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US President Barack Obama laid out a hopeful vision for the future of US-Vietnam relations on Tuesday, while insisting that the two countries’ reconciliation following a war-torn past holds lessons for the world.

“At a time when many conflicts seem intractable, seem as if they will never end, we have shown that hearts can change, and that a different future is possible when we refuse to be prisoners of the past,” Obama said in Hanoi.

“We’ve shown that progress and human dignity is best advanced by cooperation and not conflict. That’s what Vietnam and America can show the world,” he said.

Speaking to a crowd of mostly young people, Obama pointed to his own coming of age after the US-Vietnam War as a sign that both countries were ready to focus solely on current and future opportunities.

During his trip, Obama announced new commercial deals worth more than 16 billion dollars. He also lifted a decade-old arms embargo on Vietnam as a way to fully normalize relations.

The biggest applause came when he made a jab at China's increasing assertiveness in the South China Sea, where Vietnam and other South-East Asian countries are locked in territorial disputes with Beijing.

"Big nations should not bully smaller ones,” Obama said to loud applause in the cavernous National Convention Center.

US Secretary of State John Kerry, a US-Vietnam War veteran, and Obama’s national security advisor Susan Rice accompanied the president in Vietnam, underscoring the significance of his trip.

Obama's speech avoided direct criticism of Hanoi over its human rights record, instead painting in broader strokes the “universal values” he said it should adopt – and which, Obama noted, are in the Vietnamese constitution.

Those include freedom of speech, freedom of assembly, the right of access to information, the right to assembly, the right to association and the right to demonstration.

In his speech, Obama specifically addressed the young people of Vietnam, where half the population is under 30 years old.

“Your destiny is in your hands,” Obama told them. “This is your moment and as you pursue the future that you want, I want you to know that the United States of America will be right there with you as your partner and as your friend.”

After the speech, university students in the audience said they found Obama's words uplifting.

"He showed how both of our countries can achieve prosperity together, and the people I was sitting with all admired his vision greatly," said Nguyen Minh Duc, a 20-year-old student.

Earlier on Tuesday, Obama met with members of Vietnam's civil society, including dissidents and journalists detained by the Communist government for speaking out on human rights and other contentious subjects.

Several dissidents invited to the meeting were detained and prevented from attending by Vietnamese authorities, including at least one who was seized early Tuesday morning.

Obama is the third US president to visit Vietnam, following Bill Clinton in 2000 and George W Bush in 2006. Diplomatic relations were normalized between the two countries under Clinton in 1995, two decades after the end of the war.

Obama left Hanoi after the speech for Ho Chi Minh City, where he was expected to meet with businessmen and participate in a town hall meeting with young Vietnamese on Wednesday morning.

On Wednesday afternoon, he planned to leave for Japan to attend the G7 Summit and to visit Hiroshima, where he would become the first US president to visit the site of the 1945 US atomic bomb attack.

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