Statement of the Boeing Company, Arlington, Virginia

The Boeing Company appreciates this opportunity to comment on the U.S. trade relationship with Vietnam and commends the Chairman for his leadership on this important issue.  Boeing strongly supports U.S.-Vietnam trade relations and applauds the Congress and the Administration for their efforts to implement the policies necessary to further expand trade with Vietnam.

The U.S.-Vietnam trade relationship is beneficial to both nations.  Open trade with Vietnam provides a market for U.S. exports, creating high-paying jobs here at home, and gives the Vietnamese people an opportunity to experience the benefits of free enterprise.  Commercial aviation is a key element of that relationship, increasing trade, tourism, and other types of commerce, promoting communication, and generating the foreign currency necessary for continued economic growth and development.

The Boeing Company supports renewal of Vietnam’s waiver under the Jackson-Vanik amendment to the Trade Act of 1974 and recommends that Vietnam and the US complete an air transportation bilateral agreement to accelerate Vietnam’s progress toward a vital free market economy.

The waiver of Jackson-Vanik gives American companies selling to Vietnam access to crucial US export promotion programs offered by the Export-Import Bank and the Overseas Private Investment Corporation.  These programs are vital to meeting the challenges of doing business in Vietnam’s emerging market. 

Since the President lifted the trade embargo on Vietnam in 1994, the country has made significant free market reforms and has experienced substantial economic growth.  Foreign companies have joined forces with the Vietnamese to undertake a major rebuilding of the economy in almost every sector. The aviation sector is no exception.

Vietnam Airlines has been working hard to make those changes necessary to compete in the increasingly competitive commercial aviation industry.  Less than 10 years ago, the airline operated a small fleet of older, Russian-made aircraft generally considered unreliable and uncomfortable by today’s standards.  Vietnam Airlines now has replaced much of this fleet with modern equipment, allowing the airline to greatly improve its level of service and better meet the demands of today’s sophisticated traveler.  The results have been dramatic.

Most recently, after passage of the U.S. – Vietnam Bilateral Trade Agreement last year, Vietnam Airlines purchased four Boeing 777s in a deal worth $680 million.  The sale was historically significant, as it was the first time Vietnam Airlines purchased aircraft instead of leasing them. The deal marked a major step forward in the U.S. - Vietnam trade relationship.

Since then, Vietnam Airlines has leased two more 777s in order to expand and upgrade its fleet.  Boeing will have to continue to compete aggressively for this business, but cannot do so in the absence of a strong trade relationship with Vietnam. 

The Boeing Company believes that with the extension of annual NTR to Vietnam and the eventual accession of Vietnam to the World Trade Organization, that U.S. – Vietnam trade will be of significant benefit to both nations.

The potential for major economic growth in Vietnam is undeniable.

From 1992 to 1997, prior to the Asian financial crisis, Vietnam Airlines experienced annual traffic growth averaging 30 percent per year.  This compares to an average for the industry worldwide of five percent per year, and for Asia as a whole, of seven percent.  The financial turmoil that engulfed Asia in late 1997 and in 1998 did not have the same negative impact on Vietnam Airlines that it did on the airlines in neighboring countries. Some of these airlines suffered from double-digit percentage reductions in traffic, and significant erosion in profits.  While Vietnam Airlines did lose profits, the carrier was able to hold on to a generally constant level of traffic during the depths of the crisis. 

As these statistics indicate, the potential market for aircraft sales in Vietnam over the next 10 to 15 years is significant.  Boeing projects Vietnam Airlines could require three to five billion dollars worth of modern aircraft during this period.  Such growth means that Vietnam Airlines could develop an operation comparable to the size of Thai International Airways, Cathay Pacific, or Singapore Airlines, each with 60 to 80 aircraft.

Approval of annual NTR for Vietnam is essential Boeing’s ability to continue to compete for commercial aircraft sales to Vietnam.

The Boeing Company strongly supports the extension of NTR for Vietnam.  Increased trade between our two nations will create jobs and economic opportunity both in the United States and Vietnam.