HANOI — The US and Vietnam signed a defense agreement Monday, a document which officials hope will grow the military relationship between the two nations and will eventually lead to co-production of military equipment.

The Joint Vision Statement on Defense Relations was signed at a ceremony by US Secretary of Defense Ash Carter and Vietnamese Defence MInister Gen. Phung Quang Thanh.

"Following last year's decision by the United States to partially lift the ban on arms sales to Vietnam, our countries are now committed, for the first time, to operate together, to step up our defense trade, and to work toward co-production," Carter said in remarks.

The statement is nonbinding, and the Pentagon sometimes feels like a factory dedicated to producing such documents.

But a US official, speaking on background due to the sensitive nature of negotiations, characterized the agreement as a big deal, in part because it updates the 2011 Memorandum of Understanding that has been the guidelines for the US-Vietnamese military relationship to reflect new changes.

The Vietnamese, the official said, hew closely to such documents, and pushing for anything not included in the 2011 MOU would effectively be a non-starter. Hence, the new language opens new avenues on defense issues, including the option of co-production of military equipment in the future.

The agreement explicitly calls to "expand defense trade between our two countries, potentially including cooperation in the production of new technologies and equipment, where possible under current law and policy restrictions."

Getting there won't be quick, the official warned, but it is a potential watermark for any defense industry players who look at the regional market and hope to exploit the growing split between Beijing and Hanoi.

Vietnam buys more than 90 percent of its defense materiel from Russia. The offer of co-production is hence a win-win for both sides. The US can expand its defense industrial reach while also chipping at some of the foreign military control of Russia, while Vietnam can wean itself off of a sole-source provider for its gear.

In the meantime, both sides are looking for potential sales of equipment. That is set to become easier, with the US Senate's top official, Sen. John McCain, R-Ariz., ready to introduce a bill to lower restrictions on arms sales to Vietnam.

That follows an executive order from the Obama administration in October that eased other restrictions.

Through a translator, Thanh expressed pleasure on the shifting arms rules, but called for a full stop to any restrictions.

"What we do hope and do wish is the full removal of restrictions on lethal weapons against Vietnam," Thanh said. "The full removal of the restrictions would [show] the trust and respect between the two countries. And that is, I believe, in line with the interest of both countries."

As part of the agreement, Carter also announced that the Pentagon is stationing a peacekeeping expert at the American embassy in Vietnam in order to help educate and guide Vietnam's entry into global peacekeeping operations.

Vietnam has expressed interest in expanding into that realm for the first time, although when its first peacekeeping operation may occur is not yet known.

Political Ramifications

Although the past half century has seen Vietnam closely aligned to China, this new agreement can be read as a repudiation of Beijing at a time when the region is tensely watching China's actions in the South China Sea.

Officials during Carter's trip have pointed to an incident last year where China placed an oil rig just outside of Vietnam's territory as a major tipping point.

The situation led to a huge growth in anti-Chinese sentiment, including riots that targeted Chinese-owned businesses. It also, according to the official, helped solidify a decision by Vietnam's leadership to move closer to the US politically.

The signing of the agreement was held in part to mark the 20th anniversary of diplomatic relations between the two countries. In his remarks, Carter noted how unlikely the current relationship would have seemed 20 years past.

"We're both committed to deepening our defense relationship and laying the groundwork for the next 20 years of our partnership," he said.

If the goal was to make clear the strength of the American-Vietnamese alliance, the setting worked well. Before the formal meetings, Carter inspected an arrangement of Vietnamese troops, before a military band launched into the US national anthem as American and Vietnamese flags flapped overhead.

Other symbolism was present in the person of Thanh, the Vietnamese defence minister. Thanh fought against the US during the Vietnam War and rose through the ranks of the Communist party leadership. That he has pushed forward with such an agreement gives extra weight to the idea the US and Vietnam are moving beyond the brutality of their shared past.

Disagreements Remain

Gaps still remain between the two nations. Human rights remains an issue, one Carter acknowledged in his speech.

Asked directly by a reporter if those concerns should be addressed before advancing the military relationship, Carter largely sidestepped that question, although he said the US Department of State continues to have "very candid" discussions with Vietnamese officials on human rights issues.

"They clearly intersect," Carter said of human rights and defense issues.

The US official expressed optimism on the human rights front, pointing to solid gains on freedom of speech and religion in the past two years. Those are driven in part by a conclusion in Hanoi that the government cannot control the internet and social media the way China does, the official said.

Another disagreement is on the reclamation and militarization of small islands in the South China Sea. China has reclaimed 1,500 acres of islands since the start of 2015, an astounding feat — and a politically charged one, as China claims those islands as sovereign territory that others cannot traverse.

The US and its allies disagree, saying such reclaimed lands are not recognized under international law as sovereign territory. Tensions over the issue ratcheted up this week when China places a pair of artillery vehicles on one such island, effectively militarizing it.

As he promised to do during a speech at the Shangri-La Dialogues in Singapore last week, Carter formally asked all claimants in the South China Sea to halt reclamation and militarization of such islands permanently.

Vietnam, however, has a significant number of small islands under its control, and has shown no real interest in decamping from their position.

Thanh said it is Vietnam's position to work through the Association of South Asian Islands to resolve the issues. He said there are military personnel on 19 of the islands controlled by Vietnam, but added there is no plan to expand the island territory.

Twitter: @AaronMehta

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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