US embassy cable - 04HANOI889

UNCLAS HANOI 000889 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLEASE PASS TO USTR EBRYAN 
STATE ALSO FOR E, EB AND EAP/BCLTV 
USDOC FOR 6500 AND 4431/MAC/AP/OPB/VLC/HPPHO 
USDA FOR FAS/ITP/SHEIKH 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, ECON, VM, WTO 
SUBJECT: Vietnam Working on U.S. MFN Duty Issue 
 
Sensitive but Unclassified -- Please protect accordingly. 
 
REF:  (A) HANOI 696      (B) HANOI 821 
 
1. (SBU) SUMMARY:  Econcouns met MOT DG for Multilateral 
Affairs Khanh to discuss the MFN duty issue on March 26. 
Khanh said he was working to solve this issue, but that some 
in the GVN believed that since textiles were excluded from 
the BTA, anything in a textile deal with the EU was not 
subject to MFN.  Econcouns stressed that the textile 
exclusion applied to quotas only and urged Khanh to get it 
right to avoid losing GVN credibility on WTO accession. 
Khanh asked for another week to work on this before the USG 
took further action.  Khanh agreed to seek to address other 
examples of GVN violation of WTO principles.  He confirmed 
that the GVN was still sticking to the target set in Geneva 
for WTO accession, though the Minister was no longer going 
to say this publicly for domestic political reasons.  END 
SUMMARY. 
 
2. (SBU) On March 26, Econcouns met with MOT Director 
General for Multilateral Affairs Tran Quoc Khanh to discuss 
the GVN's refusal to grant lower tariffs on wine and 
motorcycles to the USG despite the fact that the BTA gave 
MFN to the U.S.  Khanh is the deputy head of the GVN WTO 
negotiating team and the de facto chief negotiator. 
Econcouns began by expressing concern about the GVN's 
refusal to honor its MFN commitment to the U.S. in the BTA 
in the case of lower tariffs on wine and motorcycles granted 
to the EU.  Khanh replied by citing a Vietnamese proverb to 
the effect that he was being blamed for what others had 
done.  He explained that some in Vietnam interpreted the 
exclusion of textiles from the BTA to refer to both textile 
quotas and tariffs.  They believed that this would also 
apply to the GVN's other bilateral commitments to MFN. 
 
3.  (SBU) Econcouns stressed that this exclusion applied 
only to quotas, not to tariffs.  MFN was simply not 
negotiable, he added.  Khanh claimed that the EU also had at 
least two other textile agreements that covered more than 
quotas (Brazil and Sri Lanka).  Econcouns stressed the need 
for GVN to get the MFN issue straight and get it right to 
avoid losing the credibility gained during the December 
Working Party Talks in Geneva.  Should the GVN fail to do 
so, it was very hard to see them making progress on a WTO 
accession, he said. 
 
4. (SBU) Khanh asked for another week to try to work on this 
issue before the U.S. took further action.  He expressed 
concern that the Ambassador was raising the issue during his 
trip to Washington.  Econcouns did not comment on this 
remark, but expressed hope Khanh would achieve a positive 
result in the coming week. 
 
5.  (SBU) Econcouns went on to raise another example of non- 
compliance with WTO principles:  the GVN requirement that 
rice for export to Iraq be sold only to state trading 
companies.   Professing ignorance, Khanh asked for greater 
detail on this and any other issue in this category so that 
he could work to correct them.  Econcouns agreed to provide 
more detailed information. 
 
6.  (SBU)  Khanh said that he was working hard on the WTO 
accession and he hoped the USG and GVN would be able to have 
a bilateral in the near future, perhaps around the time of 
the BTA joint committee meeting.  Econcouns agreed to convey 
this to Washington. 
 
7.  (SBU) Noting that Trade Minister Tuyen had referred to a 
target of 2005 or perhaps 2006 in his meeting the previous 
week with the Ambassador and visiting textile negotiators, 
Econcouns asked whether the GVN had changed its target date. 
Khanh replied that the target was still the one the GVN had 
set in December in Geneva, namely completing paperwork by 
late 2004 or early 2005 and acceding by spring or summer of 
2005.   Tuyen's statement had merely been an attempt to be 
realistic publicly for domestic political reasons while 
still striving for the timing set in Geneva, he said. 
PORTER