Vietnam signs strategic partnership with U.S.

On Sunday, Vietnam signed a partnership agreement with the U.S. regarding semiconductors and minerals, as Vietnam elevated its diplomatic relationship with the United States to the highest level. The U.S. has been advocating for this upgrade for several months, as it considers Vietnam a crucial partner in its efforts to secure global supply chains and reduce risks associated with China.

American President Joe Biden arrived in Hanoi, five decades after a lengthy and brutal Cold War-era conflict. During a ceremony, Biden acknowledged the progress made in improving relations between the two nations, noting, “We can trace a 50-year arc of progress between our nations, from conflict to normalization, to this new elevated status.”

The partnership with Vietnam is part of the Biden administration’s broader strategy to demonstrate the United States’ commitment to the Indo-Pacific region. Biden emphasized this commitment, stating, “the United States is a Pacific nation and we’re not going anywhere.”

Vietnam is carefully navigating its relations between Washington and Beijing as it seeks to establish itself as a low-cost manufacturing hub in the international competition. Top Chinese officials, possibly including President Xi Jinping, are expected to visit Vietnam soon, as Hanoi aims to maintain positive relations with all major world powers. Biden mentioned that he had discussions with Xi’s deputy at the G20, emphasizing stability in their talks.

Vietnam’s longstanding relationship with Russia is facing challenges due to the conflict in Ukraine. Talks between Vietnam and Moscow include discussions of a new arms supply agreement that could potentially trigger U.S. sanctions. These discussions involve a credit facility from Russia for the purchase of heavy weaponry by Vietnam. Hanoi is also engaged in talks with other arms suppliers, including the United States.

The upgrade in U.S.-Vietnam relations will encompass a security dimension, according to Jon Finer, the U.S. principal deputy national security adviser. While no arms deals were announced at this stage, the U.S. and its partners are prepared to help Vietnam diversify away from Russian military supplies, a move Vietnam is open to considering.

Biden’s visit coincides with growing trade and investment ties between the two nations and an escalating territorial dispute between Vietnam and China in the South China Sea. Vietnam Airlines is expected to sign an agreement to purchase approximately 50 Boeing 737 Max jets, valued at $10 billion.

Highlighting Vietnam’s increasing importance as a destination for U.S. technology companies, executives from Google, Intel, Amkor, Marvell, GlobalFoundries, and Boeing are scheduled to meet with Vietnamese tech executives and Secretary of State Antony Blinken in Hanoi.

Semiconductors are a central focus of the action plan developed during Biden’s visit, with the U.S. government allocating $100 million per year for five years under the CHIPS Act to support semiconductor supply chains globally. A significant portion of this funding could be directed towards Vietnam to bolster its semiconductor industry, including workforce training to address a shortage of skilled engineers.

Strengthening supply chains for critical minerals, particularly rare earths, is another key aspect of the partnership. Vietnam is estimated to have the world’s second-largest deposits of rare earths after China. An agreement regarding rare earths is expected during Biden’s visit, although specific details are limited.

Human rights concerns remain a contentious issue, with U.S. officials regularly criticizing Hanoi for imprisoning activists and restricting freedom of expression. There are suggestions that Vietnam may take goodwill measures, such as releasing activists, to address these concerns.