US embassy cable - 05HANOI567

UNCLAS SECTION 01 OF 02 HANOI 000567 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLEASE PASS TO USTR EBRYAN, GHICKS 
STATE ALSO FOR E, EB AND EAP/BCLTV 
STATE PASS USAID FOR CHAPLIN/ANE 
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, VM, IPROP, WTO 
SUBJECT: Vietnam: Status of Key WTO legislation 
 
Ref:  Hanoi 0017 
 
1. (SBU) Summary:  On March 3, the Ambassador hosted a lunch 
with staff and consultants of the USAID-funded Support for 
Trade AcceleRation (STAR) Project and representatives of the 
European Union to discuss the status of GVN efforts to 
accede to the WTO.  The following is a summary of STAR 
technical assistance on key pieces of WTO-related 
legislation.  Other aspects of the discussion will be 
reported septel.  For a broader overview of ongoing STAR 
technical assistance on implementation of the U.S.-Vietnam 
Bilateral Trade Agreement (BTA) and WTO accession, see 
reftel.  End Summary. 
 
2. (SBU) On March 3, the Ambassador hosted a lunch with 
staff and consultants of the USAID-funded Support for Trade 
AcceleRation (STAR) Project and representatives of the 
European Union to discuss the status of GVN efforts to 
accede to the WTO.  EU Ambassador Markus Cornaro, EU Trade 
Counselor, Econ/C, USAID Country Manager and Econoff 
(notetaker) also attended the lunch.  The STAR team said 
that the GVN is currently undertaking an "amazing amount" of 
legal reform and STAR is providing assistance on about 
twenty laws and regulations.  Several STAR consultants are 
in Vietnam now providing the GVN assistance on laws likely 
to be passed by the National Assembly (NA) this year. 
Following are their comments: 
 
Customs 
------- 
 
3. (SBU) Stuart Seidel, an attorney with Baker & McKenzie 
and a former Assistant Commissioner of U.S. Customs, is 
working as a STAR consultant assisting the GVN with Customs 
reform.  According to Seidel, the 2002 Customs Law and 
subsequent implementing regulations passed by the GVN have 
established a good framework for implementation of the WTO 
Customs Valuation Agreement (CVA).  However, implementation 
of the CVA has raised serious concerns within the GVN about 
loss of revenues, due in large part to under-invoicing by 
importers.  The GVN's current inability to address this 
problem is due primarily to a lack of adequate post- 
clearance audit procedures.  STAR is working with the 
General Department of Customs (GDC) on revisions to the 
Customs Law.  Although the NA is scheduled to approve 
revisions to the law in May, it is very likely approval will 
be delayed until November according to Seidel. 
 
4. (SBU) STAR is also assisting GVN efforts to amend the Law 
on Import and Export Duties, which deals with the process of 
collecting tariff and other trade tax revenues.  STAR 
recently supported a seminar in HCMC on this legislation and 
has provided comments on the draft amendments.  Seidel noted 
that STAR is working to ensure there is a high level of 
coordination between the drafting teams working on the Law 
on Import and Export Duties and on the Customs Law. 
 
5. (SBU) In terms of WTO accession, Seidel said that the two 
most problematic customs-related issues the GVN needs to 
address in the immediate term are 1) the lack of effective 
enforcement of border measures protecting intellectual 
property and 2) the lack of adequate procedures for 
administrative review of customs decisions.  Seidel noted, 
however, that Vietnam has made significant reforms on 
customs and the "whole mindset" of Vietnamese Customs 
officials has changed.  He expressed optimism that Vietnam 
is "well on its way" to meeting WTO customs obligations. 
 
Commercial Transactions 
----------------------- 
 
6. (SBU) Claude Rohwer, Associate Dean of the McGeorge Law 
School at Pacific University, is a STAR consultant providing 
technical assistance to the GVN on establishing a strong 
legal framework for commercial transactions.  In Vietnam, 
commercial transactions are governed by three key pieces of 
legislation:  the Civil Code, the Commercial Law and the 
Ordinance on Economic Contracts.  According to Rohwer, 
although accession to the WTO may not specifically require 
changes to these laws and regulations, revision of the 
legislation is critical for the establishment and 
functioning of a market economy. STAR is providing the GVN 
with assistance in revising completely both the Civil and 
Commercial Codes.  Rohwer emphasized the need for the GVN to 
broaden the application of the Civil Code to include all 
commercial transactions and to expand the scope of the 
Commercial Law to include trade in services.  STAR has also 
advised the GVN to repeal the outdated Ordinance on Economic 
Contracts. The NA is scheduled to pass amendments to both 
the Civil Code and the Commercial Law in May. 
 
Electronic Transactions 
----------------------- 
 
7. (SBU) Paula Breunig, Legal Council for the Center for 
Democracy and Technology, is consulting with STAR to provide 
assistance to the GVN on passage of an Electronic 
Transactions Law.  STAR technical assistance is focused on 
ensuring that the law is in step with international 
standards for e-transactions; that the law creates an 
enabling environment for e-commerce; and, that the law 
limits (to the extent possible) the State's role in e- 
transactions.  The drafting team (the Science and Technology 
Committee of the NA) is working on the sixth draft of the 
law; the NA is scheduled to review the draft in May and 
approve it in November.  As with the Commercial Law, the 
Star Team pointed out, while the WTO may not specifically 
require passage of an E-Transactions Law, it is a critical 
component of the framework for a market economy. 
 
IPR 
--- 
 
8. (SBU) According to John Bentley, STAR's Chief Legal 
Advisor, the GVN is making progress on drafting a 
comprehensive IPR Law to meet WTO accession requirements. 
The NA is currently scheduled to review the draft law in May 
and approve it in November.  The drafting team, led by the 
Legal Department of the Ministry of Science and Technology 
(MOST), is "very capable" according to Bentley.  STAR is 
also working with the GVN on a new law on the enforcement of 
judgments.  Implementation of this law will improve the 
GVN's ability to enforce judicial decisions on IPR cases and 
other commercial disputes.  The NA is scheduled to pass this 
law in early May 2006. 
 
9. (SBU) Bentley also highlighted that, with assistance from 
STAR, the GVN recently promulgated a new Civil Procedure 
Code (CPC).  The CPC contains important IPR-related 
provisions required by the WTO, including the use of 
provisional measures such as injunctions.  According to 
Bentley, the passage of the CPC was "groundbreaking" for 
Vietnam. 
 
Enterprise and Investment Laws 
------------------------------ 
 
10. (SBU) Fred Burke, Managing Partner for Baker & McKenzie, 
is consulting with STAR to help the GVN draft new, 
comprehensive Enterprise and Investment Laws.  GVN drafters 
recently completed first drafts of both pieces of 
legislation; the NA is scheduled to comment on the laws in 
May 2005 and approve them in the spring of 2006.  However, 
the GVN is now considering whether it is possible to push 
this timeline forward so one or both of these laws can be 
finished by the end of this year. 
 
11. (SBU) According to Burke, while WTO accession might not 
specifically require passage of a new Enterprise Law, this 
legislation is critical for implementing outstanding BTA 
obligations such as enabling U.S. investors to establish 
joint-stock companies in Vietnam.  (Note:  This obligation 
was due in December 2004.  End Note.)  Failure to meet BTA 
obligations in a timely manner will send negative signals to 
the business community and others regarding the GVN's 
ability to implement WTO obligations after accession, Burke 
added.  The Investment Law, on the other hand, will contain 
critical provisions specifically required for WTO accession, 
including application of the Trade-Related Investment 
Measures (TRIMs) Agreement and procedures for implementing 
market access commitments for both goods and services.  It 
is important for the GVN to complete the Investment Law 
prior to accession, the Star Team stressed. 
 
MARINE