US embassy cable - 03HOCHIMINHCITY1063

UNCLAS HO CHI MINH CITY 001063 
 
SIPDIS 
 
E. O. 12958: N/A 
TAGS: ECON, ETRD, VM, CI, WTO 
SUBJECT: WHAT DID ONE LONG, SKINNY COUNTRY TELL THE OTHER?  JOIN 
WTO, IMPROVE TRANSPARENCY AND RULE OF LAW 
 
 
Summary 
------- 
1. Chilean President Ricardo Lagos and his delegation ended a 
three-day visit to Vietnam by addressing a seminar devoted to 
improving trade ties.  Impressively, they delivered the message 
that transparency is the key to economic growth and that WTO 
accession is necessary to continue and protect that growth.  The 
meeting was ostensibly about trying to increase trade and 
investment between the two nations, which was a paltry $19 million 
last year.   End summary. 
 
Very Low Levels of Trade 
------------------------ 
2. Following the APEC Leaders Meeting in Bangkok, Chilean 
President Ricardo Lagos spent three days in Vietnam.  Capping off 
this visit, was a seminar called "Vietnam - Chile Business - New 
Horizons for Corporation" in Ho Chi Minh City, at which he was 
keynote speaker.   Two hundred businessmen, along with local 
officials, assembled at Ho Chi Minh City's Reunification Palace to 
hear Vietnamese and Chilean speakers deliver hopeful messages of a 
brighter trade relationship.  Current trade is modest at best. 
Trade peaked in 2001 at 26.6 million USD but dropped back to 19.1 
million USD in 2002.  Numbers are up so far this year, with trade 
reaching 20 million USD during the first eight months of 2003. 
Trade flowing from Vietnam to Chile includes garments, footwear, 
handicrafts, seafood, and bicycles.  The flow in the other 
direction includes wood, fertilizer, animal feed, and accessories 
used in Vietnam's garment industry.  Overall, about 75 percent of 
the trade is Vietnamese exports to Chile. 
 
Keys to Success:  Transparency, Predictability, and the WTO 
--------------------------------------------- -------------- 
3. Transparency and predictability were twin refrains running 
throughout the Chilean presentations.  The keynote speech by 
President Lagos kept to a message of past and future cooperation 
but members of his delegation spoke more substantively.  Without 
explicitly linking Vietnam to a deficiency in these areas, the 
Chileans made their point.  Time after time, they argued that 
transparency and predictability were the keys to attracting and 
keeping investors, as well as developing the overall economy.  The 
speakers explicitly linked Chile's own economic successes to 
transparency and predictability.  The underlying message was quite 
clear: Vietnam must address transparency and rule of law. 
 
4. Ricardo Lagos-Weber, Director for Multilateral Economic Affairs 
at the Chilean Foreign Ministry, also described the nature of 
trading relationships and the importance of the WTO.  The audience 
heard that a byproduct of increased trade was trade conflicts with 
other countries, that as a nation's economy grew it would begin to 
impinge on the interests of others and this would naturally lead 
to disputes.  His message was that these disputes were a normal 
part of international trade and a sign of growing economic power. 
The speaker linked the outcome of these disputes to participation 
in the WTO, saying that the only way smaller countries could be 
assured of equitable results in conflicts with larger trading 
partners was through the WTO. 
 
5. Local Ho Chi Minh City officials, led by People's Committee 
Chairman Le Thanh Hai, stressed HCMC's advantages for Chilean 
investors and business people.  Luong Van Ly of the Department of 
Planning and Investment called Ho Chi Minh City  "the economic, 
educational, social, and cultural hub of the country." 
Encouragingly, he also named transparency as the final target of 
efforts to make the city an attractive destination for investors. 
 
Comment 
------- 
6. While this seminar is unlikely to radically expand Chile- 
Vietnam trade or dramatically accelerate economic reforms here, 
the reminders, from a third-party, that legal reforms are key for 
Vietnam's economic success are most welcome. 
 
YAMAUCHI