US embassy cable - 05HANOI1888

UNCLAS SECTION 01 OF 05 HANOI 001888 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA JBELLER 
STATE PASS USTR FOR EBRYAN and GHICKS 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: PREL, ETRD, VM, WTRO, WTO, AFLU, HIV/AIDS 
SUBJECT: DPM VU KHOAN MAKES URGENT WTO POINTS TO AMBASSADOR 
 
REF: A) HANOI 1863 B) STATE 133130 
 
1. (SBU) Summary and Comment:  On July 25, the Ambassador 
met with Deputy Prime Minister (DPM) Vu Khoan to discuss 
Vietnam's bid to join the World Trade Organization (WTO). 
The Prime Minister is becoming concerned about the 
possibility that Vietnam will not be able to accede to WTO 
by its self-imposed December 2005 deadline, and is 
pressuring his ministers to work with the USG and the 
Embassy to accelerate the conclusion of negotiations.  The 
GVN would like to have another negotiation session in July 
or August (and offered to come to Washington), but will 
settle for a more formal session on the margins of the 
September 15 working party session in Geneva.  The 
Government is concerned about the possible reaction by the 
public and the senior political leadership if Vietnam is 
unable to conclude negotiations with the United States in a 
timely fashion, but the experts on the trade side understand 
the reality of the situation and are preparing for the 
possibility that accession will not occur until early 2006. 
After discussing WTO, the Ambassador highlighted the 
importance of developing an Avian Influenza contingency plan 
and asked for the GVN's assistance in addressing issues 
regarding disbursement of HIV/AIDS assistance connected with 
the President's Emergency Fund for AIDS Relief (PEPFAR). 
 
2. (SBU) The GVN, particularly the Prime Minister, has been 
actively selling the concept domestically of a 2005 
accession to the WTO, despite the more sober assessments of 
the actual trade experts in the GVN, including DPM Khoan. 
DPM Khoan and officials at the Ministry of Trade and the 
Office of the Government have a more realistic view of the 
timetable, as evidenced by their more pragmatic suggestions 
for next steps in the negotiation process.  At this point 
the USG can strengthen the pragmatists' position by 
negotiating in good faith, keeping up the pace of work set 
by the GVN, and seriously considering the GVN's offer to 
come to Washington for a round of negotiations in August. 
End Summary and Comment. 
 
PM VISIT: EVERYONE VERY HAPPY 
----------------------------- 
 
3. (SBU) At DPM Khoan's request, the Ambassador met him July 
25 at Government House to discuss the current situation of 
Vietnam's effort to join the WTO.  DPM Khoan was joined by 
Americas Desk Assistant Minister of Foreign Affairs Nguyen 
Duc Hung, Tran Quoc Khanh from the Ministry of Trade and 
Phan Chi Thanh from the Office of the Government.  A/DCM, 
Poloff and Econoff accompanied the Ambassador. 
 
4. (SBU) DPM Khoan thanked the Ambassador on behalf of the 
Prime Minister and the people of Vietnam for the success of 
the Prime Minister's visit to Washington in June.  Public 
opinion and the delegation's private assessment were both 
very positive.  The visit developed the expectation among 
the Vietnamese public that U.S.-Vietnam relations will 
develop further and that there will be new breakthroughs. 
To satisfy that expectation, the United States and Vietnam 
should work hard to follow up the commitments made during 
the visit.  In Vietnam, the Prime Minister has already 
instructed relevant agencies (the Ministries of Planning and 
Investment, Trade, Foreign Affairs, Public Security and 
National Defense) to implement the agreements reached during 
the visit.  Khoan said he looks forward to working together 
with the Ambassador and the U.S. Embassy on the 
implementation of concrete activities and outcomes from the 
visit. 
 
WTO: THE REAL ISSUE 
------------------- 
 
5. (SBU) The most important component of the high-level 
agreement reached between President Bush and Prime Minister 
Phan Van Khai is that the two sides will resume negotiations 
on Vietnam's accession to the WTO, the DPM stated. 
Vietnamese officials and people are both encouraged by the 
commitment shown by President Bush to supporting Vietnam's 
accession to the WTO.  Upon returning to Vietnam, the GVN 
did its best to provide feedback on outstanding issues such 
as taxation, services, multilateral issues, etc.  Vietnam 
extends a formal invitation for the U.S. negotiating 
delegation to resume negotiations in Vietnam at the end of 
July.  If this is a problem, Khoan said, Vietnam is willing 
to send its negotiators to Washington.  So far, he noted, 
Vietnam has received no response from the office of the U.S. 
Trade Representative (USTR) with regard to questions 
concerning the timing and agenda for the next round of 
negotiations. 
 
6. (SBU) The DPM said he has heard informally that it is 
unlikely the U.S. Delegation will come to Vietnam in July or 
August, which worries the Prime Minister.  The Prime 
Minister had asked Vu Khoan to meet the Ambassador, express 
the GVN's concern, and seek assistance in arranging another 
formal negotiation session as soon as possible. 
 
7. (SBU) Vietnam has greatly increased the priority it 
attaches to the acceleration of WTO accession, Khoan 
explained.  The United States plays the dominant role in the 
process and so Vietnam needs its cooperation.  Internally, 
Vietnam will embark on a "new plan" in 2006, he added. 
(Note: the Tenth National Party Congress, held every five 
years to set the economic and political direction for 
Vietnam, is scheduled to begin in June 2006.  End Note.)  To 
prepare Vietnam's economic and foreign policy plan for 
consideration, the GVN needs to know the prospects for WTO 
accession.  Externally, Vietnam attaches great importance to 
relations with the United States and hopes the United States 
will be "among the countries soon to conclude negotiations 
on Vietnam's WTO entry."  Khoan listed the countries who 
recently concluded bilateral negotiations with Vietnam, 
including Japan, Korea, Canada, Colombia and China. 
 
COMMUNICATION FROM USTR 
----------------------- 
 
8. (SBU) Mr. Khanh of the Ministry of Trade received a 
letter July 25 from Assistant U.S. Trade Representative 
Dorothy Dwoskin.  In response, Khoan said that he has 
instructed the negotiating team "to work hard to provide the 
necessary feedback to all requests from USTR."  Vietnam is 
committed to doing everything possible to ensure progress in 
the negotiation process with the United States.  For these 
reasons, Khoan said, and because the GVN is concerned about 
disappointing public opinion, the GVN is counting on the 
Ambassador to contribute to negotiations and ensure 
progress. 
 
9. (SBU) The Ambassador assured DPM Khoan that prospects for 
Vietnam's eventual accession to the WTO remain bright and 
that the United States firmly supports accession as soon as 
possible.  He stressed that negotiators are working hard not 
just in the context of the formal negotiating sessions but 
also in the exchange of letters and positions and in the 
informal and internal deliberations between the two sides. 
 
10. (SBU) On the bilateral side, the Ambassador expressed 
appreciation that the DPM had instructed his team to be as 
responsive as possible to U.S. requests.  Until now, the 
United States has been disappointed not to receive responses 
on some of the issues that have been outstanding since the 
June negotiation session.  The proposals that Vietnam has 
submitted have been received and are being analyzed; a lack 
of formal scheduled negotiation sessions does not imply a 
lack of work or progress towards accession, the Ambassador 
stressed. 
 
11. (SB) Vietnam's multilateral negotiations with the 
Working Party in Geneva would be a tougher job to finish 
than the bilateral negotiations with the United States, the 
Ambassador explained.  The December deadline Vietnam set for 
itself (accession by the scheduled December WTO ministerial 
in Hong Kong) is extremely ambitious and has required 
cramming two years of work into a nine- to ten- month 
period.  The Vietnamese National Assembly has worked hard 
and focused intensely on building the necessary legislative 
framework for Vietnam to meet its WTO commitments.  Though 
the Ambassador is optimistic that the National Assembly will 
pass the necessary legislation, it has yet to occur, and 
that means that the necessary legal changes in Vietnam 
remain hypothetical. 
 
12. (SBU) Even more troubling for the December deadline is 
the necessity in the United States of the U.S. Congress 
approving Permanent Normal Trading Relations (PNTR) before 
the United States considers Vietnam to be a member of the 
World Trade Organization.  Before the Administration can 
approach Congress and say "we need to have a PNTR vote for 
Vietnam this year," it will need to be ready to demonstrate 
that the full package of necessary prerequisites, including 
required legislation on the Vietnamese side and conclusion 
of bilateral and multilateral negotiations, is complete. 
Looking at the current state of this "package," it is clear 
that Vietnam is not ready and the earliest it will be 
possible to schedule a PNTR vote is the beginning of 2006. 
There is no reason a country must accede to the WTO during a 
ministerial; the bimonthly WTO General Council meetings also 
offer an opportunity.  So if Vietnam misses the December 
deadline, February 2006 is still possible. 
 
13. (SBU) The United States remains very interested in 
seeing Vietnam's proposed solutions on telecommunications 
and industrial subsidies, the Ambassador continued. 
Industrial subsidies are relevant to Vietnam's multilateral 
negotiations and the working party beginning September 15, 
during which the U.S. team will also be available to meet 
bilaterally on the margins.  The United States is not ready 
to send a team to Vietnam in July for formal negotiations, 
and has not yet fully absorbed all of the Vietnamese 
responses and suggestions.  The United States wants to 
conclude negotiations, but forcing the teams together at 
this time would be unproductive.  On the issue of 
agricultural tariffs, for example, the United States is 
still looking for evidence of a Vietnamese move.  Exchanges 
continue, the Ambassador noted.  He explained that he had 
accepted Vice Minister of Trade Luong Van Tu's request for a 
meeting the previous week, and had obtained guidance from 
Washington.  Thus while the response had been oral, its 
contents had reflected USTR's position.  The United States 
owes responses to two letters, he acknowledged, but the two 
sides should continue these practical exchanges. 
 
GVN: STILL FOCUSED ON JULY/AUGUST, THEN DECEMBER 
--------------------------------------------- --- 
 
14. (SBU) DPM Khoan emphasized that Vietnam wants to 
continue to try to accomplish accession by the December 
meeting in Hong Kong.  He reiterated Vietnam's request for a 
visit by the U.S. side to Vietnam in July or August and 
confirmed that if the United States team cannot travel, the 
Vietnamese team will go to Washington.  He also urged 
keeping up the exchanges and pace of work "intensely" until 
the next formal negotiating session so that when the two 
sides meet again conclusion of negotiations is possible. 
 
15. (SBU) In the event a formal negotiation is not possible 
in July or August, Khoan conceded, the Vietnamese side hopes 
to have a meeting with the United States side on the margins 
of the working party meeting in Geneva in mid-September. 
However, that meeting should be substantive, productive and 
very well-prepared, and not "informal." 
 
16. (SBU) DPM Khoan is confident that Vietnam will be able 
to resolve all multilateral issues in time to conclude the 
Working Party negotiations in September.  Vietnam is 
currently working with all the countries in the Working 
Party and has all of the submitted questions and requests 
and is preparing responses.  Vietnam is aware that new 
issues will come up during the Working Party meeting in 
September, but will do its best to respond favorably to 
those issues. 
 
17. (SBU) Vietnam understands that December may not be 
possible, but it remains a target "we are trying to get to 
and achieve," the DPM stressed.  The results of the 
multilateral Working Party session in Geneva will provide 
valuable information on when and how Vietnam's accession can 
go forward.  Khoan said he understands the constraints on 
the United States side as the Ambassador explained them, but 
hopes that the United States will not completely rule out 
the possibility of accession by December.  Khoan admitted 
that he does not know the procedures involved in completing 
the PNTR vote, but understands they will be addressed upon 
the conclusion of bilateral negotiations. 
 
AMBASSADOR: IT WILL BE TOUGH TO GET IT DONE BY DECEMBER 
--------------------------------------------- ---------- 
 
18. (SBU) The Ambassador said the timing for a PNTR vote is 
not fixed, but must occur before the United States considers 
Vietnam to have acceded to the WTO.  It cannot occur before 
the multilateral and bilateral negotiations are complete; 
the U.S. business response has been reviewed; and, an 
assessment of the Bilateral Trade Agreement (BTA) has been 
concluded.  The BTA so far has been a success, though some 
areas remain where the United States would like to see 
further progress, such as distribution rights and IPR.  The 
upcoming National Assembly session may address some of these 
issues, he suggested. 
 
19. (SBU) The Ambassador told the DPM that the Vietnamese 
approach of focusing intensely on work that can be done now 
to enable both sides to complete negotiations quickly is 
exactly right.  "We can see the finish line," the Ambassador 
said, "but we are not there yet."  He advised Khoan that a 
July negotiation session is impossible, but the Embassy will 
convey the August suggestion to USTR.  However, he 
cautioned, a new negotiation session is "absolutely not 
possible" unless there is evidence on both sides that it 
will be fruitful. 
 
20. (SBU) Khoan clarified that his delegation handed over an 
offer on agricultural tariffs, and is looking for a 
response.  The United States has said that Vietnam has made 
no changes in its offer, but for the Vietnamese side the 
ball is in the U.S. court.  Khoan said the Vietnamese side 
has handed over the same offer several times because it is 
still waiting for a U.S. response; its offer will not change 
in the absence of U.S. feedback, he said.  The industrial 
(non-agricultural) tariff issue is the same.  Vu Khoan said 
USTR told the GVN it will respond soon to the Vietnamese 
offer, and Vietnam will then have a "substantive offer" 
after seeing the United States' feedback.  This represents 
possible disparities in the working approach on both sides, 
but not an insurmountable difficulty.  Once again, the DPM 
stressed, "Vietnam will do whatever it can to promptly 
settle the issues outstanding." 
 
OTHER ISSUES: HIV/AIDS AND AVIAN INFLUENZA 
------------------------------------------ 
 
21. (SBU) The Ambassador noted that a joint USG team from 
USAID, the Centers for Disease Control (CDC), the 
Departments of Health and Human Services and Agriculture was 
in Vietnam recently to meet with key GVN officials and see 
how the United States could best be helpful.  The USG is 
encouraged by the leadership of Minister of Agriculture Cao 
Duc Phat as he works across ministries to put into place an 
emergency pandemic preparedness plan.  Having a well-crafted 
plan in place and made public as soon as possible and 
certainly no later than the end of September would be both 
prudent and send a strong signal to the international 
community that Vietnam has taken the right preventive 
measures, the Ambassador said.  To that end, the United 
States is prepared to assist.  Vu Khoan thanked the 
Ambassador for the offer and said he had spoken to Deputy 
Prime Minister Pham Gia Khiem about the U.S. offer.  DPM 
Khiem had met with the relevant agencies in the GVN to 
instruct them to cooperate fully with the international 
community. 
 
22.  (SBU) The Ambassador also noted that U.S. assistance to 
Vietnam in combating HIV/AIDS through the mechanism of the 
President's Emergency Fund for AIDS Relief (PEPFAR) could go 
as high as USD 40 million the next year, depending on actual 
disbursement performance, and urged the DPM to focus on this 
important aspect of the issue.  Khoan agreed that 
disbursement was an issue with so many international donors 
involved. 
 
23. (SBU) Comment: This meeting was triggered by the Prime 
Minister's concerns regarding the perceived delay in U.S.- 
Vietnam WTO negotiations following the Ambassador's July 19 
meeting with Vice Minister Tu.  The Ambassador spoke with 
Deputy Foreign Minister Vu Dung on July 24 and heard that 
the PM is agitated about what he perceives as U.S. foot- 
dragging in scheduling the next negotiating session.  It is 
not clear that the PM's staff has been completely honest 
with him about the probable timeline for Vietnam's accession 
to the WTO. 
 
25. (SBU) Comment continued: At the same time, the GVN has 
been trumpeting the December target for WTO accession to the 
public in Vietnam, and implying significant, swift and 
practical economic results from Vietnam's accession.  One of 
the outcomes of the PM's visit to Washington most heavily 
publicized in the Vietnamese media was the President's 
promise to the Prime Minister that the United States 
supports Vietnam's WTO entry and will work to make it 
happen.  Having built up expectations so high, GVN officials 
have an obligation to deliver to the Prime Minister and the 
PM feels he has the obligation to deliver to "public 
opinion" according to an arbitrary and unrealistic deadline. 
 
24. (SBU) Comment continued: Fortunately, we are also 
dealing with pragmatists in the form of DPM Vu Khoan and 
Vice Minister Tu.  They understand much more clearly the 
realities of negotiating Vietnam's WTO entry, and their 
presentation of the offer to negotiate on the margins of the 
working party in Geneva as an alternative to the July or 
August formal negotiation sessions, as well as the 
acknowledgement that an early February entry might be more 
realistic than December, demonstrate that understanding.  To 
strengthen the position of these pragmatists, the USG needs 
only to negotiate in good faith and match the pace of work 
set by the GVN side.  However, it could prove hard for us to 
justify not meeting in August since the GVN team is willing 
to come to Washington.  End Comment. 
 
MARINE