US embassy cable - 04HANOI2602

UNCLAS SECTION 01 OF 02 HANOI 002602 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA JBELLER 
STATE PASS USTR FOR EBRYAN 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ETRD, VM, WTRO, WTO 
SUBJECT: VIETNAM: AMBASSADOR'S CALL ON MOF VM TAM 
 
SENSITIVE BUT UNCLASSIFIED PROTECT ACCORDINGLY 
 
1 (SBU) Summary:  In a meeting September 16, Vice Minister 
of Finance Le Thi Bang Tam informed the Ambassador that 
Vietnam had concluded its WTO bilateral market access 
negotiations with Cuba and Chile, reiterated the GVN's 
desire to issue insurance licenses "gradually," and defended 
the GVN's auto tax and tariff policy.  Besides her planned 
meetings with Treasury and State, the Ambassador also 
encouraged the Vice Minister to meet with USTR during her 
upcoming trip to Washington.  She agreed to meet EB PDAS 
Donnelly here in Hanoi.  End Summary. 
 
Progress on WTO Bilateral Negotiations 
-------------------------------------- 
 
2. (SBU) VM Tam told the Ambassador that Vietnam has 
completed its bilateral market access negotiations with 
Chile and Cuba and expects to finish negotiations soon with 
the EU.  Additionally, she said the GVN is currently 
preparing for ongoing negotiations with South Korea, Japan, 
Australia and the United States.  VM Tam noted that the GVN 
has sent an offer for the 9th Round of Negotiations to the 
Embassy addressing tariff reductions, participation in 
sectoral initiatives and liberalization of financial 
services, and is looking forward to the U.S. response. 
(Note:  Econ Section received the documents on September 15 
and 16 and subsequently sent them via email to EAP/BCLTV, 
EB/ EB/TPP/BTA/ANA and USTR.  End Note.)  VM Tam reiterated 
the GVN's longstanding request that the United States 
consider Vietnam as a less developed country and agree on 
"appropriate" approaches to reaching stated goals.  She also 
expressed the desire for continuing support and technical 
assistance from the United States to help fulfill 
requirements necessary for WTO accession. 
 
Investment Issues 
----------------- 
 
3. (SBU) When asked about the status of American companies 
pending insurance license applications, VM Tam was not 
forthcoming on a schedule for issuance.  Echoing the now 
standard GVN line, she noted Vietnam's "small" insurance 
market and explained the GVN desire to issue licenses 
"gradually" for fully foreign-invested companies.  (Note: 
AIG, which currently has a license for life insurance has 
applied for a non-life license.  New York Life and ACE-INA 
have both applied for life insurance licenses.  End note.) 
She added that the MOF had recently indicated to these two 
firms that the GVN could accelerate license issuance, but 
this would be closely associated with whether upcoming 
negotiations on WTO accession with the United States were 
positive.  She also mentioned two other U.S. insurance 
brokerage firms in Vietnam, Aon Corporation, which already 
has a license, and Marsh and McLennan, which has been 
awaiting a license to set up a 100% owned subsidiary since 
December 2003.  (Note: Neither firm has approached the 
Embassy for advocacy End Note.) 
 
4. (SBU) In her efforts to defend the GVN's policy on auto 
taxes and tariffs, VM Tam ignored the tariff issue, but 
highlighted the National Assembly's 2003 amendment of the 
Special Consumption Tax (SCT) law (effective from 1 January 
2004,) noting this legislation reduced the SCT on completely 
built units (CBU) from one hundred to eighty percent and 
harmonized the SCT rates for imported and locally 
manufactured or assembled vehicles by the end of 2006. 
(Note:  She did not, however, explain that this law also 
increased the SCT rate for auto kits, which all of the 
foreign invested companies use, progressively from five to 
eighty percent.  According to press reports, MOF has 
finished a draft tariff schedule for automobile kits and 
spare parts to reduce gradually protection for the 
automobile industry.  MOF is reportedly consulting with the 
auto industry on the draft before submitting the schedule 
for PM's approval.  End Note.) 
 
5. (SBU) Noting that VM Tam was seeking to meet with 
Treasury and State officials in Washington during the Annual 
World Bank IMF meetings, the Ambassador suggested that she 
might also wish to consider a meeting at USTR and offered 
the Embassy's assistance in arranging it.  She said that 
such a meeting would be very useful if it could be arranged. 
She also said that she would be in town for a meeting with 
EB PDAS Donnelly during his visit later this month. 
 
6. (SBU) Comment:  Vice Minister Tam's remarks showed no 
movement in GVN positions and appeared to introduce an added 
linkage on the insurance license issue, namely progress on 
WTO negotiations.  Post suggests that her upcoming USG 
interlocutors both here and in Washington stress the need to 
move forward on insurance license issuance independently of 
and in advance of the WTO negotiations.  We also recommend 
that they stress the need for the GVN to solve the tariff 
increase aspect of the auto issue, a stance clearly 
inconsistent with WTO accession.  End Comment. 
MARINE