In signing a trade deal with its former enemy the United States last week, the communist-ruled developing country took a crucial step toward its 11-year-old goal of joining the Geneva-based trade club.

Barring any last-minute hiccups, Vietnam looks likely to join the 149-member group this year, most observers say. WTO chief Pascal Lamy gave a cautious thumbs up last week, saying "things are looking good."

Joining the rules-based global trading system will open the world's markets to Vietnamese garments, shoes, farm goods and other exports by removing quotas and tariffs, and give Hanoi a forum for appeal in trade disputes.

It will also open Vietnam's domestic economy to large foreign companies, who will bring new investment, jobs and know-how, but who also threaten to drive weaker local competitors out of the market.

"Vietnamese goods will have to compete with foreign goods, not only on the foreign market but also on the Vietnamese market," said Trade Minister Truong Dinh Tuyen after signing the US deal Wednesday.

"If we get through the first few years, we will be OK. That's the experience of other countries. At first, it will be difficult."

With WTO membership, many state subsidies will end and Vietnamese businesses will loose market share and "enter a period of rapid adjustment," said Vietnam expert Carl Thayer of the Australian Defence Force Academy.

"They will have to adjust to produce quality goods and services or go bankrupt."

Vietnam may be one of the world's five remaining communist-ruled states, but its leaders, like their Chinese comrades, have long been keen to unleash the capitalist potential of its 83 million people on the world.

"The leadership is very anxious to join the mainstream of East Asia, which is where they belong," said Jonathan Pincus, the UN Development Programme's chief economist in Vietnam -- a country that saw 8.4 percent economic growth last year, Asia's fastest rate after China.