Cablegate: Vietnam: Ambassador and Vice Minister of Trade

Published: Thu 10 Mar 2005 10:42 AM
This record is a partial extract of the original cable. The full text of the original cable is not available.
E.O. 12958: N/A
SUBJECT: Vietnam: Ambassador and Vice Minister of Trade
Discuss WTO Accession
1. This cable contains sensitive information. Do not post
on the internet.
2. (SBU) Summary: The Ambassador met with Vice Minister of
Trade Luong Van Tu on March 9 to discuss preparations for
the bilateral market access negotiations on Vietnam's WTO
accession next week in Washington. Expressing appreciation
for U.S. support in the accession process, Tu appealed for
the United States to show flexibility in the negotiations
and to set Vietnam as a priority in the coming weeks with a
view to closing out the bilaterals by June. The Ambassador
replied that the United States would need to see significant
GVN movement on both goods and services at the bilaterals
next week to advance the process. He also urged the Vice
Minister to push forward on legislative actions required
before accession. Tu stated that the GVN was not wavering
in its target for December 2005 accession and that misquotes
attributed to Trade Minister Truong Dinh Tuyen to the
contrary were being corrected. The Ambassador also reminded
Tu of the need to prepare for a vote on Permanent Normal
Trade Relations (PNTR) by the U.S. Congress by ensuring good
implementation of the Bilateral Trade Agreement (BTA) and
dealing with outstanding issues involving U.S. firms. End
3. (SBU) In response to the Vice Minister's request, the
Ambassador accompanied by ECON/C met with Vice Minister of
Trade Luong Van Tu on March 9. Remarking that the United
States and Vietnam would hold bilateral WTO market access
talks in Washington March 14-16, VM Tu said that he hoped
the Ambassador and USTR would support Vietnam and seek to
speed up these negotiations. Noting that Multilateral Trade
Director General Tran Quoc Khanh would head up the
Vietnamese side, Tu solicited the Ambassador's view on how
and when the two sides could conclude their negotiations.
Tu commented that the WTO negotiations had two aspects, a
technical one, in which both sides would work together to
clarify basic issues, and a political one, in which each
side would make a political decision on what was acceptable.
4. (SBU) The Ambassador responded by noting that there was
much to discuss in these areas. He agreed with Tu's
assessment of the technical and political aspects especially
for any issue as complex and multifaceted as a WTO
accession, which has both bilateral and multilateral
negotiating tracks. As a key player in both the
multilateral and bilateral tracks, the United States had
made a political commitment to support Vietnam's accession,
hopefully in 2005. In that regard, the United States had
consistently lived up to its political commitment. The
United States was also pleased that there would be bilateral
talks in Washington next week. The Ambassador commented
that he had asked his Economic Counselor to go to Washington
to assist in the negotiations.
5. (SBU) While the political aspect would be important, the
technical requirements would need to be addressed as well,
the Ambassador continued. The United States is working hard
to make accession in Hong Kong a reality as shown by the
flexibility offered in December 2004 by providing the U.S.
goods market access requests. Having reviewed Vietnam's
January response, the United States is disappointed that the
revised goods offers did not come close to bridging the gap.
Moreover, Vietnam's revised services offer only put on paper
the understandings reached in the October round in
Washington and did not go further to include suggested
improvements to narrow the differences.
6. (SBU) The Ambassador went on to say that although the
U.S. political commitment was as strong as ever, the United
States was concerned that 2005 would be a busy year for the
two countries as well as the WTO accession experts since
eight countries have expressed interest in acceding to the
WTO in Hong Kong in December. Many members of the U.S. team
working with Vietnam are also involved in other accession
negotiations such as those with Russia, Saudi Arabia and
Ukraine. While Vietnam's accession is important, the two
sides are behind where they thought they would be today.
Therefore, they need to work harder. Both sides would like
to set the stage for a successful visit of Vietnam's Prime
Minister. While not impossible, it was growing more
difficult for Vietnam to meet its goal of concluding the
bilateral negotiations before December. Remarking that the
United States had given Vietnam a new paper on services on
March 8, the Ambassador said that he hoped there could be
real movement at the March 14-16 negotiations so that the
two sides could move closer to concluding their bilateral
7. (SBU) Expressing thanks for the United States' steps to
provide new requests on goods and services, VM Tu said that
his team was now seriously considering the U.S. requests.
He hoped that significant progress could be made at the next
round in Washington. He stressed that it would be good for
the United States to give priority to the bilateral
negotiations with Vietnam in order to have continuous
bilateral negotiations in the coming period. He expressed
his thanks in advance for the good will gesture that the
United States could make by giving priority to Vietnam.
8. (SBU) Tu noted that Vietnam needed to focus on both
bilateral and multilateral negotiations. In the
multilateral track, he would look for U.S. flexibility
because the BTA had been based on WTO principles and the WTO
was only a higher level of what was in the BTA. Already
Vietnam had revised many legal documents to implement the
BTA. The National Assembly (NA) would focus on revising and
issuing new legal documents as needed in 2005. Tu observed
that the NA had held a session the previous week to hear
about revising and passing legal documents in order to meet
the WTO requirements. There had also been a meeting with
the NA Foreign Affairs Committee to consider how to ensure
that the legislative programs required for WTO were
efficiently carried out.
9. (SBU) The Ambassador commented that he and a group of
interested Ambassadors and others had discussed this issue
in depth the previous week, motivated by a shared interest
in seeing Vietnam succeed and join the WTO as soon as
possible. The group had two main concerns. First, key laws
under Vietnam's WTO legislative action plan would not be
enacted until 2006, after the proposed accession date. At
the same time, the group of Ambassadors recognized that the
NA has a tremendous workload. A key question, then, is how
the NA and government will work together to ensure all
legislation is completed on time. While this was not the
main purpose of the bilateral meeting next week, the United
States would look forward to hearing from Vietnam's
delegation about how they plan to handle this issue. A
related issue is that WTO members need to review all the
legislation to ensure that it will bring Vietnam's system
into conformity with WTO rules prior to accession. The GVN
recognizes this and committed in the Ninth Working Party to
provide documents so that the Working Party members could
review them. But as of March 9, the WTO secretariat still
had not distributed any drafts of legislation passed in
November let alone drafts of legislation proposed for
passage in May. All of these processes take time, therefore
the sooner the documents are provided, the better, the
Ambassador stressed.
10. (SBU) Referring to press reports of the previous week,
the Ambassador said he had been puzzled to hear Minister of
Trade Truong Dinh Tuyen say that WTO accession in 2005 might
be too hard for Vietnam. The Ambassador asked whether this
was accurate and whether it meant that Vietnam was wavering
about its commitment to accede in Hong Kong. VM Tu
responded that the press reports had been incorrect and that
the Ministry had requested a correction. Vietnam is not
wavering from its target as expressed to the United States
and other trading partners supportive of accession. Tu
confirmed that the legislative action plan would be revised
as the Ambassador had mentioned based on discussions between
the NA and the government. As for the distribution of legal
documents to WTO Working Party members, some documents were
now being translated while a number had already been sent to
the WTO Secretariat, in particular all the documents
relating to Sanitary and Phyto Sanitary (SPS) and Technical
Barriers to Trade (TBT) matters. The GVN intends to provide
remaining documents soon, he said.
11. (SBU) Noting that the United States, through USAID
provides technical assistance to the NA on legal reform, the
Ambassador said that the United States would like to focus
as much as possible on WTO matters. So far much of the work
of the Support for Trade AcceleRation (STAR) Project had
related to the BTA, but clearly WTO legislative compliance
tracks well with the focus of STAR. If the GVN had specific
requests regarding how to direct this program, the
Ambassador offered to try to help. VM Tu expressed his
appreciation for the contributions by STAR and took note of
the Ambassador's offer.
12. (SBU) The Ambassador then mentioned the third element of
Vietnam's WTO accession package, Permanent Normal Trade
Relations (PNTR). For Vietnam to accede in Hong Kong (with
respect to its dealings with the United States), the U.S.
Congress would have to vote to establish PNTR for Vietnam in
the fall. The Congress would certainly look at whether
Vietnam had met its obligations under the BTA. While the
record was good, it was not perfect, the Ambassador
13. (SBU) In this process, the Congress would also look to
the U.S. business community for a picture of how the
environment for doing business is changing, the Ambassador
continued. While this record is also generally good, there
are issues that have not yet been resolved. Noting that
most of these questions are not under the purview of the
Ministry of Trade, the Ambassador listed several outstanding
issues so that the Vice Minister would be aware of them. He
mentioned the investment disputes in a coffee project called
Krong Ana in Daklak Province involving a U.S. firm and the
Third Ring Road Project in Hanoi involving a U.S. firm
called Tricore. He also noted that U.S. firms had made
competitive offers for several procurements that had not yet
been awarded. He also noted that although there had been
movement on insurance licenses for U.S. firms, not one has
been issued. AIG had been in to see the Minister of Trade
that morning, he noted. Finally, he raised the issue of the
special consumption tax on automobiles and its impact on the
auto industry in Vietnam in which U.S. firms have invested.
The Ambassador said that he had discussed these issues at
various levels within the GVN and would continue to do so.
14. (SBU) Noting that he had received it that morning, the
Ambassador then conveyed a March 8 letter from Acting United
States Trade Representative Peter Allgeier to Minister
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