Vietnam has reached an agreement with the United States that paves the way for the communist country to join the World Trade Organization, a deal that Washington praised as a "historic" step forward in relations between the two nations.

The two sides have "reached agreements in principle," Vietnamese Trade Minister Truong Dinh Tuyen told Tuoi Tre (Youth) newspaper after four days of talks in Washington. "The official signing will be conducted soon, probably in Ho Chi Minh City."

The newspaper quoted Vu Dang Dung, an official at the embassy in Washington, as saying the two countries are expected to officially sign the agreement in early June when U.S. Trade Representative-designate Susan Schwab attends the Asia Pacific Economic Cooperation (APEC) Trade Minister Meeting in Ho Chi Minh City.

The newspaper did not give details of the pact.

CountryWatch: Vietnam

Current U.S. Trade Representative Rob Portman called it a "very good agreement for the United States."

"It opens a new and growing market for American agricultural goods, services, such as financial services, and manufactured products," Portman said in a statement from the Office of the U.S. Trade Representative in Washington.

"This agreement also signals an historic step in our bilateral relationship," Portman said. "Vietnam recognizes that broad-based reform and economic liberalization are essential to its integration into the global economy."

One of the most thorny issues, that dragged the talks longer than scheduled, was a Vietnamese government's decision to mobilize US$4 billion to accelerate the garment and textile industry, the newspaper said.

The two sides agreed that Vietnam will scrap this decision upon becoming a WTO member and immediately stop subsidizing local garment and textile companies when the two countries officially sign the agreement, it said.

The U.S. Congress needs to grant Vietnam Permanent Normal Trade Relations, the last step before the communist country can become a member of the Geneva-based world trade body.

The newspaper said Tuyen, in the capacity as special envoy of Prime Minister Phan Van Khai, has received strong commitments from the U.S. House of Representatives and Senate in giving Vietnam PNTR.

U.S. Sen. Max Baucus on Sunday welcomed the deal, saying it opens Vietnam to more American products by requiring the communist-led government to reduce tariffs on key U.S. goods, including beef from Baucus' home state of Montana.

"The road to normalization between the United States and Vietnam is almost complete," Baucus, a Democrat, said.

Baucus said he hopes the process of granting normal trade relations to Vietnam will be finished before Congress breaks in August.

Last month, Vietnam concluded talks with Mexico, leaving its former enemy, the United States, the only country it needs to conclude bilateral negotiations.

Vietnam wants to join the world trade body before hosting an APEC summit in Hanoi in November which U.S. President George W. Bush is expected to attend.

The bilateral trade volume has steadily increased since the two countries signed the Bilateral Trade Agreement in 2001, reaching nearly US$8 billion last year, heavily in favor of Vietnam.