US embassy cable - 05HANOI993

UNCLAS SECTION 01 OF 03 HANOI 000993 
 
SIPDIS 
 
SENSITIVE 
 
STATE ALSO FOR E, EB AND EAP/BCLTV 
STATE PASS USTR EBRYAN, GHICKS 
STATE ALSO PASS USAID 
DOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, EFIN, VM, WRTO, BTA, IPROP, FINREF, WTO 
SUBJECT: VIETNAM:  DAUSTR BRYAN AND VICE MINISTER OF TRADE 
TALK BTA AND WTO. 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY. 
 
Ref  (A) Hanoi 584 
     (B) Hanoi 794 
     (C) Hanoi 817 
 
1. (SBU) Summary:  During a meeting April 11 with Deputy 
Assistant USTR, Elena Bryan, Vice Minister of Trade Luong 
Van Tu highlighted efforts Vietnam has made to implement its 
obligations under the U.S. - Vietnam Bilateral Trade 
Agreement (BTA), suggested holding the BTA JC Chairman's 
meeting in May, asked the USG to increase quotas on 
Vietnam's textile and garment exports and requested that the 
United States host another round of WTO bilateral 
negotiations in Washington before the next WTO Working Party 
meeting in Geneva in late May.  DAUSTR Bryan noted that 
Vietnam's efforts to implement its international obligations 
should help with Vietnam's desire to attract additional 
investment. She reminded the Vice Minister that Vietnam 
needs to submit draft legislation and implementing 
regulations to the WTO as soon as possible.  Finally, she 
advised the Vice Minister that the United States needs to 
receive a revised services offer in writing before it can 
begin to discuss a date for the next round of WTO bilateral 
negotiations.  She also noted that the United States would 
need time to consult with advisors once the offer is 
received. End Summary. 
 
2. (U) On April 11, prior to the "expert level" meeting of 
the BTA Joint Committee, DAUSTR Bryan, accompanied by USPTO 
Attorney-Advisor, Jennifer Ness, U.S. Copyright Office 
Policy Planning Advisor Steven Tepp, Econ/C and Econoffs 
from Hanoi and HCMC, called on VM Tu to discuss the status 
of BTA implementation. (Note:  The BTA JC meetings will be 
reported septel.  End Note.)  The tone of the meeting was 
very upbeat, with the Vice Minister emphasizing the positive 
impact the BTA has had on bilateral relations.  In 
particular, he cited strong growth in direct and indirect 
bilateral trade over the past year, the presence of 
"hundreds of U.S. companies" operating in Vietnam and the 
surplus in U.S. services exports to Vietnam as examples of 
positive developments. 
 
Vietnam:  Progress on BTA Implementation 
---------------------------------------- 
 
3. (SBU) VM Tu specifically highlighted the progress the GVN 
has made in implementing BTA obligations in the areas of 
transparency and the protection of intellectual property 
rights (IPR).  With respect to transparency, the VM pointed 
out that GVN drafters of laws and regulations regularly seek 
out opinions from stakeholders, including foreign companies. 
He also explained that National Assembly discussions are 
open to the public and the GVN publishes its legislation in 
the Official Gazette, in local media and on GVN agency 
websites.  Improving transparency is part of Vietnam's 
reform process, the VM asserted.  The GVN has set up a 
committee responsible for reviewing all documents and 
simplifying legislative procedures.  Vietnam has made 
significant progress in bringing its procedures in line with 
BTA and WTO transparency standards, the VM added.  On IPR, 
VM Tu noted that Vietnam has joined the Berne Convention and 
promulgated regulations to bring Vietnam into compliance 
with Berne requirements.  However, he said, Vietnam still 
has "some problems in the area of IPR." 
 
4. (SBU) VM Tu also cited improvements Vietnam has made in 
increasing market access opportunities for U.S. companies, 
in some cases ahead of the BTA implementation schedule.  The 
GVN provided MFN tariff treatment to U.S. goods two years 
before the BTA took effect, he said.  Additionally, there 
are more than seventy 100 percent U.S. companies operating 
in Vietnam now.  In insurance services, the GVN has issued 
one 100 percent investment license to an American insurance 
company and has committed to issue two more licenses to U.S. 
companies soon.  Finally, the VM affirmed that Vietnam has 
implemented its BTA obligations in the banking sector, 
although only two U.S. banks have a presence in Vietnam. 
(Note:  The VM attributed the small number of U.S. banks to 
the lack of strong OPIC presence in Vietnam.  However, OPIC 
has been active in Vietnam since 1998.  End Note.)  The Vice 
Minister added that the GVN would like the USG to "create 
favorable conditions for Vietnamese companies to do business 
in the United States."  "I have received criticisms from 
Vietnamese banks that have been unable to get approval to 
set up representative offices in the United States," he 
complained. 
 
5. (U) DAUSTR Bryan responded that the United States has 
also taken efforts to facilitate bilateral economic 
relations.  The USG applied MFN and national treatment to 
Vietnam in all areas except tariffs well before the BTA came 
into effect.  With respect to U.S. investment in Vietnam, 
DAUSTR Bryan explained, U.S. companies are careful to ensure 
that investment conditions are good before investing in a 
new market like Vietnam.  U.S. companies have become more 
comfortable investing in Vietnam in the last few years, 
partly because of the BTA.  However, they are still looking 
for signals that the investment climate is improving - 
including better IPR protection, fewer restrictions on 
investment and a court system that enforces contracts.  As 
Vietnam continues to implement its international obligations 
and bolster its judicial system, it will likely see an 
increase in U.S. investment, DAUSTR Bryan added. 
 
6. (SBU) On insurance, DAUSTR Bryan noted, approval of long- 
pending insurance licenses will send a positive signal to 
the world financial community and help to encourage other 
investment in Vietnam.  However, she noted, there is a 
perception in the United States that Vietnam applies 
different rules to companies from different countries and 
that the GVN trades market access in one sector for access 
in another.   In the United States, there are no licensing 
requirements; Vietnamese companies are free to invest and 
face the same regulatory rules as all other companies, she 
stated. 
 
7. (SBU) With respect to banking, DAUSTR Bryan explained 
that after September 11, the USG implemented regulations 
requiring the home countries of banks to have anti money- 
laundering regulations in place before they could establish 
representative offices in the United States.  These rules 
apply to banks from all countries on an MFN basis, she 
noted.  The VM immediately expressed strong support for U.S. 
efforts to combat terrorism and money laundering and 
reported that the GVN has submitted a draft anti money- 
laundering decree to the Prime Minister for approval. 
DAUSTR Bryan asked the Vie Minister to provide a copy of the 
draft regulation as soon as possible.  (Note:  the Embassy 
has repeatedly requested a copy of the draft decree on money- 
laundering from the GVN without success for over a year. 
End Note.) 
 
8. (SBU) The Vice Minister suggested the two sides hold the 
Chairman (Vice Minister) level meeting of the BTA JC in May 
(Note: VM Tu was anticipating WTO bilaterals in Washington 
in May.  End Note.)  DAUSTR Bryan responded that, should the 
VM be in Washington for other reasons, this sounded 
possible, but she would need to check the schedule of the 
appropriate Deputy USTR. 
 
WTO Accession 
------------- 
 
9. (SBU) Turning to Vietnam's WTO accession, VM Tu said he 
was aware that the USG is concerned about Vietnam's ability 
to complete the legislative requirements for WTO.  The GVN 
has decided it needs to speed up the legislative process, he 
assured her.  The Government has identified ten existing 
laws and ordinances that need to be revised and fourteen new 
laws and ordinances that need to be drafted in order to meet 
WTO requirements.  This legislation was included in the 
legislative action plan the GVN sent to the WTO Secretariat 
and the USG for review last week (Reftel B).  The VM added 
that the National Assembly (NA) has agreed to work to 
approve all of this legislation in 2005 and will extend the 
length of its two regularly schedule sessions this year 
and/or add an additional session if necessary t complete the 
task at hand. 
 
10. (SBU) DAUSTR Bryan pointed out that although the WTO 
Working Party has made it very clear that it wants to see 
drafts of all laws, regulations and implementing regulations 
before they are approved, Vietnam has not yet sent any 
drafts to the WTO for review.  In fact, the GVN's latest 
submission to the WTO Secretariat contained only two laws: 
the Law on Minerals and the Anti-Dumping Law.  (Note:  Both 
of these laws were final versions.  End Note.)  The VM noted 
that the Prime Minister recently issued instructions on 
preparing draft legislation, translating the drafts and 
submitting them to the WTO (reftel C).  The GVN is very 
focused on translating draft legislation at this time, he 
said.  As soon as the drafts are ready, Vietnam will begin 
submitting them to the WTO. 
 
Next Round of Bilats 
-------------------- 
 
11. (SBU) VM Tu then reiterated the written request he had 
sent to the Ambassador (reftel B) for the United States to 
host another round of WTO bilateral market access 
negotiations in Washington at the end of April.  DAUSTR 
Bryan expressed appreciation for the work the GVN has done 
and for the constructive round of talks held in Washington 
in March.  However, while the USG has Vietnam's revised 
tariff offer, as has been discussed in previous meetings, it 
will not begin to consider scheduling another round of 
bilaterals until Vietnam provides a revised services offer 
in writing.  Once the offer is received, the USG will need 
least four weeks to review it and consult with U.S. 
industry. Given that, late April or early may is not a 
realistic time frame for the next round of negotiations, 
DAUSTR Bryan concluded.  The Vice Minister responded that 
the GVN will send the services offer "this week."  Conceding 
the point on the April timeframe, VM Tu requested that 
bilats be held "sometime" before the next WTO Working Party 
scheduled for late May.  DAUSTR Bryan committed to convey 
this information to AUSTR Dorothy Dwoskin. 
 
Textile Quotas 
-------------- 
 
12. (SBU) VM Tu also requested the USG consider increasing 
the size of U.S. quotas on Vietnam's exports of textiles and 
apparel.  Both Vietnamese and U.S. companies have complained 
that Vietnam is disadvantaged because its textile and 
garment exports to the Unites States are still subject to 
quota, he explained.  DAUSTR Bryan responded that the United 
States is not in a position to remove the quotas until 
Vietnam accedes to the WTO. 
 
13. (U) DAUSTR Bryan cleared this cable. 
 
MARINE