US embassy cable - 04HANOI2649

UNCLAS HANOI 002649 
 
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, BTA 
SUBJECT: VIETNAM: AMBASSADOR'S CALL ON MOT VM TU 
 
SENSITIVE BUT UNCLASSIFIED 
 
1 (SBU) Summary:  In a meeting September 21, Vice Minister 
of Trade Luong Van Tu told the Ambassador that he believed 
both the United States and Vietnam are "happy" with the 
current state of the bilateral economic relationship and 
that GVN officials would be available to meet with the USG 
in the October 26-28 for WTO bilateral market access 
negotiations.  End Summary. 
 
BTA Implementation 
------------------ 
 
2. (U) VM Tu told Ambassador that, almost three years after 
entry-into-force of the U.S. Vietnam Bilateral Trade 
Agreement, he believes the United States and Vietnam are at 
a point in the development of the bilateral economic 
relationship where "both sides are happy."  Although the 
relationship is growing quickly, VM Tu stated, it started at 
a very low level and there is a great deal of potential that 
has not yet been explored.  The VM praised USG efforts to 
help implement the BTA, including USG provision of technical 
assistance to Vietnam through the USAID-funded Support for 
Trade AcceleRation (STAR) Project and USG support for trade- 
promotion trips to Vietnam.  He added that the BTA is only 
the first step in developing the bilateral trade and 
economic relationship between the Unites States and Vietnam. 
 
Plans for WTO Bilats 
-------------------- 
 
3. (SBU) VM Tu noted that during Deputy USTR Josette 
Shiner's visit to Hanoi in July, the U.S. and Vietnam had 
discussed holding WTO bilateral market access negotiations 
in October.  To that end, he pointed out that the GVN had 
provided the USG with a written response to the comments the 
U.S. side had made on Vietnam's last WTO offer, and had 
proposed holding bilats any time after October 15.  The 
Ambassador noted that the U.S. side is looking at holding 
the bilats during the October 26-28 timeframe and VM Tu 
quickly replied that the GVN would be available for meetings 
in Washington on those dates. 
 
Investment Issues 
----------------- 
 
4. (SBU) VM Tu told the Ambassador that the GVN has worked 
hard to create conditions favorable for foreign investment 
in Vietnam and said that "most U.S. investments in Vietnam 
are profitable."  The GVN is happy with the presence of U.S. 
companies, which employ a lot of Vietnamese labor, including 
higher-level management staff.  He explained that foreign 
invested companies used to rely on expensive expatriate 
managers, but increasingly they have been able to hire more 
managers locally.  For example, Proctor and Gamble initially 
had twenty expatriate managers on staff, but has been able 
to reduce that number to four by hiring Vietnamese managers. 
At the same time, P&G has been able to increase its market 
share in Vietnam.  VM Tu noted that he has frequently told 
U.S. investors that the GVN considers their success to be 
GVN success as well.  However, he added, there are some 
"issues" it will take time to resolve and the GVN is looking 
for the companies' understanding of conditions in Vietnam. 
 
5. (SBU) Comment:  In his first meeting with the Ambassador, 
VM Tu made a concerted effort to put a very positive spin on 
the bilateral economic relationship.  Aside from noting that 
the two sides should continue to work together on any 
"problems" that arise, Tu did not choose to raise any of the 
current irritants in the bilateral relationship, including 
the ongoing anti-dumping case against shrimp or the recent 
designation of Vietnam as a "Country of Particular Concern" 
regarding religious freedom.  End Comment. 
MARINE