US embassy cable - 05HANOI753

UNCLAS SECTION 01 OF 04 HANOI 000753 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, AND EB/TRA 
TRANSPORTATION FOR MARITIME ADMINISTRATION 
 
E.O. 12958: N/A 
TAGS: EWWT, EINV, PREL, VM 
SUBJECT: Vietnam:  March 22-44 Consultations on Maritime 
Cooperation 
 
Sensitive but unclassified protect accordingly. 
 
1. (SBU) Summary: The U.S. Maritime Administration (MARAD) 
and the Ministry of Transportation (MOTr) met March 22-24 in 
Hanoi to discuss the potential for conclusion of a bilateral 
maritime services agreement in the near future.  The 
Vietnamese side provided a draft agreement, which served as 
the basis for discussion on issues a future bilateral 
agreement should cover.  The U.S. delegation highlighted the 
need for a "forward looking" agreement that would enable 
U.S. investors to provide a full range of maritime services 
in Vietnam and expand options for investment with up to 100 
percent foreign equity in the maritime sector.  At the 
conclusion of the discussions, the U.S. delegation committed 
to revise the Vietnamese draft agreement to reflect the 
issues discussed and to present a new draft to the GVN as 
soon as possible.  The Vice Minister of Transportation 
reiterated the GVN's interest in concluding a bilateral 
agreement in time for a proposed trip to Washington by the 
Prime Minister in June this year.  End Summary. 
 
Productive Talks 
---------------- 
 
2. (U) A delegation of Transportation Department (DOT) 
officials, headed by the Maritime Administration's Associate 
Administrator for Policy and International Trade, Bruce J. 
Carlton, met with GVN transport officials March 22-24 in 
Hanoi to discuss the possibility of negotiating a bilateral 
maritime services agreement.  Mr. Nguyen Cong Duc, Vice 
Chairman of the Vietnam National Maritime Administration 
(Vinamarine), led the Vietnamese delegation, which also 
included representatives of the MOTr, Vietnam National 
Shipping Lines (Vinalines) and the Ministry of Foreign 
Affairs. 
 
3. (SBU) The discussions were friendly and productive. 
After both sides briefly described the state of maritime 
services in their respective countries, they highlighted 
high-level interest in the possibility of concluding a 
maritime agreement.  The U.S. side emphasized interest in 
long-term development of maritime relations, including 
establishing a framework in which U.S. shipping companies 
could provide a full range of maritime services in Vietnam 
in areas such as multi-modal and logistics operations.  The 
Vietnamese side agreed that a bilateral agreement should be 
forward looking and should foster investment in both 
countries. 
 
Legal Framework 
--------------- 
 
4. (U) According to the GVN delegation, the two primary 
pieces of legislation that control activities in the 
maritime sector in Vietnam are the 1990 Maritime Code of 
Vietnam, which provides a broad framework for maritime 
activities and the 1996 Law on Foreign Investment (amended 
in 2000).  The GVN is in the process of thoroughly revising 
both of these laws.  The National Assembly is scheduled to 
approve the revisions to the Maritime Code in May and to the 
Foreign Investment Law in November.  In addition, a 2001 
Government Decree (No. 10/2001/ND-CP) provides detailed 
regulations on limitations on investment in the maritime 
services sector.  According to this decree, foreign 
investors are limited to 49 percent equity investment in 
joint ventures in a range of maritime services.  Foreign 
investment is prohibited in two services: sea ship agencies 
and sea towage services. 
 
5. (SBU) MARAD Associate Administrator Carlton said that 
while Vietnam's current regulations limit foreign investment 
to 49 percent, the two sides need to look at ways to move 
toward 100 percent foreign equity in the maritime sector 
"relatively quickly."  This will bring investment in to 
Vietnam's market and help grow its economy. Vinamarine Vice 
Chairman Duc responded that he is thinking along the same 
lines as the U.S. side.  It is critical for Vietnam to 
change its laws at this time, he added.  The National 
Assembly is involved in a comprehensive law-making process 
as part of Vietnam's WTO accession process.  It is our 
"policy and intent to open the market and generate a better 
environment for foreign investment," he concluded.  Hinting 
that the two sides should not focus too much attention on 
the constraints of Vietnam's legal system, and that the GVN 
could be flexible on the equity cap issue, Mr. Tran Manh Ha, 
Director of the Legal department of Vinalines added that 
U.S.-Vietnam discussions on the limitations on foreign 
investment "don't need to wait for changes in the law. The 
two sides can have a longer vision." 
 
Key Elements 
------------ 
 
6. (SBU) Using a draft bilateral agreement provided by the 
GVN as a framework, the two sides discussed key elements of 
a potential agreement, including the following: 
 
-- Advance notification of arrival.  The USG requires that 
ships coming to the United States give 96-hour advance 
notification of arrival.  Vietnam requires 72 hours prior 
notice. 
 
- Seafarers' documentation. The U.S. side noted that any 
language on seafarers' documents in a bilateral agreement 
should be in line with international conventions dealing 
with this issue, including ILO Convention 185 and the 
International Maritime Organization's International Ship and 
Port Facility Security (ISPS) Code. (Note:  ILO 185 allows 
use of biometric technology on seafarers' identity 
documents.  End note.) The U.S. side also noted that since 
September 11, the United States has eliminated the use of 
crew list visas (for both aviation and maritime services). 
Appropriate treatment of visa issues and identity documents 
in maritime agreements is extremely important to the United 
States. 
 
- Most-favored Nation (MFN) versus national treatment (NT) 
for shipping services.  The U.S. side noted that in Annex H, 
Article 4.3(b) of the U.S.-Vietnam Bilateral Trade Agreement 
(BTA), Vietnam had committed to eliminate discriminatory 
port charges by December 2004.  Any discussion of applying 
MFN rather than NT for port charges would constitute a step 
back from that agreement. The GVN acknowledged the need for 
a maritime agreement to comply with BTA principles. 
 
- The relationship between a bilateral maritime agreement 
and the two parties' other international commitments (such 
as membership in ASEAN or APEC.) 
 
- Market access and investment.  The U.S. side expressed 
strong interest in ensuring that an agreement would include 
opportunities for expanded market access and investment 
opportunities for U.S. shipping companies.  The U.S. side 
noted that a priority goal for the agreement would be to 
enable U.S. carriers to move from the current 49 percent cap 
on equity to a majority share (51 percent) and then to 100 
percent foreign owned investments within a relatively short 
time frame. 
 
- Remittance of income.  The U.S. side noted that this issue 
had been dealt with in the U.S. Vietnam Bilateral Air 
Services Agreement signed in 2003 and suggested a parallel 
approach should be used for maritime services. 
 
- Cooperation on investigation of maritime casualties in the 
territorial waters of each country. 
 
- Cooperation on search and rescue activities. 
 
- Education and training for seafarers.  Both sides 
expressed strong support for developing mechanisms for 
educational and training exchanges. 
 
Courtesy Call on Vice Minister of Transport 
------------------------------------------ 
 
7. (SBU) On the last day of the talks the U.S. delegation, 
accompanied by Econ/C, paid a courtesy call on Vice Minister 
of Transportation, Tran Doan Tho.  At this meeting, VM Tho 
noted the GVN is "vigorously preparing" for a visit by Prime 
Minister Phan Van Khan to the U.S. this summer and expressed 
hope that a bilateral maritime agreement could be included 
in time for such a visit.  MARAD Associate Administrator 
Carlton responded that the discussions in Hanoi have 
resulted in a very comprehensive roadmap for negotiation of 
a bilateral agreement.  He also highlighted the U.S. side's 
commitment to revise the GVN draft agreement based on the 
discussions and provide a copy to the MOTr for consideration 
"very quickly." 
 
Memorandum of Consultations 
--------------------------- 
 
8. (U) The discussions concluded on March 24 with the 
signing of a Memorandum of Consultation.  Text of the MOC 
follows: 
 
Memorandum of Consultation 
 
Delegations representing the Governments of the United 
States of America and of the Socialist Republic of Vietnam 
held bilateral consultations in Hanoi on March 22 to 24, 
2005, to discuss prospects for a bilateral maritime 
agreement.  The U. S. delegation was chaired by Mr. Bruce J. 
Carlton, Associate Administrator for Policy and 
International Trade, U.S. Maritime Administration.  The 
Vietnamese delegation was chaired by Mr. Nguyen Cong Duc, 
Vice Chairman of the Vietnam National Maritime 
Administration. The discussions proceeded in a friendly and 
productive atmosphere; delegation lists appear as Attachment 
A. 
 
The discussions focused on the interest of the two countries 
in fostering a mutually beneficial maritime relationship. 
The delegations first acquainted each other with their 
respective governments' perspectives on the state of the 
international shipping industry, its rapid pace of 
development, and its potential for supporting the economic 
growth of both Vietnam and the United States. Discussions 
then addressed key elements of a bilateral agreement based 
on the draft prepared by the Vietnamese side, including a 
comprehensive assessment of the potential scope and form of 
such an agreement, mechanisms for encouraging investment and 
opportunities for cooperation. The U.S. side will provide 
the Vietnamese side a revised draft reflecting these 
discussions as soon as possible.  Lastly, the two sides 
briefed each other on their government's successful 
implementation of new global maritime security mandates. 
With the intention of maintaining the momentum developed 
from this positive exchange, the delegations agreed to 
recommend to their respective governments that negotiation 
of an agreement be given high priority. 
 
For the U.S. delegation: 
Bruce J. Carlton 
 
For the Vietnamese delegation: 
Nguyen Cong Duc 
 
Hanoi 
March 24, 2005 
 
Annex A 
 
List of the U.S. Delegation 
 
Mr. Bruce J. Carleton, Associate Administrator for Policy 
and International Trade, U.S. Department of Transportation, 
Maritime Administration 
 
Mr. Gregory B. Hall, Director of International Activities, 
U.S. Department of Transportation, Maritime Administration 
 
Mr. Brian T. Varney, International Economist, U.S. 
Department of Transportation, Maritime Administration 
 
Mr. Christopher T. Tourtellot, Attorney, U.S. Department of 
Transportation 
 
Mr. Samuel R. Watson, Economic Counselor, U.S. Embassy Hanoi 
 
Ms. Jessica L. Adkins, Economic Officer, U.S. Embassy Hanoi 
 
Ms. Vo Lan Phuong, Economic Assistant, U.S. Embassy Hanoi 
 
List of the Vietnamese Delegation 
--------------------------------- 
Mr. Nguyen Cong Duc, Vice Chairman, Vietnam National 
Maritime Administration (Vinamarine) 
 
Mr. Nguyen Vinh Loc, Deputy Director General, International 
Cooperation Department, Ministry of Transport 
 
Mrs. Pham Thi Phuong, Deputy Director General, Legal 
Department, Ministry of Transport 
 
Mr. Nguyen Viet Dung, Head of International Cooperation 
Section, Vietnam National Maritime Administration 
(Vinamarine) 
 
Mrs. Ho Huong Giang, Americas Department, Ministry of 
Foreign Affairs 
Mr. Nguyen Hoang, Expert, Ministry of Transport 
 
Mr. Tran Viet Ha, expert, International Cooperation 
Department, Ministry of Transport 
 
Mr. Tran Manh Ha, Director of Legal Department, Vietnam 
National Shipping Lines (Vinalines) 
 
9. (U) This cable was cleared by MARAD. 
 
MARINE