressman Gilman
Information submitted to the record by Ms. Griffiths at the request of Congressman Bereuter
Questions for the record submitted by Congressman Royce to Mr. Bader
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House of Representatives,
Subcommittee on Asia and the Pacific,
Committee on International Relations,
Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:14 a.m. in room 2172, Rayburn House Office Building, Hon. Doug Bereuter (chairman of the Subcommittee) presiding.
    Mr. BEREUTER. The Subcommittee will come to order. I apologize for starting a couple of minutes late.
    Today's hearing addresses the issue of the future of U.S. relations with Vietnam. The Subcommittee has in recent years examined specific issues of U.S. interests with respect to Vietnam, for example, the POW/MIA issue, boat people, human rights, but we have not conducted a broad review of the general direction of U.S.-Vietnam bilateral relations in some time.
    Perhaps this is not surprising since the United States and Vietnam really do not have much of a bilateral relationship—at least they didn't for more than 2 decades. However, Ambassador Pete Peterson arrived just last month to take up his post as the first U.S. Ambassador to Vietnam since the fall of Saigon. Secretary of State Albright will arrive there in less than 2 weeks, and Treasury Secretary Robert Rubin returned from Vietnam only a few weeks ago. In addition, the commander in chief of U.S. forces, Pacific, CINCPAC, traveled to Hanoi in March of this year.
    Clearly, a great deal is changing in U.S.-Vietnam relations. We are presently moving toward the establishment of a consulate in Ho Chi Minh City with a reciprocal Vietnamese consulate in San Francisco. In addition, there has been dynamic progress on a broad range of diplomatic and economic issues. Negotiations on a bilateral investment treaty are proceeding rapidly, and the United States and Vietnam have successfully resolved long-standing debt issues. In addition, agreement has been reached on the mechanisms to interview those boat people who have been returned to Vietnam for possible asylum.
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    However, the United States also continues to have significant concerns with the Government of Vietnam. Most important of those outstanding issues is the fate of the POW/MIAs, and their fate has yet to be resolved. While President Clinton has certified that the Vietnamese Government is fully cooperating with the U.S. Joint Task Force full accounting, the Committee has received disturbing information regarding lack of cooperation.
    Furthermore, the United States continues to have legitimate concerns regarding the human rights in Vietnam, particularly strict limits on the exercise of freedom of religion and freedom of speech. Similarly, there is an interest in assuring fair treatment of returning boat people. Also, the U.S. business community has voiced its frustration about the level of corruption in Vietnam which makes conducting business nearly impossible for American corporations, according to some business sources.
    Some in the United States, particularly in the U.S. business community, have argued that we are moving too slowly in normalizing relations with Vietnam. Others, particularly human rights advocates in the POW/MIA community, suggest that the United States should first use the leverage it currently enjoys to compel changes in Vietnamese behavior. It certainly is appropriate to explore what leverage we do have with Vietnam and to ask how that leverage can best be used.
    The Subcommittee is particularly fortunate to have an outstanding panel of witnesses today. Testifying for the Administration will be Jeffrey Bader, Principal Deputy Secretary of State for East Asian and Pacific Affairs. Mr. Bader has testified before the Subcommittee before, most recently at our hearing on Indonesia. He has also been a candid and eloquent spokesperson for the State Department, and we look forward to hearing from him today.
    Representing the Office of the U.S. Trade Representative is Ms. Susan Esserman, General Counsel for the USTR, who will of course present testimony on the status of U.S.-Vietnamese trade relations.
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    In our distinguished panel of private witnesses, we are privileged to welcome Ann Mills Griffiths, a long-time Executive Director of the National League of Families. Ms. Griffiths has been in the forefront of the movement to obtain the fullest possible accounting of POW/MIAs, and her institutional memory on these issues is legendary.
    The Honorable David Lambertson comes to the Subcommittee from the University of Kansas, where he serves on the faculty of the School for Public Policy. He has a long and distinguished record of public service, including service as Deputy Secretary of State for East Asian and Pacific Affairs and, most recently, ambassador to Thailand.
    Mr. Adam Schwarz is presently a visiting fellow at the Johns Hopkins University School of Advanced International Studies. He previously served as bureau chief for the Far Eastern Economic Review and, in that capacity, was stationed in Hanoi for several years. He has been able to follow firsthand the changes in the political and economic environment of Vietnam.
    Dr. Michael Samuels is an international business consultant whose corporation is actively involved in a number of Asian countries, including Vietnam. He served as Deputy U.S. Trade Representative and as U.S. ambassador to the GATT.
    It is good to have all of you, both panels, here before the Subcommittee today. Consistent with the policy of the Subcommittee, I will tell our witnesses that their entire statements will be made part of the record, but I would ask them to summarize in approximately 5 to 8 minutes. That is allowing adequate time for Members' questions. Given the wide variety of issues that we have before us today, I am sure there will be no shortage of questions.
    Now I would like to turn to the distinguished Ranking Democratic Member of the Subcommittee, the distinguished gentleman from California, Mr. Berman, for any comments he would like to make, and then I will turn to our Chairman.
    Mr. BERMAN. Thank you very much, Mr. Chairman.
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    I welcome this hearing on the eve of the Secretary of State's pending visit to Vietnam and Cambodia. This provides us an opportunity to explore how far we have come and how far we still have to go in improving relations between Vietnam and the United States.
    My own district has a great deal of interest in the state of relations with Vietnam. I frequently hear from constituents who are concerned about immigration issues, especially the status of the ROVR program. I look forward to hearing in greater detail the efforts being made to implement that program.
    I also have heard from many concerned about the human rights situation in Vietnam. Most recently, a group of Buddhist monks spoke to me concerning the imprisonment of two leading Buddhist clergy and the confiscation of Buddhist properties. I would appreciate an explanation of the efforts being made by the State Department to resolve these issues.
    I hope the Secretary intends to make clear our concerns in her meeting with senior officials when she is there. I understand the Administration still assigns the highest priority to obtaining the fullest possible accounting of American POW/MIAs in Vietnam. This is as it should be.
    My own staff, along with the Majority of the Subcommittee, was in Vietnam in January, where discussions were held with our Defense Department staff charged with this mission. I understand that staff emphasized in their meetings with Vietnamese officials the importance of resolving this issue, especially the need to accelerate efforts to provide documents. I would underscore the importance of continuing to make progress on this issue, and I hope we will soon open a consulate in Ho Chi Minh City.
    Expanding the official American presence, I believe would be extremely helpful in obtaining information and resolving the issues of POW/MIA, human rights and immigration which continue to plague further improvement in our relations. I have every confidence in Ambassador Peterson in advancing this complex agenda.
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    Finally, let me just add that there has been extraordinary progress in the last few years in building a basis for a mutually productive relationship between our two countries. It is on the road to a radical economic transformation, which I hope will be matched by political change. To achieve those changes, we need to strengthen our ties. Concluding a trade agreement would be a major step in that direction.
    I want to thank Chairman Bereuter again for holding this hearing, and I look forward to the testimony of the witnesses.
    Mr. BEREUTER. Thank you very much, Mr. Berman.
    Now I turn to the Chairman of the International Relations Committee, the distinguished gentleman from New York, Mr. Gilman.
    Mr. GILMAN. Thank you, Mr. Chairman, and I want to commend you, as chairman of our Asia-Pacific Subcommittee for holding this important hearing today on the current state and the future of our United States-Vietnamese relationship.
    As you know, I have long been concerned about our affairs with the Socialist Republic of Vietnam, and I am anxious to hear what the Administration witnesses and our other witnesses have to say about this issue today; and I want to thank our panelists for coming to Capitol Hill today to give us the benefit of their views.
    As many of you know, I questioned the President's decision in 1995 to normalize relations with Vietnam, primarily based on the lack of significant progress by the government in Hanoi in cooperating fully with our nation in obtaining the fullest possible accounting of American POWs and MIAs from the war in Southeast Asia. I remain unconvinced that the Vietnamese authorities are cooperating in full faith to resolve the remaining POW/MIA cases, despite the President's determination to this effect back in December 1996.
    In addition to my deep concern over the POW/MIA issue, I have reservations about Vietnam's willingness to protect human rights, including religious, political and other freedoms, to improve labor conditions, and to make certain there is going to be fair treatment for refugees. I believe strongly that the further development of a cooperative bilateral relationship between our nation and Vietnam must facilitate maximum progress in all of those issues.
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    The House recently passed the Foreign Relations Authorization Act for fiscal years 1998 and 1999. The International Relations Committee labored long and hard to craft a bipartisan bill that boldly restructures the management of our foreign policy, and included in the bill is language intended to shape our bilateral relations with Vietnam.
    We call upon the Secretary of State to report to the Congress on the extent to which the Vietnamese Government is cooperating on the POW/MIA cases, its progress on releasing political and religious prisoners, and its treatment of refugees and participation in other humanitarian efforts, such as the orderly departure program. The Administration and the supporters of its Vietnamese policy contend that improved relations with Hanoi assist our strategic objectives in Southeast Asia by promoting regional development and stability. Those proponents contend that increasing U.S. economic and political interaction with Vietnam will encourage market development, will foster respect for human rights and political liberalization.
    We hope that a policy of engagement will elicit better cooperation from the Vietnamese on such issues as POW/MIAs and human rights. We hope that they are right, but my concern today is that economics and business interests have come to overshadow those issues that have been placed at the forefront of our policy with Vietnam.
    Our hearing today will help us determine whether this policy has had any demonstrable effect and whether the POW/MIA and human rights issues remain the cornerstones of our policies with the regime in Vietnam.
    Finally, I note Secretary of State Albright was not able to accept our invitation to participate in today's hearing as she is preparing for the upcoming G–7 Summit in Denver and her subsequent travel to Asia, which will include Vietnam. I hope the Secretary will have the opportunity to meet with our Committee upon her return and to share her thoughts with us on U.S.-Vietnamese relations.
    So, once again, I want to thank our chairman, Mr. Bereuter, for conducting today's hearing and we look forward to the testimony from our distinguished panelists.
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    Thank you, Mr. Chairman.
    Mr. BEREUTER. Chairman Gilman, thank you for your testimony. We will ask the Secretary if she will be able to give us a briefing when she returns.
    I understand Mr. Capps has a statement. The gentleman from California, Mr. Capps, is recognized.
    Mr. CAPPS. Thank you, Mr. Chairman. I want to say how pleased I am to be here today to witness this expert testimony. Before coming to Congress, I taught a course on Vietnam and the Vietnam War at the University of California; and I have been there, and I look forward to returning to that country this coming August.
    As close as we are to advancing further normalization of relations between the United States and Vietnam, we must recognize that this relationship presents us with great challenges, but also great possibilities. Among the challenges are the resolution of outstanding POW/MIA cases, human rights violations, political repression, encouraging economic and political reform. No wonder these challenges can be underestimated.
    However, the most important challenge of all will be to maintain equal focus on all of our interests, all at the same time, because the end goal is to develop a well-balanced and multifaceted relationship with Vietnam. We need to cultivate a relationship that contributes to regional stability, one that facilitates maximum progress toward resolving outstanding POW/MIA issues, one that ensures a productive human rights dialog and one that encourages progress toward the development of mutually beneficial economic relationships. We have a long way to go, but the one thing I have learned from my analysis of the Vietnam War is Vietnam will not bend to our will by force; it is much more likely Vietnam will change over time.
    The development of a well-balanced bilateral relationship between our two countries will be hastened by increased diplomatic interaction and also interaction with international NGO's, students and businesses. Taking that step toward normalization is vital to such a relationship, so I look forward to the testimony of our expert witnesses.
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    Thank you.
    Mr. BEREUTER. Thank you, Mr. Capps.
    Mr. Rohrabacher. This seems to be almost an all-California panel except Mr. Gilman and myself.
    Mr. ROHRABACHER. Thank you, Mr. Chairman. I am looking forward to the testimony today.
    I have to say, I start off with a bit of a bias in the sense that I have witnessed these changes in our relationship with Vietnam over the last 5 years, and it just seems like we are galloping forward to try to normalize relations, thus, basically teaching the Vietnamese regime, as well as other dictatorial regimes in the world, the United States doesn't really care about human rights and we don't care about religious leaders being thrown into jail and we don't care about political prisoners. And I will be very interested in talking to the policymakers that move forward with this policy on why we can continue to move forward with a relationship when they continue to repress their own people.
    So thank you very much. I am looking forward to the testimony.
    Mr. BEREUTER. Thank you, Mr. Rohrabacher.
    The gentleman from California, Mr. Sherman, is recognized.
    Mr. SHERMAN. Like everyone, I look forward to a beneficial relationship between Vietnam and California.
    I want to echo what has been said about POWs and MIAs and human rights. I think those issues need to be at the forefront of our thoughts about Vietnam. But when it comes to normalizing our trade relationship, we also have to take cognizance of the fact that Vietnam is a Communist country with a managed economy.
    I don't want to repeat what I think is the disastrous trade relationship we have with China, where their exports to us are over four times our exports to them. And I would look forward to our panelists telling us how we can open our markets to Vietnam and be sure that they will be opening their markets to us, especially when we are a country where economic regulation is done through laws; so if we grant Most Favored Nation status, our capitalist enterprise will import everything that it is profitable to import.
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    In contrast, a Communist country is one where, regardless of what economic laws may be on the books, you have governmental ownership and control of major enterprises and subtle control of even nominally independent enterprises. And so the Government of Vietnam, like the Government of China, is in a position to manage trade with us, even if we open the door to their exports. And I don't have a solution to this problem, but before we open the door with Most Favored Nation for Vietnam, I would like some assurance that it won't be an open door through which $4 of exports arrive in the United States for every $1 of our exports going to another Communist country.
    Mr. BEREUTER. Thank you, Mr. Sherman.
    The gentleman from California, Mr. Kim.
    Mr. KIM. Thank you, Mr. Chairman. I would like to ask unanimous consent to insert my opening statement into the record.
    Mr. BEREUTER. Without objection.
    Mr. KIM. I just want to say that the history of U.S.-Vietnamese relations has been a long, complicated, very emotional one. From having no relationship, even having a trade embargo, and now having an ambassador in Hanoi, we have come a long way, and I am glad that we have improved substantially.
    Again, I would like to welcome all of the expert witnesses this morning. I am looking forward to the testimony.
    Thank you, Mr. Chairman.
    Mr. BEREUTER. Thank you very much.
    If we can have the first panel come forward and take their places at the witness table, we would appreciate it. I already introduced the first two panelists for the first panel, so I won't go into their biographical details further.
    You heard my comments about your entire statements being made a part of the record. I would like to note that my other committee is in the midst of a very controversial markup right now; so if you see me leave, it is not because of something you said. I will be returning as quickly as possible.
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    Mr. BEREUTER. Secretary Bader, you may proceed as you wish.
    Mr. BADER. Thank you, Mr. Chairman. As you suggested, I will excerpt my statement today.
    It is good to see Chairman Gilman here, as well, today. I am very honored. Thank you, Mr. Chairman.
    I am pleased to have the opportunity to speak today on U.S. policy toward Vietnam. This is an opportune time to review our policy with Secretary of State Albright's visit to Vietnam just 1 week away and the arrival of our first ambassador to the Socialist Republic of Vietnam, Pete Peterson, 6 weeks behind us.
    Vietnam is a nation in the midst of significant transformation. After years of self-imposed isolation from its neighbors in the West, because of its occupation of Cambodia, the Vietnamese leadership changed course beginning in the mid-1980's. Domestically, Vietnam embarked on a policy of economic reform. This policy has reduced the role of central planning and encouraged the development of private businesses.
    Vietnam has sought to attract foreign investment, both in the region and from the West. The result has been a surge in Vietnam's growth, which took off in 1991 and has averaged 9 1/2 percent since 1995, and a steady stream of foreign investors and traders coming to Vietnam.
    Vietnam is moving toward a market economy with Socialist characteristics, as they put it; it has, however, been halting, and there are significant barriers and obstacles the leadership has not confronted.
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    Internationally, Vietnam's reorientation has had at least three major components: No. 1, improving its relations with the States of the region, particularly the ASEAN countries; No. 2, enhancing its relations with the United States; and No. 3, integrating into the broader international community. This has led Vietnam to join ASEAN and, with it, the ASEAN Regional Forum which discusses regional security issues with the important States of the Asia-Pacific, including the United States.
    Vietnam's desire to improve relations with the United States has engaged us in a number of issues of concern to us, in many cases flexibly. These include POW/MIA accounting, establishment of diplomatic relations, resettlement opportunities abroad for Vietnamese boat people and return of some of them to Vietnam, economic and commercial cooperation, protection of intellectual property rights, repayment of sovereign debt, security dialog and law enforcement cooperation.
    Since the early 1990's, the United States has been proceeding cautiously in developing relations with Vietnam, following a road map conceived in the Bush Administration. Obtaining the fullest possible accounting of American POW/MIAs from the Vietnam War continues to be our highest priority. In 1993, the President set out four specific areas in which cooperation by the Vietnamese would be examined as a basis for further improvement in relations, first, resolving discrepancy cases and live sightings.
    No. 1, with the assistance of Vietnam, we have been able to confirm the fate of all but 48 of the 196 last-known-alive high-priority cases, that is, persons known to have survived their capture or aircraft loss, but who did not return alive. We have found no compelling evidence that any American remains alive in captivity in Southeast Asia.
    No. 2, recovering and repatriating remains. This month, the Joint Task Force for Accounting unit began the 46th joint field activity in Vietnam. These joint U.S.-Vietnamese operations and unilateral Vietnamese turnovers of remains have returned 211 sets of remains to the United States since 1993.
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    No. 3, accelerating efforts to provide documents that will help lead to the fullest possible accounting. Joint research teams have reviewed and photographed approximately 28,000 archival items.
    And No. 4, providing further assistance and implementing trilateral investigations with Laos. The arrival of Pete Peterson in Hanoi provides us an invaluable asset as we pursue the goal of the fullest possible accounting. As a former POW, he brings a unique commitment and credibility to this mission. He has already demonstrated an extraordinary ability to communicate with the Vietnamese, enabling him to build a framework of cooperation necessary to further the goal of accounting for POW/MIAs.
    Concern for human rights is an important element of our policy. Vietnam remains a one-party dictatorship in which criticism of the regime is not tolerated. We have a formal human rights dialog with Vietnam and have held five sessions so far. When Secretary Albright visits Vietnam at the end of this month, human rights will be among the most important issues she raises.
    We have raised issues such as freedom of religion, freedom of the press and expression, right of association, as well as specific cases of imprisoned political and religious dissidents. In January of this year, we reached agreement with the Vietnamese Government on the Resettlement Opportunity for Vietnamese Returnees program, or ROVR. ROVR was created to encourage Vietnamese in countries of first asylum such as Thailand and Hong Kong, who have been found ineligible for refugee status, to return voluntarily to Vietnam. We hope to begin full-scale interviewing of the applicants in the near future. This will be the last chapter in a saga begun in the mid-1970's which has brought about one million Vietnamese to the United States under various resettlement programs.
    We have been working with Congress to reach agreements on opening a Consulate General in Ho Chi Minh City. This would be very much in our interests. It will enable us to provide consulate and business services to the 3,000 Americans resident in Ho Chi Minh City and the 75,000 American tourists visiting annually.
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    There is a huge demand for immigrant and nonimmigrant visas, which currently must be handled, at a great expense to the U.S. Government, out of Bangkok. With Vietnam's membership in ASEAN and participation in the ASEAN Regional Forum, we now have fora for discussing regional security issues with the Vietnamese leadership. Vietnam's conduct and influence will be an important element in affecting regional stability.
    Vietnam claims numerous islands, reefs and atolls in the Spratly Islands. It has historic interest in influencing Cambodia and Laos. And Vietnam's relationship with China has long been of consequence to the stability of the region. A U.S.-Vietnam dialog multilaterally and bilaterally should contribute to increasing stability in Southeast Asia.
    Our two military establishments have begun to develop a modest relationship. We held our first round of military-to-military talks in Hanoi in October. Both sides intend to proceed cautiously.
    The economic relationship is a high priority for both countries. Growth in trade and investments has been impressive, but far short of the potential inherent in this dynamic economy. Since we listed the embargo in 1994, over 400 U.S. firms have set up operations in Vietnam. Because of the embargo and the absence of contacts between our two countries for so long, the U.S.-Vietnam economic relationship is one of a handful in the world which should experience dramatic growth in the years to come and create jobs for Americans as exports grow.
    For this to happen, Vietnam needs to eliminate trade barriers and continue to develop an institutional and legal framework meeting the needs of American business. U.S. companies have told us they want trade and investment support, such as Eximbank and OPIC and TDA programs. A Jackson-Vanik waiver would be required for Eximbank and OPIC to operate in Vietnam. Eximbnk support, in particular, is essential for U.S. companies to compete on a level playing field against foreign competitors.
    We have also tabled a civil aviation agreement in Vietnam.
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    Current legislation has prohibited most bilateral assistance to Vietnam. U.S. aid has, however, provided humanitarian assistance through NGO's for prosthetics and rehabilitation assistance to war victims and to displaced children and orphans. The assistance is about $3 million a year.
    In conclusion, Mr. Chairman, the United States and Vietnam have a tragic history. Healing the wounds of war takes time, effort and good will. We are moving toward the time when Americans will truly see Vietnam not as a war, but as a country, and the Vietnamese not as former enemies, but as a people with whom Americans can build a relationship based on reconciliation and shared hopes for the future. We still have much more work ahead of us.
    Thank you, Mr. Chairman.
    Mr. BEREUTER. Mr. Bader, thank you very much for your expeditious summary. There are many more details in your testimony and Members will have that to share.
    [The prepared statement of Mr. Bader appears in the appendix.]
    Mr. BEREUTER. Our next witness is General Counsel of the Office of U.S. Trade Representative, Susan Esserman. Please proceed as you wish.


    Ms. ESSERMAN. Thank you very much, Mr. Chairman and Members of the Committee. I appreciate this opportunity to speak to you today on the status of the United States trade relations with Vietnam.
    At the outset, I would like to underscore the point made by Deputy Assistant Secretary Bader, namely, that obtaining the fullest possible accounting for POW/MIAs remains this Administration's top policy priority with respect to Vietnam; and all other policy decisions, including issues pertaining to economic normalization and trade relations, are considered with this in mind. In fact, it was in the context of progress on POW/MIA accounting that President Clinton lifted our trade embargo in February 1994. Up until that point, we had no trade relations with Vietnam.
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    In July 1995, again in light of continued cooperation on this issue, the President normalized diplomatic relations with Vietnam and directed the process of economic normalization with Vietnam to begin. Economic normalization encompasses a number of important programs, including eligibility for OPIC, Eximbank financing, trade development agency programs and normalization of trade relations; and that is what I am going to focus on today, because that is the area under the purview of the United States Trade Representative.
    We are at the early stages of our trade relationship with Vietnam, and we are following a well-established process under U.S. law for developing trade relations with countries such as Vietnam. Our goal is to establish a firm foundation for those trade relations from the start, by negotiating a comprehensive trade agreement that we hope will minimize future trade conflicts. With the lifting of the trade embargo in 1994, trade was allowed to flow between the two nations, but not on normal terms. Vietnam is one of only a small number of countries that are not currently eligible for normal trading status, and therefore, its exports to the United States face very high tariffs, in the range of 40 to 80 percent.
    Trade relations will not be normalized until the Jackson-Vanik Freedom of Immigration criteria are fulfilled or waived, and a bilateral trade agreement is not only concluded, but approved by Congress. At USTR, our efforts are focused on negotiating a comprehensive bilateral trade agreement. Our broad objective in negotiating this trade agreement is to establish equitable and mutually beneficial trade relations between our two nations. This means that in return for providing normal tariff treatment to Vietnamese products, Vietnam will be required to grant the United States MFN trade status and to ensure that U.S. firms and workers have meaningful opportunities to export and do business in Vietnam consistent with international standards.
    Achieving this trading relationship requires a comprehensive agreement addressing market access for goods and services, intellectual property protection, investments and basic international trade norms, such as transparency and national treatment. Such an agreement would promote the Administration's overall trade policy objective of opening world markets and expanding trade opportunities for American workers and companies.
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    We have adopted this comprehensive approach for a number of reasons:
    First, this is the first such bilateral agreement negotiated after the conclusion of the Uruguay Round agreements in which broader and more extensive standards governing international trade were established.
    Second, it is particularly important that a country of Vietnam's significance, with over 70 million people and export growth at double-digit rates, adopt international norms or practices.
    Most significantly, there are real impediments to trade in Vietnam, which we must begin to address at this early stage of our economic relationship. The U.S. private sector, sensing Vietnam's future potential, has expressed a strong interest in the commercial opportunities in Vietnam, yet a large number of U.S. companies have raised concerns about the difficulties of doing business since the embargo was lifted 3 years ago.
    Vietnam is still in the process of making the transition from a centrally planned economy to a market economy, a process which began only a decade or so ago. It has made some very important strides in this respect, however, it must do much more to open its economy to international competition. State-owned enterprises, while no longer tied to a central plan, still receive preferential treatment and are largely shielded from international competition. Exporters still face an array of barriers from restrictions on the right to trade to customs valuation problems to high tariffs and import prohibitions.
    Access by foreigners to key service sectors, such as financial services and telecommunications, is still highly restricted. Foreign investors in Vietnam also face a broad array of discriminatory treatment.
    Vietnam's intellectual property protection regime is rudimentary. As a result of our extensive discussions with the U.S. business community and our analysis of Vietnam's trade and investment regime, we have proposed to the Vietnamese Government an agreement that would help us to address the problems that our companies are encountering. This bilateral agreement should ensure that our trade relations are moving on the right path at this very early stage, that Vietnam is taking concrete steps to adopt these international norms during a realistic timeframe.
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    Finally, I would like to bring to your attention important progress that we have made on the key issue of intellectual property protection. During our April meetings, we completed negotiation of a bilateral copyright agreement with Vietnam that will significantly improve the trading environment in Vietnam for U.S. motion picture, sound recording, software and publishing industries. This agreement will, for the first time, require Vietnam to protect U.S. works and to allow the copyright industry to enforce their rights in Vietnamese courts. This agreement is a major step forward for our copyright industries and will facilitate negotiations of the more comprehensive intellectual property provisions in the broader comprehensive agreement that I have just described.
    In sum, we have much work ahead of us as we normalize our trade relations between the two countries and, specifically, in our negotiation of a bilateral trade agreement. That agreement must not only be negotiated, but it must be approved by Congress for a normal trade status to be granted.
    We look forward to working with the Members of this Committee as we move forward in this process. Thank you very much.
    Mr. BEREUTER. Ms. Esserman, thank you very much for your excellent testimony.
    [The prepared statement of Ms. Esserman appears in the appendix.]
    Mr. BEREUTER. We will proceed to the question period, operating under the 5-minute rule, and I am going to swap my time with Chairman Gilman, who has other commitments. So I call first on Chairman Gilman for his questions.
    Mr. GILMAN. Thank you, Mr. Chairman. I will try to be brief.
    To both panelists, in the past 3 weeks, Mr. Peterson has arrived to take up his new post in Hanoi. What are his principal objectives and what should the principal objectives be? Was it appropriate to send him over there while so many difficulties remain in our bilateral relationship, and where does trade fit into his priorities?
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    Mr. BADER. Mr. Chairman, the No. 1 priority that Ambassador Peterson will be pursuing, as he made clear in his hearings and statements before leaving, and as he made clear since he arrived, is obtaining the fullest possible accounting of POW/MIAs. He has emphasized that in all of his initial calls; he has dramatized it publicly by his appearances before the media. So that is No. 1.
    Trade pursuit—pursuit of the objective of economic normalization is part of his agenda. American business is very interested in developing this market. He is pursuing that as well.
    Human rights—advancing protection of human rights is part of this agenda.
    Developing law enforcement cooperation and a security dialog with the Vietnamese. I would say those would be the major priorities for our ambassador.
    Mr. GILMAN. And Ms. Esserman, when Secretary Albright travels to Hanoi in 2 weeks, are there any trade or diplomatic agreements likely to be concluded during the Secretary's visit?
    Ms. ESSERMAN. As I mentioned, we had a copyright agreement in April, and it may be that that copyright agreement will be signed when the Secretary goes to Vietnam.
    Mr. GILMAN. And Mr. Bader, are you familiar with Mr. Berger's letter to Senator Lott on April 10th, outlining our policy on Vietnam and the POW/MIA issue? Mr. Berger stated Ambassador Peterson should be charged with pressing Hanoi for more unilateral action on the POW/MIA cases in addition to pressing them for access to key witnesses to explain the so-called ''Russian documents''.
    Have any steps been taken to ensure that these items are being taken care of, and what has been done with regard to the pledges made by Mr. Berger?
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    Mr. BADER. Mr. Chairman, yes, I am familiar with National Security Advisor Berger's letter. An interagency process has begun in Washington. The Intelligence Community has begun the process of trying to fulfill the commitments made in Mr. Berger's letter, so that process has begun. We are trying to figure out what kinds of questions and what kinds of task schemes would be most effective and fulfilling Mr. Berger's commitments.
    Mr. GILMAN. Mr. Bader, last year the President certified on several occasions that Vietnam was cooperating in full faith on the MIA/POW issue. As you know, that was a condition for funding to normalize diplomatic and consular relations.
    Are you satisfied with the way the certification process has worked over the past year; and has there been any Intelligence Community consulted by your department or the White House with your recommendation on the certification?
    As you know, this was a conclusion reached by the Senate Select Committee on Intelligence on April 10th following an inquiry. Could you comment on that?
    Mr. BADER. Certainly, Mr. Chairman.
    Mr. Chairman, the certification provided by the President has been based on all of the information available to the President. Most of that information has come from the Defense Department and from information developed in the course of our cooperation with Vietnam. Since we set up the Joint Task Force Full Accounting detachment, that has become the main avenue for developing information for pursuing leads on cooperation, so that has been the principal means.
    The Berger letter talks about, as you pointed out correctly, exploitation of other assets; and we will be pursuing that.
    Mr. GILMAN. And Admiral Prueher of CINCPAC has said the Vietnamese cooperated, but they could do better. How would you interpret that comment? Did you discuss that with Admiral Prueher?
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    Mr. BADER. I had not heard that comment. I visited our Joint Task Force detachments in Hanoi and spoke to the people there. They feel that they are getting very effective cooperation from their Vietnamese counterparts. I met with their Vietnamese counterparts, and they described to me the kinds of missions that have been undertaken, unilateral missions out to very remote jungle areas in Vietnam, very perilous and very dangerous missions.
    We can always look for greater cooperation. We certainly would like to see more in the way of documentation provided. These are the kinds of things Ambassador Peterson will be pursuing.
    Mr. GILMAN. And just one last question, Mr. Chairman, if you would bear with me.
    Ms. Esserman, on the Ho Chi Minh consulate, when is it expected that that consulate would be opened?
    Ms. ESSERMAN. Let me refer that question to Mr. Bader.
    Mr. BADER. Mr. Chairman, if I could take a run at that, the Administration has set up a request for a reprogramming of funds to the Congress that would allow for the opening. We are in consultation with the appropriate authorizing and appropriations committees, and we look forward to a decision on that soon.
    Mr. GILMAN. How much money is involved in that?
    Mr. BADER. I am told that there are a couple hundred thousand dollars.
    Mr. GILMAN. How much?
    Mr. BADER. I am told it is a few hundred thousand dollars.
    Mr. GILMAN. Has that been forwarded to our Committee at our request?
    Mr. BADER. My impression is, that was forwarded.
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    Mr. GILMAN. Thank you.
    [The information referred to appears in the appendix.]
    Mr. BADER. Thank you, Mr. Chairman.
    Mr. BEREUTER. We are still the authorizing subcommittee in the Committee. Thank you.
    The gentleman from California, Mr. Berman.
    Mr. BERMAN. Thank you, Mr. Chairman.
    I want to focus on some very specific individuals and specific issues. First, let me talk about the issues, the ROVR program, the sort of up-to-date status of Vietnam's willingness to cooperate with our efforts to reinterview refugees who have returned, to determine whether or not they meet the qualifications for refugee status under U.S. law and the more liberalized standards set up in the ROVR program.
    Mr. BADER. Congressman, in January of this year, Vietnam agreed to implement the ROVR program, or as they consider it, the ROVR subprogram of the departure program; so we have an agreement in principle to proceed. There are several thousand cases of people who have returned from Hong Kong, Thailand and other places to Vietnam that we are waiting to interview. We are waiting for the Vietnamese Government to tell us that the names on the list we have given them are eligible for exit permits.
    Thus far, the Vietnamese Government has given us a list of several hundred names that they say are eligible for exit permits. We are pleased to have the several hundred, but that falls far short of what we are looking for, which is a much more complete list that we can begin interviewing.
    Mr. BERMAN. And are we starting the interviews of the several hundred?
    Mr. BADER. We expect to begin interviewing the next group of ROVR applicants next month.
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    Mr. BERMAN. As I mentioned in my opening statement, I met with a group of Buddhist monks from Vietnam who talk about the large numbers of people of Buddhist clergy under arrest or under house imprisonment.
    I was specifically asked to inquire about Mr. Tran Huu Duyen and his present status, and to what extent the embassy is involved in seeking to secure his release, and whether Secretary Albright is going to raise specific cases with the Vietnamese when she goes there.
    Mr. BADER. Congressman, with respect to this particular individual, I am aware of the general issue of the United Buddhist Church of Vietnam, of arrests and detentions of activists and worshipers in that church. I don't know the specific names. We will be glad to send out that name to Ambassador Peterson to get what information we can from the embassy and to see what we can do in this particular case.
    More broadly, we have raised specific cases of religious prisoners. There are a number of problems in terms of protection of the freedom of religion in Vietnam. The United Buddhist Church of Vietnam, which you mentioned, is the former umbrella organization, the group for most Buddhists in South Vietnam, before 1975. Since reunification, an official church has been imposed upon South Vietnam; so this is now, as it were, an unregistered church, and it has been subject to harassment and persecution, which we have raised on a number of occasions, including in our human rights dialog.
    As to Secretary Albright, I am sure she will raise human rights issues, freedom of religion issues. I will discuss with her the individual cases that are of concern to you, and there are other cases that have been raised by human rights organizations to see what the best way to handle those during her visit is.
    Mr. BERMAN. Well, let me raise two other cases for you, and I would appreciate any information you can get back from Ambassador Peterson and the embassy there and any efforts that the Secretary might make on their behalf. The other two names are Dr. Nguyen Dan Kue and Professor Doau Viet Hoat. Both of them are prominent dissidents; both are prisoners of conscience, deemed so by Amnesty International. Have those cases been raised? What was the Vietnamese response? And again an effort to see that Secretary Albright raises them on her trip.
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    Mr. BADER. I will check on those particular cases, Congressman.
    The human rights dialog has made it the practice of raising specific cases, so if those cases were known to us at the time of the last human rights dialog, I suspect they will raise it, but I will check on that.
    Mr. BEREUTER. Thank you, Mr. Berman.
    I will defer my time at the moment to Mr. Rohrabacher, who has an appointment.
    Mr. ROHRABACHER. Isn't it quite cynical in the Vietnamese regime to talk about a certified church and an uncertified church? Isn't this some sort of a facade for the West, and when we start rushing forward and talking about economic relations, aren't we doing nothing more than granting the type of people who play these kinds of games the satisfaction of knowing that they can get away with this type of travesty?
    Mr. BADER. Congressman, we certainly don't approve or condone in any way the establishment of official churches and unregistered churches; and the invidious distinctions made between them that we regard as an unacceptable infringement.
    Mr. ROHRABACHER. This is like Nazi Germany and Stalinist Russia, let's face it. And when I hear the people in this Administration and also in our business community rushing and saying we have to go in there and our very presence is going to make things better, and then we end up not making any real demands that there be change for us to go into these societies, I think it does nothing more than cement these terrible practices. Am I missing something here?
    Mr. BADER. Congressman, there are different ways to advance human rights. The Administration has made the judgment that being present in Vietnam, having a human rights dialog, having an ambassador on the ground who can raise these issues and having more extensive contacts and penetration to Vietnam is the best way to advance these objectives.
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    Mr. ROHRABACHER. Is waiving our Jackson-Vanik preconditions, our own standards that we have set for ourselves, waiving that, is that some way of proving to them that they must change their way of acting?
    Mr. BADER. Congressman, as you know, no decision has been made to waive Jackson-Vanik.
    Mr. ROHRABACHER. So we are not going to waive our standards when it comes to trying to promote business in Vietnam?
    Mr. BADER. Well, we will look at Jackson-Vanik in the context of the law, you know, the law's requirements for promoting the objective of freedom of immigration; and in response to Congressman Berman's question about ROVR, that is very much on their minds as we look at the Jackson-Vanik issue.
    Mr. ROHRABACHER. I have a list of 100 Buddhist prisoners. We have present a few representatives of this regime. Whoever is here representing the North Vietnamese regime, I hope you take a look at this list of political prisoners, and if you want to prove anything to us in the United States, maybe they can release these prisoners when our Secretary of State visits Vietnam. I will submit this for the record, Mr. Chairman.
    Mr. BEREUTER. Without objection, it will be made a part of the record.
    Mr. ROHRABACHER. And I would hope that when the Secretary of State visits the leaders in Vietnam that she asks about the list of 100 Buddhist prisoners to see if they have been released. That would be a sign that they actually are taking us seriously.
    About the MIA/POW situation, just a thought here, and here are some areas that the Vietnamese might be able to indicate that they are fully cooperating with us. What we need—and I am putting this in for the record, and I hope the Secretary of State asks about these. It is within the power of the Vietnamese Government to provide us the Vietnamese records and documents regarding MIAs and POWs. We also need the original records that comprise unit 559 document; they produce their own document, document 559, it is on Laos, because they have their own documentation and analysis for what was going on in Laos.
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    We would like the original documents and records of the Ministry of Defense graves registration unit because this Congress has already had testimony that a Vietnamese mortician worked with the bodies of American military personnel, and there has never been any followup on that, and this has been years now since that testimony was given in the United States. It is as if it didn't exist. Just ignore the fact there has been testimony by a man who got out of Vietnam, who said there were hundreds of bodies, hundreds of Americans that he worked on that have not been accounted for.
    And, finally, I would ask my friend Pete Peterson—and he is a friend—that he ask for the records of his own prison where he was incarcerated in Vietnam. It behooves all of us to question the sincerity of people who are claiming they are fully cooperating with us, who have yet to give the prison records of where our own POWs were kept and only say that all those records were lost. If we have prison records and we have these other records, we can find an accounting of how many prisoners they held in the first place; and I would just ask if these things could be taken into consideration, and the next time we hold a hearing, I would hope—and I have made these requests before—it just seems we are rushing headlong into normalizing relations and that these things really don't matter. I am sort of pleading with you and others to take these requests seriously.
    Mr. BEREUTER. Thank you, Mr. Rohrabacher.
    The gentleman from California, Mr. Capps, is recognized for 5 minutes.
    Mr. CAPPS. Thank you.
    Mr. Bader, in the final paragraph of your presentation, you say we are moving toward a time when Americans will truly see Vietnam not as a war, but as a country, and then you talk about how the reconciliation can go forward. I have heard former Secretary of State, Warren Christopher, use that phrase, and actually it is a phrase I like very much.
    But my question is going to be how deliberate can we be about that, and these are the examples I want to cite. We talk about the tragedy of, and every one of these is a tragedy, the 58,000 Americans who were killed in Vietnam. A number that doesn't get cited very often is that there are at least twice that many Americans who took their own lives when they came back to this country after the war because of posttraumatic stress. I would like to see that number come out more often and to be able to talk about how deeply the wounds and the hurt go on our side.
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    But the other number that doesn't get mentioned often in these kinds of testimony is how many Vietnamese were killed, and if the numbers I have are correct, and I believe they are, there were about two million casualties among the Vietnamese population.
    We talk about the number of missing in action on the American side, and, again, every one is a tragedy, and nothing I am saying here is intended to diminish how serious this issue is. But a number that never gets cited, and ought to, is that there were 30,000 MIAs in the Saigon area alone, on the Vietnamese side; and that is why I am asking this question about reconciliation.
    I think my question is an unanswerable question, but I think we have to face it as a society. We talk about wanting the country to become—Vietnam being the name of a country and not the name for a war. How deliberate can we be on our side to push that process forward? I mean, I think you are talking about public understanding, public perception. What, in your judgment—and I ask you this because you studied this and you thought about it a long time—what specific steps can be taken to push this process forward? I await your response. Thank you.
    Mr. BADER. Congressman, I have not heard that figure before on posttraumatic stress syndrome; that is quite startling. I think there are a number of things that we can do.
    Another number we have heard from the Vietnamese is the number of MIAs that the Vietnamese have, and the number they cited to us is 300,000. They are interested in cooperation from us in trying to account for or locate those people. The kind of way that we can help heal the wounds of war is, I think, what our veterans associations have been doing in this regard. Some of our veterans groups have gone back to Vietnam, they have established kind of oral history projects, they have established linkups with Vietnamese groups in order to try to provide information to Vietnamese families and to the Vietnamese that might be helpful in accounting for those 300,000. We are exploring ways to further that objective, and I think, again, Pete Peterson brings a unique ability to communicate on that.
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    The Vietnamese are very interested in the effects of Agent Orange, which has been a matter of concern in the United States. We have scientists who are prepared to study and work with Vietnamese scientists on that. We had an unfortunate incident where a renowned U.S. scientist was trying to take some samples out of the United States, out of Vietnam and the Vietnamese prevented him from doing so. I think that is very unfortunate and that is the kind of area where we can cooperate.
    I think oral history projects generally—former Secretary McNamara has been out there in the last few days reviewing the period of the 1960's and the decisions made with the Vietnamese. Again, that is entirely private, and we are not associated with it, but these are things our society as a whole can do.
    Mr. CAPPS. Mr. Chairman, can I have one followup? My own judgment on this is that we are—both officially and in public conversation, we are using a rhetoric about our relationship with Vietnam that is already outdated, it is outmoded, it is tired. We need to move this on, I think, to more up-to-date topics, to strategies that would be more resilient. And, you know, I can't tell you I know exactly how to do that, but I think this conversation we are having today is like a conversation we could have had a year or two ago.
    It is the same thing over and over again, and I am hoping that the Secretary of State's visit to Vietnam might accelerate the process, move it onto more resilient, more productive, more potentially promising terms than what we have at the present time.
    Thank you.
    Mr. BEREUTER. I want to state my questions on the subject for just a minute or two, because it is the largest impediment to improving our relationship—that is the POW or MIA issue. Many of the unresolved or active cases that remain involve individuals last recorded in Laos or in Cambodia in areas controlled by the North Vietnamese army at that time.
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    Has the Vietnamese Government now been helpful in resolving those cases that involve a third country?
    Mr. BADER. Mr. Chairman, the answer is yes. That is one of the criteria that the President used in setting forward his certification. The Vietnamese have produced several scores of people who have been helpful in trying to resolve cases in Laos. There are, I think, about 30 or 40 Vietnamese who have provided interviews and oral history assistance to us in trying to bring those cases to a conclusion.
    Mr. BEREUTER. Now I would think that the leadership of Vietnam is in the midst of a major transition, with the long-time rulers preparing to retire. How will that transition affect U.S. policy?
    Mr. BADER. Mr. Chairman, as I said, I can't remember if it was in the statement, as delivered, or the statement as written. We have not seen any particular divisions within the Vietnamese leadership on political reform issues—domestic political reform issues. There are groups that favor economic reform more than others; there are groups that favor opening to the United States—in a more active, dynamic, open relationship with the United States. They tend to be the younger elements of the leadership.
    As the transition proceeds in Vietnam, one would expect that those elements would become more prominent, but that does not necessarily, I think, in the short term portend domestic political reform; we have not seen that particular division.
    Mr. BEREUTER. I would express the hope that there is a great deal of attention focused on how we can advance our own policies and advance improvements in the Vietnam-U.S. relationships during this transition period of time. I think we have expertise in this area as a society, and I hope the government is bringing it to bear to look at these possibilities.
    Finally, I would ask the question about the National Endowment for Democracy. There is a modest program there working with the Vietnamese Parliament. Are such programs really worthwhile in a totalitarian regime? That is the most basic question.
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    If you had an opportunity to use our resources to try to advance democracy and pluralism in that country, would you use it in this area? Would that be one of the areas? Or what other areas would you identify where we might have an impact on advancing market-oriented economies, but especially democracy and pluralism in that society?
    Mr. BADER. Well, the one we have been examining as a government is commercial code and commercial law. We have been looking at whether there is something that USAID can do in that area, because that is an area that the Vietnamese are interested in and that would be something that would protect the interest of U.S. business as well. NAD, as you know, is separate from the U.S. Government, they get funding through the Congress from the U.S.A., but they are free to determine their own programs. We sometimes have a look at them and offer an opinion, but ultimately, they make their own decisions. I am not familiar with the particular program—let me go back and take a look at it—but NAD will ultimately do what is within its charge without regard to the view of the U.S. Government.
    Mr. BEREUTER. Thank you.
    I call on Mr. Sherman for his time. He is recognized.
    Mr. SHERMAN. Thank you, Mr. Chairman.
    I would like to associate myself with the specific human rights request made by Congressmen Berman and Rohrabacher and hope that each one of those will be brought up individually in meetings with the Vietnamese, not just in vague or general terms.
    And then I would like to focus with Ms. Esserman on the possible trade relationship. My concern is that we are about to repeat the disastrous trade relationship we have with China, where, as I mentioned, you have $4 of exports to the United States for every $1 worth of goods we are able to send there. And a Communist country—and I know it is not fashionable to refer to China or Vietnam as Communist, but they have managed economies, and I know it is not fashionable to point that out either; and the opportunity for nontariff barriers is so great that it will make Japan look like an open economy.
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    Now, among the barriers that we see in China are situations where the government just puts out the word—I have never found a statute in China on this—that you can't sell goods to China, you can only manufacture them there, that once you manufacture them there, you have to have a Chinese partner, that U.S. goods will be given second treatment and that the enterprises will be told to prefer European goods for political reasons.
    I don't think there is any element that you can put in a trade agreement that prevents a call from Hanoi to an enterprise, which can be put out of business the next day by a commissar, instructing that business not to purchase certain U.S. goods and to prefer either European goods or to demand that goods be manufactured in Vietnam.
    If you have mechanisms that can prevent oral, nondocumented pressure from being brought to bear to squeeze out American exports, I would like to know what they are, and unless there are good mechanisms available, has your department at least considered the idea that there be targets in any trade agreement where the Vietnamese simply agree that since we can't trust their process, the results will be reasonable, that is to say, we won't have trade imbalances of 200 or 300 or 400 percent?
    Ms. ESSERMAN. Congressman, I very much appreciate your concerns, and that is one of the reasons why we have taken such a comprehensive approach to this agreement, and we were aided in being able to do this because we have now a whole new array of standards that apply in this agreement as a result of the Uruguay Round agreement.
    One of the ways in which we are seeking to try to address this is to look at an industry all together, looking at the wide range of potential barriers so you are not looking at something in an isolated way, you are looking to—as you eliminate one barrier, you are looking to see what can be put in its place. So that is the kind of approach we are taking.
    Mr. SHERMAN. Just to follow up on that, you are trying to look for things that are absolutely invisible and trying to enforce legal standards in a society that is not a society of law. Are you negotiating for an agreement that would set a limit on the amount of the trade deficit that we will inevitably run if we normalize trade relations with Vietnam?
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    Ms. ESSERMAN. At this point, we are following the standards under the law to look at the wide range of barriers that our companies face. And that is the approach we are taking.
    Mr. SHERMAN. In other words, the answer is no, there is no result-oriented trade provision?
    Ms. ESSERMAN. Congressman, one thing you need to appreciate here, this is at the very earliest stage of our trade relationship, and that simply would be unprecedented. But I would say that this is quite a comprehensive approach for this very beginning stage of our relationship.
    Mr. SHERMAN. The tradition is for the United States to run huge trade deficits. I would hope you would be exploring unprecedented approaches.
    Ms. ESSERMAN. We are looking at this very carefully, thank you.
    Mr. BEREUTER. Thank you, Mr. Sherman. May I join you in your concern and your expression?
    The gentleman from California, Mr. Kim.
    Mr. KIM. Thank you, Mr. Chairman, for yielding. I do have one question for Mr. Bader.
    First, I would like to make a statement. Whenever I go back to California, southern California, people are telling me that all we are interested in is making money, money, money. It doesn't make any difference what country that is in. They tell me, ''How soon you forgot that we have lost thousands of lives out there in Vietnam.''
    ''Now we go back to the same people, the same leadership, to try to negotiate, try to get a piece of contracts. We don't have any pride.'' This is the criticism I have received in numerous cases, one in which I share their feeling.
    Now, what I am hearing today, which I understand also, which I also kind of agree with, is that alienating Vietnam is not in our national interest. It is about time we have some kind of relationship. Since then, we have lifted the trade embargo; now we have a full ambassador to Vietnam, which is, in my opinion, tremendous progress. You call that cautious progress, which I support. It is an emotional relationship; we shouldn't forget the other side either.
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    Having said that, my question to you is, what is your next step? I understand you mentioned trying to extend MFN to Vietnam. But I emphasize that MFN should come with conditions, such as progress on MIAs.
    Now let me ask you this question. Do you have any vision or plan, perhaps in the next 2 or 3 years, with Vietnam and our relationship? Can you tell us what your plan would be?
    Mr. BADER. Congressman, I think one useful way of looking at it is, there are problems left over from the period of the war and there are problems looking ahead, and we have to address both sets of problems as we go through the next few years. The problems left over from the war are primarily the POW/MIA accounting issue, and the processing of refugees for people who have a fear of persecution; and those two issues are still very much at the top of our agenda.
    As we continue to deal with those, we have to look forward to broadening the relationship and dealing with other issues; and I think those other issues, economic and commercial normalization, are certainly important ones. Vietnam is a dynamic growing economy, and we do not wish to be left out as the Europeans and other Asians seek to take advantage of this market.
    There are security concerns. Vietnam is an important regional security player. As I was alluding to in my statement, their relationship with China; their influence in Cambodia, which is very much in the news today, with yesterday the shooting in downtown Phnom Penh; Vietnam's claim on the Spratly Islands, a place where we have an interest in the freedom of navigation; narcotics, Southeast Asia is a principal source of heroin and opium on the streets of the United States.
    Vietnam is an important transit route. As we close off transit routes elsewhere in Southeast Asia, in Burma or through China or through Thailand, Vietnam becomes a more attractive transit route.
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    Counterfeiting, you know the U.S. dollar is the currency of Vietnam. If you go out in the streets of Vietnam and you want to buy something, U.S. dollars are what are used, so counterfeiting is a real problem, the Secret Service has been out there, and we want to work on that issue.
    So I think the broad array of issues we have seen emerging there constitute part of the road map for the next steps in our relationship.
    Mr. KIM. Thank you.
    Mr. BEREUTER. Thank you, Mr. Kim.
    And finally, Mr. Hastings, the gentleman from Florida.
    Mr. HASTINGS. Mr. Chairman, thank you. I apologize to Mr. Bader and Ms. Esserman for not being here earlier.
    I tried as swiftly as I could to go through your remarks. Ms. Esserman, one thing that jumps out at me in your statement for the record was that you feel, and I think rightly so, that there are real impediments to trade in Vietnam. I didn't get to the part where I am sure you must have listed them.
    Which do you consider to be the most significant impediments at this point, and what kind of timeframe are we talking about for being able to overcome some of the difficulties in the bilateral trade agreements?
    Ms. ESSERMAN. I can't give you precise timing relating to the completion of the agreement. What we have done is, we have presented a very detailed and comprehensive agreement to the Vietnamese Government for their consideration, and we are awaiting response to that. There are an array of barriers that are troublesome, that our business community has complained about: concerns about the right to export freely, licenses, quotas—you know, basic international principles, such as national treatment being provided to our companies. There are problems in the services area, and the intellectual property regime is quite rudimentary, although we have made some progress in that we have negotiated a copyright agreement with them, which we have concluded.
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    Mr. HASTINGS. I come to the Asia Subcommittee as a new Member, and I have not studied Vietnam, so I confess a significant amount of lack of knowledge of the area. The one question that I put probably suggests my ignorance, and that is as to the rule of law. What kind of safeguards are in place for investors, for dispute resolution?
    I, for one, if I were investing someplace, I would look to the courts here in our country and elsewhere, and I am just curious, is there a system in place at this point or is there one being developed or are we involved in any way in trying to help it to develop?
    Mr. BADER. Congressman, I believe that Vietnam adheres to international arbitration mechanisms as a matter of membership. However, I think that the view of many American investors is they do not have confidence that awards or decisions by those international arbitration mechanisms would be effectively enforced in Vietnamese courts.
    This is a serious problem, as I understand it.
    Mr. HASTINGS. All right. My final question, Mr. Chairman, deals with MFN for Vietnam, and again, not knowing what other countries do, do other countries, such as the European Union, afford Vietnam a Most Favored Nation status?
    Mr. BADER. Congressman, yes, they do.
    Mr. HASTINGS. They restrict trade in other ways, with quotas or nontariff barriers.
    Ms. ESSERMAN. I don't know the answer to your question, but I am happy to get it provided to you.
    [The information referred to appears in the appendix.]
    Mr. HASTINGS. Please do.
    And I yield back, Mr. Chairman.
    Mr. BEREUTER. Thank you, Mr. Hastings. At the Chairman's prerogative, one final question from Chairman Gilman.
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    Mr. GILMAN. Thank you, Mr. Chairman.
    Following up on my earlier questions with regard to the U.S. consulate offices in Ho Chi Minh City, I now have a copy of the letter that was sent by Patrick Kennedy, Acting Secretary, Under Secretary of State for Management, dated May 22nd, indicating its startup costs for such an office would be $3.8 million, and we estimate that leasing the residential space construction of the building, equipment and furniture will be a total of about $10 million, and that you are planning to occupy it in early July.
    Are those figures sound, do they sound accurate to you?
    Mr. BADER. Thank you for correcting my earlier remarks, Mr. Chairman. I understand the $3.8 million figure is correct.
    Mr. GILMAN. And do you intend to occupy the consulate office in Ho Chi Minh City as early as July?
    Mr. BADER. Mr. Chairman, if that is what the letter says, that is correct. I can't say I know a specific timetable. I think that depends on the Congress' reaction to our reprogramming request.
    Mr. GILMAN. It also says other agencies are going to have a presence in Ho Chi Minh City—Department of Commerce, USIA, Naturalization Service, and some other non-State Department people will be there. Can you tell us a little more about that?
    Mr. BADER. Well, Mr. Chairman, there will be, I believe, a limit on the number of personnel that will be in our consulate at the outset. Vietnam imposes a limit of 20 on the number of personnel who can be in any consulate in Ho Chi Minh City. We will, of course, impose reciprocal limits on them here, but that will certainly restrict the numbers.
    Mr. GILMAN. So do you intend then to provide some 20 in personnel when you open up?
    Mr. BADER. I believe that the initial opening target is approximately 20. That is my recollection.
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    Mr. GILMAN. And then you hope to add more personnel later on?
    Mr. BADER. I think there is an expectation that over time, there will be some increases beyond that; that is right.
    Mr. GILMAN. And will any of this functioning of the consulate be based upon the cooperation of Vietnam with the United States?
    Mr. BADER. It will be based on the principle of reciprocity, Mr. Chairman. Right now, the Vienna Convention on consulate relations is the standard that both sides apply. We would, however, like to have a bilateral consulate convention; we have not yet negotiated one.
    Mr. GILMAN. Besides the bilateral consulate convention. Right now I am talking about their cooperation with us in other matters.
    Mr. BADER. In terms of a decision to open?
    Mr. GILMAN. To expand.
    Mr. BADER. Well, decisions to expand would depend upon the value that we would see in the particular expansion, and that would certainly depend upon whether we anticipated cooperation in those areas or not. We have no interest in expanding just for the sake of expansion; we want to accomplish something. So if we are not getting cooperation, that would certainly affect this.
    Mr. GILMAN. And what was the rationale for opening the Ho Chi Minh consulate?
    Mr. BADER. There were several bases. The principal one is, that is where most of the consular refugee processing, visa, passport activity of the United States in Vietnam currently is occurring. We are doing it using TDY personnel out of Bangkok, so that is very important.
    The second is commercial, that most of the commercial interests of the United States will be in the south; and I think, more generally, monitoring of human rights, trade opportunities, POW/MIA issues, we will be better able to do it with a permanent presence in the south.
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    Mr. GILMAN. Mr. Chairman, I would like to ask the witness if you could provide our Committee with a little more of the detailed plans for the Ho Chi Minh consulate office with relation to personnel, construction plans and the costs.
    Mr. BADER. I would be glad to.
    Mr. BEREUTER. I would ask unanimous consent that that information be made a part of the hearing record.
    Hearing no objection, that will be the order.
    [The information referred to appears in the appendix.]
    Mr. BEREUTER. Secretary Bader and Ms. Esserman, thank you very much for your testimony and responses to our questions. We appreciate it.
    Mr. BEREUTER. I would like now to call the second panel of four witnesses to the table. I have already given a bit of biographical information about the witnesses, but again, the witnesses are the Honorable David Lambertson, the University of Kansas; the Honorable Michael A. Samuels, president of Samuels International, Inc.; Ann Mills Griffiths, executive director of the National League of Families; and Adam Schwarz, Johns Hopkins University, School of Advanced International Studies.

    Mr. BEREUTER. In light of the advanced testimony, or the expected testimony, I would like to begin with David Lambertson first, and we will proceed then to Ann Mills Griffiths, with a follow-up by Adam Schwarz and Michael Samuels.

    Mr. LAMBERTSON. Thank you very much, Mr. Chairman.
    Mr. BEREUTER. As I mentioned, your entire statement will be made a part of the record. Please proceed and try to summarize, if you can, in 5 minutes or so.
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    Mr. LAMBERTSON. Thank you, sir.
    Distinguished Members of the Subcommittee, Chairman Gilman, I am very pleased to have this opportunity to be here today to talk about the future of U.S.-Vietnam relations and to offer a few thoughts on how we have gotten to where we are now.
    When I look at the U.S.-Vietnam relationship, I see a decidedly mixed picture. On the one hand, there is plenty of room for satisfaction. Political normalization is virtually complete. Ambassador Peterson is on the job in Hanoi; Secretary Albright is planning to go there for the second visit by a Secretary of State in less than 2 years; and as Mr. Bader earlier made clear, we are pursuing a whole variety of issues with the Vietnamese Government.
    Our economic ties have shown impressive growth, although there are obviously some problems. There are some problems indeed in the picture, and in our political relations with Vietnam. Leaving aside for a moment the POW/MIA issue, I believe we have ascribed too much importance to Vietnam's strategic role in the region, and perhaps for that reason, we have given that government the benefit of the doubt more than we have many of the other governments in Southeast Asia and elsewhere with whom we have longer and friendlier relations.
    In the area of human rights, for example, the Vietnamese Government has permitted very little real progress toward political pluralism or democracy, and yet that does not seem to have become the issue it would have in our relations with a number of other countries that I can think of.
    I believe quiet diplomacy is the best means to address problems like that, I might add, so I don't advocate highly public pressure by the U.S. Government. But it is important that our private representations are firm and consistent and persistent. And I suspect that our message has to some extent been blunted by what has been our obvious desire to move the relationship forward; and I think the same is perhaps true on the economic side.
    As we have heard this morning, there are a variety of issues that are being discussed as we attempt to address the obvious problems that exist in the Vietnamese economy and that are presenting problems for American business. Those problems ought to be addressed—I hope are being addressed—with the same vigor that we use when we talk to other governments in Southeast Asia and elsewhere around the world. And, once again, I suspect that the desire on the part of the United States to move the relationship forward as quickly as we can causes some of our message to get lost in the shuffle.
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    Overall, I think that in the pursuit of normalization, which we have considered a very important goal in and of itself, and because we have considered it so important, our approach to a variety of the issues that should have affected the pace of normalization has not been as rigorous or critical as it should have been.
    I believe this was certainly true on the POW/MIA front. I think there has been a noticeable gap between Administration rhetoric, which continues to assert the POW/MIA issue is the highest priority, and the reality. Over the past several years, in my opinion, the POW/MIA issue has been gradually subordinated to the normalization process, rather than being the determining factor in that process. I am sure that when Secretary Albright meets with Vietnamese leaders in Hanoi, she will have the POW/MIA issue at or near the top of her agenda, but the visit itself, I think, is going to overshadow the discussion of that or indeed other important issues. The overall message that a high-level visit of this kind is likely to leave with the Vietnamese is that we are satisfied with the state of the relationship despite spotty progress on priority issues and anxious to move forward as quickly as we can.
    Indeed, in my view, that is the message we have given the Vietnamese consistently over the last several years. Our progress toward normalization has seemed inexorable. Following the road map of 1990, the Vietnamese have always been judged to have met our criteria, so we can take the next step forward; and I think the Vietnamese at some point probably stopped taking our admonitions too seriously because of that.
    Within the government, the POW/MIA issue has faded as an interagency policy priority. I think that is too bad, and I think it indicates that the stated priority of the Administration is not being pursued in reality. The interagency group is long gone and, with it, the input we used to have from the National League of Families. As I understand it, there has been a transfer of many intelligence personnel from independent intelligence activities into the policy apparatus of the government, which has reduced the ability of those analysts to give independent judgments.
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    In recent years, the emphasis, as you know, has been on JTF–FA field operations in Vietnam, and those operations have been painstaking, and the men who carry them out have done sometimes courageous and often very difficult work. However, those efforts have produced very few tangible results, in my judgment, compared to what I believe Vietnam could have provided unilaterally.
    Nonetheless, we have praised Vietnamese cooperation with our JTF–FA and indeed overall cooperation with us. I think we have not been insistent enough upon unilateral action by Vietnam. I am one of those who believes, based on intelligence analyses done in the 1980's and early 1990's, that the Vietnamese Government has more information in the form of archives of various ministries, in the form of personal recollections by individuals, and yes, in the form of stored remains, than they have yet provided us. And I think, therefore, we ought to keep pressing the Vietnamese for such information and make it clear somehow that our overall relations are going to suffer if it is not forthcoming.
    What is needed for the future to bolster the foundation for the overall U.S. relationship and to move toward the achievement of our objective on POW/MIA, is a renewed focus on Vietnamese unilateral actions. And that does not have to come at the expense of Vietnam's cooperation with JTF–FA. We also need to be more objective and stringent in making judgments about whether or not Vietnam is giving us full-faith cooperation.
    Here at home, I think an interagency group on policy ought to be reconstituted, and the executive director of the National League of Families ought to be a member of it. That would serve our government better than the existing situation.
    Let me say, in conclusion, that I think a steadier and more thorough approach to the POW/MIA issue over recent years would not necessarily have slowed the process of normalization. I think we would be about where we are now: We would have an ambassador in Hanoi, but Vietnam would know that we mean what we say about this important question, and the foundation for our future relationship would be more solid.
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    And let me add that I am pleased that we have diplomatic relations with Vietnam; I am pleased we have growing economic ties. I simply think that in getting to this point, we could have and we should have achieved more progress on our POW/MIA objective. For the future, we can more effectively pursue our various priorities, including foremost among them, POW/MIA, by more firmly linking real progress on those issues to further improvements in our overall relations.
    Thank you, Mr. Chairman.
    Mr. BEREUTER. Ambassador Lambertson, thank you very much for your direct and candid testimony and for your recommendations.
    [The prepared statement of Mr. Lambertson appears in the appendix.]
    Mr. BEREUTER. Next we will hear from Ann Mills Griffiths, executive director of the National League of Families.
    You may proceed as you wish.


    Ms. GRIFFITHS. Thank you, Mr. Chairman, and Chairman Gilman, and other Members of the Committee. You will have to forgive my voice, I am afraid it is almost gone. And, also, I want to apologize, Mr. Chairman, for not meeting the criteria for information and testimony in advance. I am afraid we are starting our 28th annual meeting tomorrow. We had computer failures twice in a row, and I lost the testimony both times.
    Mr. BEREUTER. I was forewarned. Thank you.
    Ms. GRIFFITHS. This is not the way I planned it, so I do apologize.
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    I want to thank you for holding this hearing. As you know, I have testified frequently over the last 20 years to provide the families' views regarding status of efforts to account for our missing relatives from the Vietnam War. In preparation for today's hearing, I reviewed testimony from the last 3 to 4 years, and unfortunately for all of us, many of whom are here in this room today, far too little has changed.
    I was asked by the Committee to address three primary questions: the status of unresolved POW/MIA cases; the level of cooperation by the Government of Vietnam, which I have expanded only slightly to include Laos and Cambodia; and U.S. policy options for ensuring the fullest possible accounting.
    Taking the last first, let me say that although I had not seen Ambassador Lambertson's statement that he has presented, I fully agree with what he outlined as a policy approach that would bring greater results. Without walking back at all, I think you will find that most of the families are very realistic and you cannot take back or walk back. Despite often hearing rhetoric to the contrary about if it doesn't work, we will pull it back, that just doesn't happen.
    So we are realistic about taking where we are today and trying to get results to meet the objectives that the President and the Secretary of State have stated are the highest priority in the relationship with Vietnam.
    One way of portraying the status of unresolved cases is to give you a statistical summary, and in view of the time involved, I would prefer to supply that subsequent to our annual meeting, 3 or 4 days from now.
    Mr. BEREUTER. That will be acceptable, and we will put it in the record without objection.
    [The information referred to appears in the appendix.]
    Ms. GRIFFITHS. Thank you.
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    I will say that the more important point about the status of cases is that far too few have been resolved with the current approach, largely due to what Ambassador Lambertson was characterizing as the failure of our government to press adequately, particularly in the last 4 or 5 years for unilateral actions by the Vietnamese. The pattern of Vietnam's past repatriations, the circumstances of loss, past Vietnamese admissions at the highest levels that they are holding remains, and the U.S. Government data base clearly demonstrate that, with full cooperation, Vietnam could provide remains and records that could resolve hundreds of cases. Foremost among those are those that were known to last be alive that have not been returned alive or dead, and other discrepancies that involve photographs of Americans that still have not been accounted for.
    I was not surprised to hear Congressman Capps, with all due respect, characterize the greater gravity of the two million Vietnamese losses and their ''300,000'' MIAs. We heard the Vietnamese, I have been going there since 1982, as Congressman Gilman knows, and so does Congressman Bereuter, and they first talked about 300,000 MIAs, and then they dropped that for a number of years.
    In 1982, when I visited Hanoi with the League delegation, they tried that, and they said they had 300,000 MIAs. Then we pointed out that if they had anyone left alive, they would have returned to their families or have escaped by boat. You can certainly understand the difference between an American MIA issue, and the much greater tragedy and loss of life of the Vietnamese, but it was clear from the inception of this Administration that the rhetorical policy did not match what they were doing.
    For anyone in the Congress to get the idea that everything is going very well on this issue, you need only look at the succession of statements, commendations and praise that have been a steady stream since 1993. There has been some cooperation, and there have been results. As I said, in terms of accounting, far too little.
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    In terms of records, a great number have been provided. Very few actually relate to people that are still missing and unaccounted for, and I was pleased to hear Congressman Rohrabacher talk about the failure to provide even such obvious things as original source documents used to compile summaries, and in particular, summaries written from source documents, all in one individual's hand. It is quite clear that the source documents have to be available.
    I am trying to summarize quickly.
    I must also point out, though, that despite public statements by this Administration, Vietnam did not meet and has still not met the criteria for unilateral POW/MIA actions set forth in the Bush Administration road map that dealt with specific requirements on POW/MIA and Cambodia. Neither have they met President Clinton's stated four criteria in terms of unilateral cooperation. Nevertheless, we were heartened by Secretary Albright's statement on April 29 at the swearing-in ceremony of Ambassador Pete Peterson as the first commitment of the second Clinton term. She stated, ''The highest priority in America's relations with Vietnam is achieving the fullest possible accounting.'' And she also stated that it is a matter of the highest priority in the foreign policy of the United States. We accept the word of the Secretary; however, in this Administration, we have learned that such commitments may or may not be carried out beneath the level of the President and the words of his Cabinet.
    The staff report of the Senate Select Committee, to which Mr. Gilman referred, found that, ''Collection requirements pertaining to the POW/MIA issue were in place during the 1980's and early 1990's, but were removed from the President's Decision Directive on the Intelligence Community's priority requirement list on the recommendation of the President's National Security Council in 1995.'' Now, that is hardly a demonstration of highest priority by the Administration now in office.
    As I said, the vast majority of the families are realistic. We want answers. We know that we will not get them all. We were chartered in 1970 to achieve the fullest possible accounting. We never expected a full or complete accounting on this issue; we don't expect it now. What we do expect is that our own government's long-standing expectations, established by intelligence assessments clear up until 1992, will be met, or at least, close to being met.
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    We were very concerned to find, in view of what we have seen as political spin by this Administration, that even on valid efforts by the Defense Department's POW/MIA office, there have been consistent spin documents to cover them. We were therefore very pleased that the Senate Armed Services Committee has now included language in its final defense authorization report to the full Congress that the Director of Central Intelligence will be authorized to set up a separate POW/MIA intelligence area. Perhaps that effort will return objectivity to the very skilled and talented former DIA analysts, who are now, unfortunately, within DPMO—having to have everything coordinated within the context of policy guidance, rather than the Intelligence Community.
    I will stop there, except to say that as much as we have disagreed with the policy approach that did not use the leverage available to the United States for the POW/MIA cooperation that was expected, we recognize that Ambassador Peterson, whom we just saw in Hanoi, is in a position to be most helpful. He pledged at his swearing-in it was his highest priority, and we take him at his word. And we know also, however, that ambassadors have to work within existing policy. He made that commitment to us, and he did so less than a month ago when we were in Hanoi on another League delegation.
    I would like also, Mr. Chairman—and I have not addressed the League delegation that we took—I will say we received more commitments from the Vietnamese. We are waiting to see if they were implemented. We were encouraged across the board with the improved quality of joint field operations, due in large part, I think, to the leadership of the new commander, Brigadier General Jim Campbell, U.S.A.
    We have always known there were hard-working people in the field, in efforts that we certainly appreciate. In Laos and Cambodia, we are extremely encouraged. Particularly in Cambodia, they are doing everything that we could ask for. There is room for improvements in Laos, but in the latter two countries, both Cambodia and Laos, the League has long been on record supporting MFN for both countries, in view of, in relative terms, a much greater seriousness in their cooperation with the United States.
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    Thank you, Mr. Chairman.
    Mr. BEREUTER. Ms. Griffiths, thank you very much for your testimony.
    [The prepared statement of Ms. Griffiths appears in the appendix.]
    Mr. BEREUTER. Next we will hear from Adam Schwarz of Johns Hopkins University. He is a visiting fellow. By way of background, it is important to remember he served as Bureau Chief for the Far Eastern Economic Review station in Hanoi for a number of years.
    Mr. Schwarz, thank you for coming. Please proceed.


    Mr. SCHWARZ. Mr. Chairman, thank you for inviting me to testify at today's hearing on U.S. policy toward Vietnam. I believe the hearing today will provide a timely and useful opportunity for discussion on America's relationship with Vietnam.
    As you know, the relationship with Vietnam itself has undergone considerable change in recent years. Diplomatic relations were established with Vietnam in July 1995 and talks continue between the two governments, as we heard today, on deepening and expanding the relationship.
    Mr. BEREUTER. Would you pull that a little closer, please.
    Mr. SCHWARZ. I'm sorry.
    Vietnam, after many years as an international pariah land an economic water has made major strides in the past decade in reintegrating with the world community both politically and economically. Nevertheless, the relationship between the two countries remains a difficult one.
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    Several obstacles remain on the agenda, including the resolution of outstanding MIA cases, the fate of the boat people who have returned to Vietnam, the status of political and civil liberties in Vietnam, Vietnam's capacity to observe and enforce international trading rules and the treatment accorded American investors in Vietnam.
    In my opinion, analyses of any one of these issues depend fundamentally on an understanding of the complex political process in Vietnam. As such, I would like to focus my remarks today on the changes under way in Vietnam, particularly in its economic development and the way those changes are affecting the political arena.
    Vietnam's economic reform process, known in Vietnamese as ''doi moi'', began with the Sixth Communist Party Congress in 1986, a little over a decade ago. As the 1990's opened, management of the economy gradually improved, inflation was brought down from triple to single digits, the currency was stabilized and a central bank established. A start was made on reforming the financial and State-owned enterprise sectors and more leeway was given to the private sector to operate. A relatively liberal foreign investment law was passed in 1989.
    Vietnam has been rewarded with multiple years of high, single-digit growth, a decline in poverty, strong interest from the foreign investment community and a resumption of foreign aid, and in 1995, an invitation to become the seventh member of the Association of Southeast Asian Nations. With its industrious people, fertile soil and abundant resource base, and strategic location, Vietnam has the potential to match the impressive economic growth we have seen in many countries across Asia.
    Although the changes Vietnam has undergone has brought many tangible benefits to its people, there still appears to be considerable confusion within the Vietnamese leadership and, in particular, within the Vietnamese Communist Party about the merits of reform and the pace at which future reform should proceed. Although it is difficult to define clearly, there is a reformist wing of the party which recognizes that much more needs to be done to restructure the Vietnamese economy if Vietnam is to catch up with the rest of its economically more advanced neighbors and to join the World Trade Organization.
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    I should add that the term ''reformers'' in the Vietnamese context refers to economics. The entire leadership of the Communist Party appears unanimous in its support for one-party rule. There are more conservative elements within the party which, while not publicly opposed to the ''doi moi'' process, have misgivings about the effect of ''doi moi'', both on Vietnamese society and on the party's capacity to maintain itself in power.
    Conservative forces are strong in the military and internal security apparatuses. The divisions within the party on the pace of economic reform have only seeped into the public view in the past 18 months, and were especially visible prior to the party's Eighth Congress, held a year ago in June 1996.
    The public debate, such as it is, rarely addresses economic reform per se. Instead, a series of proxy issues has been brought into play in which reformist and conservative elements attack and fend off attacks from the other side. In many cases, the issues revolve around the extent to which the reform process and its proponents are responsible for the various ills affecting Vietnam—ills ranging from drug use, prostitution, corruption, traffic fatalities, a widening wealth gap and the alleged erosion of cultural identity.
    While these many debates go on, the reform momentum has clearly slowed. Foreign investors have begun to complain more vociferously about bureaucratic red tape, corruption and the inadequacies of the judicial system. After a promising start, a privatization program has crawled to a near halt. Only about a dozen of some 6,000 State enterprises have gone through what the Vietnamese call the ''equitization process'' and even in these cases, the cash-poor firms have received very little new capital.
    A combination of an ideological commitment to a dominant State sector and the vested interests of those who control the State enterprises have made it extremely difficult for reformers to proceed in this area. In addition, restrictions on private sector business activity have not been removed as quickly as earlier expected or, indeed, as earlier promised by the government.
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    Many areas of the economy remain protected from outside competition and even some enjoying such protection, such as the banking sector, are in dire shape. A number of banks have missed payments on their overseas obligations in recent months. With an eye on the precarious financial shape of many State enterprises, many conservative elements of the Communist Party appear to be edging toward a less accommodating position vis-a-vis foreign investment.
    The high cost of doing business in Vietnam, meanwhile, has eroded the competitiveness of many products made in Vietnam and this, in turn, has led to a sharply higher trade deficit. Efforts to improve the competitiveness of the economy have been weakly implemented on account of concern over how those efforts would impact the State sector.
    Let me conclude by reemphasizing that Vietnam's economic reform process is still in its beginning phases. The country has come a long way from its inward-looking, isolated, economically decrepit state of just 10 years ago; but although much has been done, it is only a start. Much confusion persists as to the form and the ultimate aim of the reform process. Indeed, even Vietnam's official description of the process, the creation of a, ''Socialist-oriented commodity based, multisectoral economy under the State-managed market mechanism'', itself suggests the depth of the confusion.
    In terms of political reform, less progress has been made. In some areas, there has been improvement. One example would be the right of small-scale farmers and traders to engage in business in a private capacity; freedom to worship and to travel internally have also been expanded. On the other hand, freedom of the press, of association and of the right to engage in political activity remain severely abridged.
    Despite encouraging rhetoric, the attitude of the leadership toward Vietnamese returning from abroad remains in many ways contradictory.
    The next 2 or 3 years are critical for Vietnam. This would be the period for the current aging leadership to pass on the reigns to a new generation. The new leadership, in turn, must get to work quickly on overhauling the country's trade and State enterprise sectors if Vietnam is to be capable of meeting its regional and international trade commitments, including those to the United States in the trade agreement currently being negotiated. Thank you.
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    Mr. BEREUTER. Thank you, Mr. Schwarz.
    [The prepared statement of Mr. Schwarz appears in the appendix.]

    Mr. BEREUTER. Finally, we will hear from Ambassador Samuels, U.S. Deputy Trade Representative and our ambassador to the GATT. Please summarize and proceed.


    Mr. SAMUELS. Thank you very much, Mr. Chairman and thank you and your Subcommittee for inviting me to testify today. Your invitation reflects a desire on your part to look at the broad picture in U.S.-Vietnam relations, and I commend you for that.
    Mr. Chairman, last week you gave a speech at another place here in Washington where you identified important principles for relations in East and Northeast Asia. And if I may say, those principles are very relevant to the type of policy that ought to be developed by the United States; and, I believe, for the most part, are being pursued by the Clinton Administration today. They emphasize the need to sustain a security commitment in the region, a need to promote economic interests in Asia and a need not to neglect the historic U.S. commitment to fundamental principles of democracy, pluralism and respect for human rights.
    I think that these are important for us to keep in mind as we review U.S. relations with Vietnam. The most appropriate way to address all three of those principles is through a policy of continuing engagement, and I urge close attention to the importance of economics in this process because the Asian scene is changing in important ways. The opportunity exists in bilateral relations to serve the interests of both countries and both peoples.
    Mr. Chairman, much of my career has been spent working with developing countries. There is always a tendency, when looking at any single country, to identify that country uniquely. Indeed each country is unique, but there are a lot of commonalities today. I would say that Vietnam is one of the most dynamic, one of the most exciting developing countries in the world today.
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    Those of us who have worked with people in countries in the developing world know that problems abound. And the countries in the developing world also know this. They seek solutions to these problems, and there are often very difficult political and social decisions that have to be made.
    The Vietnamese leadership is, I believe—and I think Mr. Schwarz's testimony reflected this—wrestling with these problems; and I believe it is doing so constructively and openly, as it is able to do, about as openly and constructively as any developing country generally does, worldwide.
    I believe that, as we approach this engagement that we have been talking about, it is important to understand that current and future national interests are bigger than the important but limited issues of the past. We will continue to disagree over ideology, but we need to keep in mind that the Vietnamese leadership is driven by a nationalism that I believe can serve both their interests and ours.
    The tensions between Vietnam and its northern neighbor, China, are long-standing and reflect a fundamental aspect of Vietnamese foreign policy. For a variety of reasons, this fact requires a more strategic American response than has been true for some time. I would, therefore, disagree with Mr. Lambertson, who feels that perhaps we may have had too much of an emphasis on the strategic. I don't believe we have had enough up until now. I don't mean to be calling for a policy of containment toward China, but I commend the Administration for beginning to bring U.S. policy, albeit slowly, to a position that more accurately reflects U.S. national interests, especially its strategic requirements—and perhaps my view on this goes back to my own first contact with Vietnam, which was as part of a U.S. delegation to attend a meeting of the Southeast Asia Treaty Organization in Saigon back in 1973.
    The Vietnamese citizenry is dynamic. There is a process of economic openness that is beginning. It is a challenge that has led to impressive economic growth for over a decade, among the highest in the world, during this period. And the Vietnamese have made commitments that will be difficult for them to pursue, but we need to stay on their backs on this. These are commitments to join ASEAN, to be part of the Asia Free Trade Agreement, which requires various commitments to opening their market, and a desire to enter APEC and the World Trade Organization. These commitments, when they are brought into fruition, will institutionalize market mechanisms.
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    This, Mr. Sherman, will address one of your questions earlier on in the session—the efforts to tie them down to commitments that are part of both the World Trade Organization and that will be negotiated, I believe, when eventually the bilateral trade agreement is reached.
    As part of the efforts to grow the economy in Vietnam, there are a number of other countries whose companies and governments take seriously the opportunities in that economy. As part of the overall U.S. competitive position in the world, it is important that we do likewise, that we not allow U.S. economic interests to be at a disadvantage, and that we emphasize the important role the economic component can play in total U.S. capability in Vietnam.
    In my prepared testimony, I make arguments in favor of the importance of the Eximbank, the Trade and Development Agency, and OPIC as important vehicles for the overall presence of the United States in Vietnam and for economic matters generally. And I would note that for those who are concerned about human rights issues, as we all are, it is important to understand that American companies often have a very important role through their support for nongovernment organizations in urging forward the human rights agenda.
    The bilateral trade negotiations that have begun will be very difficult negotiations because many of the aspects of things that the United States insists on are difficult for the Vietnamese to come to grips with. That is part of the struggle that they are going to have to go through in order to meet our needs, in order to avoid the situation that Mr. Sherman identified, which is not to allow us to fall into the same kind of trap that we have seen with some other countries of that area.
    There is one area where the economic agenda has a vital similarity to almost all other agendas. That is, in order to have the appropriate economic atmosphere, you must have a rule of law, and concern for the rule of law is something that is shared by those who have interests in all parts of our relationship with Vietnam. I would note that at the present time there is an extremely active effort within Vietnam and within the National Assembly of Vietnam to try to create a commercial code where one didn't exist, to try to come up with commercial laws where they didn't exist. I would commend both the UNDP and the U.S. Government for their efforts to try to assist in this process.
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    Mr. Chairman, I guess I can say that in my years of efforts in the State Department and USTR and the private sector, within the business community and the academic world, I have come to believe that our economic strength is one of our most useful assets—not just economically, but politically and strategically. Vietnam is an engaging country. The Vietnamese are engaging and hard-working people who like to laugh. It is a warm culture. Few who know them are not attracted to them. Our goal should be to maximize that attraction in a way that will best support U.S. interests.
    Thank you.
    [The prepared statement of Mr. Samuels appears in the appendix.]
    Mr. BEREUTER. Ambassador Samuels, thank you very much for your testimony; and I would say in general, the testimony we received from this panel is diverse and excellent and very helpful to us.
    I turn first to Chairman Gilman under the 5-minute rule for questions he might wish to ask.
    Mr. GILMAN. Mr. Chairman, again I will try to be brief.
    Mr. Lambertson, can you elaborate on your view that more could and should be done to pressure Vietnam for unilateral action on the POW/MIAs?
    Mr. LAMBERTSON. First of all, let me reiterate what I said in my statement, which is that I am of the belief, based on intelligence that exists, that Vietnam does have more information that could be provided to us and they have not yet provided it. I therefore think that we ought to make that always our top priority in our discussions with Hanoi on the POW/MIA issue, and I think we ought to be very clear on this point, perhaps clearer than we have been in recent years. I can't say this for sure, but it is my strong impression that we have not sufficiently emphasized the importance of actually receiving the information that we are convinced is available and linking that to further improvement in our economic relations and other aspects of our overall relationship.
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    Mr. GILMAN. Thank you.
    Ms. Griffiths, can you tell me what specific recommendations you would make to the present Administration with regard to what more we could or should be doing to clarify our MIA/POW issue?
    Ms. GRIFFITHS. Yes. Well, first of all, I agree with Ambassador Samuels that the United States has tremendous economic potential for accomplishing our wider objectives. In this Administration, unfortunately, there has been no willingness to use any economic or political leverage to press for what Ambassador Lambertson is saying, which is to use our leverage to accomplish what are our stated objectives.
    Mr. GILMAN. You are talking about the carrot-and-stick approach.
    Ms. GRIFFITHS. Or even using simply the incentive of saying, as we allegedly do, that we have a policy of reciprocity. That is nonsense in this Administration; it is not a policy of reciprocity, it is a policy of meeting their objectives in advance, then hoping that Vietnam will respond in good faith. And you know from many years of experience, as do many people in this room, Vietnam has not demonstrated good faith in providing what they have and could provide, both records and remains.
    So what I am saying is agreeing with everyone here, including Mr. Schwarz, on the assessment of the difficulties of the failure to politically liberalize. I was noting—and obviously there are going to be changes in the leadership in Vietnam, but even if they step down, such as is speculated now for the Prime Minister and President of Vietnam, they are going to retain positions in the leadership of the Politburo.
    Until we have changes in the Politburo—and we have ways for this government to motivate them to make the decisions that will accomplish U.S. objectives, whether it is resettlement, repression, political pluralism, POW/MIA, or whatever—until we have a willingness to use whatever leverage we have to try to generate change, then how can we say that any of these matters are our highest priority?
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    Mr. GILMAN. Thank you. To the entire panel, how would you characterize our official relations, and unofficial, with religious groups in Vietnam?
    Ms. GRIFFITHS. I would say, from the people I have heard—and I heard again from a man today that I have heard from in the past—that it would be hard for any Vietnamese Americans to have real confidence in agreements, whatever they might be, that would be reached, until they see the Government of Vietnam begin to ease its repression and the hardships they inflict upon their own people.
    There are now problems with the ROVR program that Mr. Bader was discussing earlier; the Vietnamese were backing off on that as well. From the religious groups that I have heard from, there is great concern on the part of the religious community about repression, somewhat eased up, but nevertheless, the constant observation and surveillance and reporting on individuals throughout the country.
    Mr. GILMAN. Do any other panelists want to comment on the affiliation of the religious groups?
    Mr. SCHWARZ. I just very briefly would say, as I mentioned in my talks, religious freedom has expanded at the grass-roots level in the sense that we are seeing in Vietnam much more active construction of churches, temples, pagodas and so on, and much more attendance at these houses of worship. There continues to be, however, a confrontational relationship between the government and religious hierarchies, both the Catholic church with the Vatican and with the leaderships of the various Buddhist churches.
    There is also a great deal of concern within the government about Christian proselytizing in upland areas to ethnic minorities, both in person and by radio. There is concern over Radio Free Asia and the extent that they will engage in that sort of commentary. So it remains a delicate and sensitive issue.
    I don't think the U.S. Government—as you know, the relationship is, itself, new. It has had other priorities to work on. These issues are mentioned in the human rights report, but I don't believe it to be a top priority.
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    Mr. GILMAN. Mr. Samuels.
    Mr. SAMUELS. I don't purport to be a specialist in this area, but I have traveled enough around Vietnam to be very impressed by how absolutely jam-packed churches are on Sundays; and having also traveled around Washington on Sundays, I can certainly say that churches are much more jam-packed in Vietnam than they are in Washington.
    That may reflect a smaller number of them there. But this is actually a fascinating, broader question concerning the role that the U.S. Government ought to play in pursuing religious freedom in other countries, the extent to which we pick and choose the countries where we are involved in this issue, and the extent to which our own Constitution gives authority to our government to do that. I don't purport to know the answer to that question, but intellectually, it would be a challenged subject for a hearing by your Committee, sir.
    Mr. GILMAN. Thank you, Mr. Chairman. I want to thank the panelists for their patience. Thank you.
    Ms. GRIFFITHS. Could I add one thing on that?
    Mr. BEREUTER. Briefly. We have a vote.
    Go ahead, very briefly.
    Ms. GRIFFITHS. Yes, it is very brief.
    The POW issue is completely different than any of the other high-priority objectives of the United States, only to the extent to which our own government has said in the past that Vietnam is withholding it. So it is the only one that sort of defies the whole, if we are working with them more, more dialog, it is automatically going to improve. You can make that case for human rights and political freedom and others.
    Mr. BEREUTER. Thank you. I think in light of the vote, which is final passage on the current pending legislation, we need to restrict the remaining three, including myself, to one 2 1/2-minute question and then we will adjourn the hearing today.
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    The gentleman from California, Mr. Sherman. I am sorry I have to cut it shorter.
    Mr. SHERMAN. That is OK. I appreciate that. It is obvious the Vietnamese are not giving us the information on our POWs and MIAs. One thing that intrigues me is what motivates their failure to do so, given the pressure that we are putting on them, and I have heard three theories—revenge, regret and ransom.
    The first is that they want to take revenge against our servicemen and families because they are angry with the war that was waged. The second is that they regret how they treated our POWs, that in effect they tortured them, killed them, and they would like us to forget about it and they certainly don't want to give us the proof that that is what happened. The third is ransom, that they actually have something of value and that at some future moment they would like to trade it for Most Favored Nation treatment or whatever.
    I would like our panelists to comment on which of these three motivations, or some other motivation—explain why the Vietnamese are not cooperating with us on the POW issue. And I realize this is just speculation.
    Mr. ROHRABACHER. [Presiding.] One of you can answer with a 30-second summary.
    Mr. LAMBERTSON. I would add to that list, perhaps suspicion on the part of some of the top Vietnamese leadership about our motives and, therefore, simply a disinclination to cooperate on an issue they know is important to us.
    I tend, of the three you listed, to favor the latter; that is, it is an issue that has been a valuable negotiating tool for them in the past and they perhaps still see it that way.
    Ms. GRIFFITHS. I would say it is a little of all of the above, which makes it somewhat difficult, but I think it is always difficult to speculate on the motivation of the Vietnamese Government. I would simply say, if you put yourself in their place, and your objectives are being met without supplying what is desired by the other party, then you have no motivation to give it; and that has been Vietnam's record ever since we started giving them in advance everything that they wanted.
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    Mr. ROHRABACHER. Mr. Schwarz.
    Mr. SCHWARZ. I am not an expert in the field. I can only say I am not familiar with the evidence that would support the premise of the question. In my conversations with both American diplomats in Vietnam and at the JTF office in Hanoi, I have heard nothing from those officials involved in this issue—anything other than they feel they are getting good cooperation from the Vietnamese.
    Mr. SHERMAN. I would just want to comment—I believe the Vietnamese are represented here in the room—that I think this country would explode in anger if we were told a year or 2 or 5 years from now, oh, we have a few bodies, oh, there are one or two people that we have kept alive and we would like this or that concession. If that comes out years from now, I don't think they are going to get what they want.
    Mr. ROHRABACHER. Mr. Samuels, do you have a comment?
    Mr. SAMUELS. I would subscribe to Mr. Schwarz's views.
    Mr. ROHRABACHER. Let me close the hearing then. Our Chairman has left, and we have got a vote on.
    Just to say, I have been to Vietnam numerous times since 1967, starting when I was 19 years old, and it is some place that is obviously a group of people that have interacted with Americans and who are part of our national psyche, and I would like nothing less or more than to be treating the people of Vietnam just like we treat the people everywhere else in the world.
    Vietnam has a Communist dictatorship. It is still putting Buddhists in jail for being Buddhists. It has a recognized church and an unrecognized church. Businessmen seem to be pouring in there and thinking they can have a relationship with this type of regime the same way we have a relationship with Italy or some other country.
    We do not have, as a people, a responsibility to build up the economy of dictatorships; and this idea that we are going to be giving them OPIC grants, and we are going to be giving businessmen down there guaranteed loans and things is an abomination as to what our Founding Fathers thought America stood for.
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    And, finally, coupled with the human rights violations, if you see someone beating up a priest or a nun, and then you go into a business meeting with them, you might have a little bit of trepidation in signing a contract with somebody who is engaged in that type of behavior. But our businessmen seem to think their very presence there is going to change the behavior. I think it reinforces it if they go ahead with that behavior and you sign business contracts with them.
    And one last thing on MIA-POWs. The issues I brought up earlier and two of our panelists brought up, these have been brought up year after year and year after year and ignored by this Administration and past Administrations for whatever reason. We have not seen the records of the prisons in which our own people were kept. Pete Peterson was kept on a dual track, he was on a second-level track, he was an MIA for 3 years before he became a POW. Perhaps that was true of other people who were held prisoner in Vietnam.
    It is not unreasonable for us as a people to ask for the prison records where our own people were being held, and we haven't received that; and I don't know—if you have been a journalist in Vietnam and not bothered to ask that question of the Vietnamese leadership, that it just indicates to you, well, they have been cooperating because all our officials claim they have been cooperating. Well, there are records up the kazoo that we need access to.
    What about the mortician who testified before Congress that he himself embalmed 400 American bodies, and they refuse to give us the records of that particular operation?
    Well, until the Vietnamese Government levels with the United States and the people of the United States, there is no reason for us to rush into a relationship with that country; and if other people are making profit dealing with a dictatorship or sending guns to Adolph Hitler or Joseph Stalin, let them make their profit doing so. We should act better than that in the United States of America.
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    This hearing is adjourned.
    [Whereupon, at 12:27 p.m., the Subcommittee was adjourned.]


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