US embassy cable - 05HANOI2276

UNCLAS SECTION 01 OF 03 HANOI 002276 
 
SIPDIS 
 
STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA JBELLER 
STATE PASS USTR ELENA BRYAN 
USDOC FRO 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, VM, WTRO, WTO, BTA 
SUBJECT: VIETNAM'S MINISTER OF TRADE URGES PROGESS ON WTO 
 
 
SENSITIVE - DO NOT POST ON INTERNET 
 
1.  (SBU) Summary:  On August 30, the Ambassador met with 
Minister of Trade Truong Dinh Tuyen, at the Minister's 
request, to discuss Vietnam's WTO accession.  Tuyen asked 
for a bilateral round of negotiations with the U.S. Trade 
Representative (USTR) in late September after the bilateral 
meeting on the margins of the next WTO Working Party meeting 
in Geneva. He urged the U.S. side to be flexible, 
particularly on industrial subsidies, which he said 
presented technical difficulties, and on state owned 
enterprises.  Drawing on material provided by USTR, the 
Ambassador summarized the points where the respective sides 
still owed each other responses, urged the Vietnamese to 
follow through, and emphasized that it would not be possible 
to get Congress to approve permanent normal trade relations 
(PNTR) for Vietnam unless Vietnam fully implemented the 
bilateral trade agreement (BTA) and its WTO accession 
package improved on the BTA.  The Minister stressed the 
political importance of taking advantage of the goodwill 
generated by the recent visit of the Prime Minister to the 
United States.  He warned that if Vietnam could not complete 
its WTO accession by the end of 2005, half of the value of 
the Prime Minister's visit to the United States would be 
lost.  End Summary. 
 
2.   (SBU) On August 30, the Ambassador met with Vietnam's 
Minister of Trade Truong Dinh Tuyen, at the Minister's 
request, to hear the Minister describe Vietnam's desire to 
accelerate its WTO accession.  Because the Minister has been 
seriously ill, this was their first meeting in almost a 
year.  The Minister opened the meeting by pointing to the 
recent visit of Vietnam's Prime Minister to the United 
States and expressed his pleasure that, 30 years after the 
war, the United States and Vietnam were again friends. 
 
3.   (SBU) The Prime Minister's visit had improved bilateral 
relations, as both the U.S. Trade Representative (USTR) and 
the U.S. business community had acknowledged, but the two 
sides had not taken full advantage of that progress, he 
said.  He was disappointed that the two sides had not met in 
July, as he had expected.  They are now to meet in September 
on the margins of the WTO Working Party meeting in Geneva, 
but time and human resources there will be limited, so 
another, more formal meeting will be needed afterwards.  He 
urged the U.S. side to come to Hanoi, but if that is not 
possible the Vietnamese side can come to Washington.  In 
either case, the negotiation round should take place in late 
September or early October, he stressed.  Wherever the 
follow-on meeting takes place, the Minister wants to visit 
Washington before negotiations, so that he can meet the new 
key U.S. players, USTR Rob Portman and Secretary of Commerce 
Carlos M. Gutierrez, and be able to provide political 
guidance to the Vietnamese negotiating team.  If the meeting 
is in Washington, he would come a few days early and then 
stay for the negotiations. 
 
4.   (SBU) Expressing regret for the misunderstanding over 
the possibility of meeting in July, the Ambassador promised 
to convey the Minister's request to Washington.  He 
emphasized that both sides need to continue to work 
diligently to ensure that the next round of meetings are a 
success.  In order to ensure the Minister understands where 
we are, he summarized the state of play in the negotiations. 
The United States appreciates receiving Vietnam's revised 
offers, which experts in Washington are analyzing before 
responding. The United States would like to see a written 
response to its paper on the methodology for resolving 
telecom differences, clearly a key issue.  The United States 
looks forward to seeing the second draft of the Working 
Party report on which the Vietnamese side is working with 
the WTO Secretariat.  At the end of June, the U.S. side 
provided Vietnam with detailed approaches for resolving 
differences in the areas of trading rights, industrial 
subsidies, and State-owned enterprises (SOE).  Getting 
responses to these approaches in the next week or so would 
help to advance the negotiation process.  It is very 
important that Vietnam's legislative action plan remains on 
track.  The U.S. side appreciates receiving copies of draft 
legislation and hopes to get written comments back to 
Vietnam soon.  USTR promised Vietnam a legislative checklist 
and it will be sent soon.  Vietnam is now beginning to 
publish implementing regulations and decrees in Vietnamese. 
It would help for the United States to get English language 
versions of the proposed decrees and regulations. 
 
5.  (SBU) The Minister responded that he understood the U.S. 
side's interest in the new Vietnamese legislation.  Vietnam 
has been following the advice of U.S. advisors and 
recognizes the importance of publishing documents.  He has 
studied comments received, including those from Dorothy 
Dwoskin, Assistant U.S. Trade Representative (AUSTR) for WTO 
and Multilateral Affairs, so that any adjustment in the 
draft laws can be made before they are submitted to the 
National Assembly.  He is working with the Standing 
Committee of the National Assembly, which approved the 
legislative program for WTO accession and remains committed 
to adhering to its current bill-passing timetable. 
 
6.  (SBU) The Minister complained that some U.S. 
requirements are difficult to follow.  For example, on 
industrial subsidies, the Vietnamese authorities cannot 
calculate the amount of revenue foregone.  About 500 
companies may have benefited, but many made no profit, so 
the benefits, if any, are difficult to calculate and the 
amounts involved are not significant.  He promised to get 
back to the United States with information on subsidies and 
other issues, but said that there were things that 
technically Vietnam could not do. 
 
7. (SBU) State trading enterprises are another difficult 
issue, he continued. Vietnam is in a period of transition 
and still needs controls, not because the state wants a 
monopoly, but because the private sector is still 
underdeveloped.  Tuyen urged the U.S. side to distinguish 
between what the Vietnamese Government wants to do, and what 
it does not want to do, but must.  The United States needs 
to be flexible, he said.  The Ambassador noted that Vietnam 
has a "chicken and egg" problem; as long as state owned 
firms have a monopoly in certain sectors, private firms 
cannot develop.  He promised to pass to Washington Vietnam's 
concerns on industrial subsidies and state owned 
enterprises, but suggested that the Vietnamese also respond 
to USTR in writing. 
 
8.  (SBU) Minister Tuyen again urged that the United States 
be flexible.  There are still some people in Vietnam who do 
not want to be friends with the United States and if America 
is "too rigid", it will encourage them.  Vietnam is being 
asked to meet requirements not imposed on other countries, 
he noted.  The Ambassador agreed that the United States 
should not be rigid, but then neither should Vietnam.  He 
pointed out that Vietnam is driving the accession timetable 
and pushing to complete negotiations, but there are very 
sensitive issues for U.S. business, whose support is needed 
in order to get Congress to approve permanent normal trade 
relation (PNTR) status for Vietnam. 
 
9.  (SBU) The prospects for completing Vietnam's accession 
in time for the December 2005 WTO meeting in Hong Kong are 
virtually non-existent, the Ambassador added.  It may still 
be possible to complete bilateral and multilateral 
negotiations this year, but getting PNTR status by year-end 
is not possible.  Even getting through Geneva would be very 
difficult so the Ambassador was pleased when he saw a press 
report that Vice Minister Luong Van Tu had told the National 
Assembly that Vietnam is now aiming at WTO accession in late 
spring next year.  Lowering expectations is a smart move. 
The Minister said that after his interview, Tu had been 
criticized and pressed to send a letter to the press 
"correcting" his remarks, but Tuyen had defended Tu, arguing 
that, while Vietnam's goal was still to accede by December, 
that goal also depended on cooperation from other countries 
and Vietnam had to prepare for the "next best outcome," a 
spring 2006 accession. 
 
10.  (SBU) On PNTR, the Ambassador stressed that the USG 
must put together a complete package for Congress.  Vietnam 
needs to have a clean record on implementing the U.S.- 
Vietnam Bilateral Trade Agreement (BTA).  The package for 
Congress must, at minimum, provide for no less than current 
market access and should show some progress from the BTA. 
Some in Congress will oppose PNTR because they believe that 
another trade agreement is not in the interests of the 
United States while others will oppose it because of other 
issues, such as human rights and religious freedom. 
However, with a good package and the support of U.S. 
business, the Administration would go forward and win 
support for PNTR for Vietnam. 
 
11.  (SBU) (SBU) Some U.S. companies are complaining that 
some BTA obligations have not been implemented, however, the 
Ambassador hoped that the Minister could help implementation 
of trading rights, IPR protection and investment rights. 
The Ambassador said the U.S. side had been pleased by when 
Vietnam promised that U.S. companies could access BTA 
benefits pending passage of implementing legislation. 
However, a number of U.S. companies had complained that they 
could not reach the point of contact on trading rights that 
the Ministry of Planning and Investment had set up.  He 
hoped that the GVN would ensure that someone is at the other 
end of the telephone and email. 
 
12.  (SBU) On BTA implementation, the Minister pointed out 
that the GVN is working on a new IPR law, which has been 
shared with the United States for comments.  Vietnam 
recently destroyed a number of pirated CDs.  Vietnam does 
not have separate implementing legislation for the BTA, but 
its obligations will be implemented by other laws.  He is 
willing to meet with U.S. companies that are having a 
problem and asked the Ambassador to inform them so. 
 
13.  (SBU) At the end of the meeting the Minister returned 
to the need to develop a schedule to complete negotiations. 
He proposed that after meeting in Geneva, the two sides 
should meet again at the end of the month.  Otherwise, it 
would not be possible to complete the paperwork.  He warned 
that if Vietnam could not complete its WTO accession by the 
end of 2005, half of the value of the Prime Minister's visit 
to the United States would be lost.  Vietnam has concluded 
negotiations with all Asian partners, including China, and 
with all its European partners, including Denmark and 
Switzerland.  There is progress in negotiations with 
Australia and New Zealand.  Beyond them, the United States 
and five Latin American countries are left so there is 
strong possibility to conclude by the end of 2005. 
 
14.  (SBU) Comment:  The Ministry of Trade is beginning to 
prepare the rest of the GVN and the public for the 
likelihood that Vietnam will not make its self-imposed goal 
of completing WTO accession by the end of 2005.  However, 
the Minister still intends to make an all-out effort to 
complete negotiations by year's end.  At the same time, he 
has not abandoned the hope of persuading the United States 
to soften its demands and accept a "political" agreement. 
End comment. 
 
MARINE