A bipartisan group of senators has urged President Bush to lift the 15-year-old U.S. trade embargo on Vietnam, saying the policy has "outlived its usefulness."

In a letter drafted by Sen. Richard G. Lugar (Ind.), a key Republican on the Senate Foreign Relations Committee, the senators argue that the embargo has been eroded by declining support from U.S. allies and is hurting American businesses by giving "unilateral advantages" to "our foreign competitors, particularly the Japanese and the French."

"The time has come to stop penalizing American business interests," the senators said. "Trade with Vietnam would foster American interests across the board."

Vietnamese Foreign Minister Nguyen Co Thach recently pledged increased cooperation on the issue of American prisoners of war and those missing in action from the Vietnam War. The new policy provides for a permanent U.S. presence in Hanoi to coordinate the effort at finding and identifying remains of lost war dead and any traces of prisoners of war.

Administration officials have said Vietnam has cooperated in trying to end the civil war in Cambodia, where a Vietnam-installed government is battling U.S.-backed rebels, but the administration has insisted that diplomatic relations will not be normalized until a peace agreement is reached, and until concrete steps have been taken to resolve the POW/MIA question.

The senators, joined by increasing numbers of U.S. businesses and banks, say the embargo should be lifted now. "In recent months, the United States has become increasingly isolated in its maintenance of the economic embargo against Vietnam," the letter argues. "European and Asian businesses are now enjoying unilateral advantages. Some of the most promising construction and development contracts have already been committed.

"Japan recently announced the opening of a number of commercial bank offices in Vietnam. In fact, the government of Vietnam now estimates that $1.15 billion worth of foreign capital has been committed to investment projects in Vietnam. Once again, the United States risks forfeiting a market to our foreign competitors," the senators said.

Some administration officials have suggested that the first U.S. move toward easing relations might be to allow international loans to Vietnam but not to lift the trade ban. The senators opposed this, saying that such a policy "would open the door to all foreign business interests while slamming the door on American business, forfeiting a generation of business prospects for U.S. citizens. We therefore urge you to move first on removing the embargo on direct U.S. trade with Vietnam. . . . "

Others signing the letter were Democrats Claiborne Pell (R.I.), Alan Cranston (Calif.), Joseph R. Biden Jr. (Del.), John F. Kerry (Mass.) and Christopher J. Dodd (Conn.), and Republicans Frank H. Murkowski (Alaska) and Mark O. Hatfield (Ore.)