By the Blouin News Business staff

Ties with Vietnam: Australia up, Canada down?

by in Americas, Asia-Pacific.

Vietnam's Prime Minister Nguyen Tan Dung adjusts his headset during the East Asian Summit Plenary Session at the Myanmar International Convention Center in Myanmar's capital Naypyidaw on November 13, 2014. MANDEL NGAN/AFP/Getty Images

Vietnam’s P.M. Nguyen Tan Dung in Myanmar’s capital Naypyidaw on November 13, 2014. MANDEL NGAN/AFP/Getty Images

On Wednesday, Vietnamese Prime Minister Nguyen Tan Dung met with Australian Prime Minister Tony Abbott, and the two countries agreed to elevate their economic and defense ties. Vietnam is Australia’s fastest-growing Southeast Asian trading partner, with bilateral trade of $6.4 billion in 2014, and Dung is actively encouraging further Australian investment in his country. Shared concern over China’s rise has led the former Vietnam War-era rivals to warm up relations — Australia is now even set to train 120 Vietnamese military personnel.

Communist, authoritarian Vietnam and democratic Australia, currently under Abbott’s right-wing administration, seem unlikely partners. But, as P.M. Dung said, both countries share the goal of assuring “peace and stability, maritime security, and freedom of navigation in the South China Sea.” Both want to ensure self-restraint from all parties in the region in order to avoid escalating any disputes — rhetoric largely aimed at China.

More importantly, both countries are eager to do business, which, it must be admitted, is greatly facilitated by Abbott’s general habit of not criticizing authoritarian regimes. Australian investors have poured in about $1.7 billion in 320 projects in Vietnam, and Dung predicted that the economy would grow by up to 7% from 2016-2020, boosted by an ambitious privatization program. Dung sought out further Australian investment in Vietnam’s telecommunications, banking, and energy sectors. Vietnam is so eager to improve ties that even the nearly $7 million reduction in Australia’s foreign aid to the country for 2014-15 was not a point of contention. Joint membership in the U.S.-backed Trans-Pacific-Partnership (TPP) will enhance the two countries’ relationship even further, once the free trade pact’s negotiations are concluded.

Almost all of this contrasts with the position of Canada, a country that also places a high premium on future economic links with Southeast Asia but for which the past is an obstacle. In December, Canada’s Senate passed a bill that would make April 30 an official day to commemorate the exodus of South Vietnamese refugees after the fall of Saigon in 1975 and their acceptance into Canada. The bill, originally called the “Black April Day Act” before being changed to the “Journey to Freedom Day Act,” has infuriated the Vietnamese government, which warns it distorts history (Hanoi views April 30 as the start of reconciliation, following the end of the war) and imperils the bilateral relationship.

This would be a major blow for Canada’s business community and the administration of Prime Minister Stephen Harper, both of which are seeking to expand trade and investment with Vietnam and the other ASEAN members. A trip this week by Ed Fast, Canada’s International Trade Minister, to Southeast Asia is his 13th in less than four years, and he said “It’s a huge opportunity, and it is one that has just started.” Canada’s bilateral trade with Vietnam reached an all-time high of over $2 billion in 2013.

Canada, which is also in TPP negotiations, has provided Vietnam with around $630 million in official development assistance between 1990 and 2012. However, Canadian investment in Vietnam in 2012 was only around $40 million — a drop in the bucket compared to that of Australia. In September 2014, Canada and Vietnam agreed to expand their bilateral trade and cooperation in several fields, but if the Journey to Freedom Act becomes law it would give this budding relationship a black eye.

Canada’s House of Commons is scheduled to resume debating the bill on March 23, and may even vote on it. The question remains: Will Canadian lawmakers risk a diplomatic crisis — causing real economic pain and foregone opportunities — over a symbolic act relating to a war that ended forty years ago?