US embassy cable - 05GENEVA2203

UNCLAS SECTION 01 OF 05 GENEVA 002203 
 
SIPDIS 
 
 
PASS USTR FOR DWOSKIN/KLEIN/HICKS 
EB/OT FOR CRAFT 
USDA FOR FAS/ITP/SHEIKH/CHATTIN, MTND/HENKE, FAA/SE/CONLON 
USDOC FOR ITA/JACOBS 
 
E.O. 12958: N/A 
TAGS: VM, ETRD WTRO USTR, Trade 
SUBJECT:  U.S. - VIETNAM WTO ACCESSION NEGOTIATIONS, SEPTEMBER 15- 
17, 2005 
 
 
SUMMARY AND COMMENT: 
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1.  U.S. AND VIETNAM CONDUCTED INTENSIVE NEGOTIATIONS ON THE 
MARGINS OF THE ONE-DAY WORKING PARTY MEETING IN GENEVA, SEPTEMBER 
14-17.    NEGOTIATORS CONTINUED TO NARROW THE GAPS INALL AREAS, 
LEAVING IN MOST CASES THE MOST SENSITIVE AND/OR POLITICALLY 
DIFFICULT ISSUES.   EXAMPLES:  ABOUT 100 OR SO AGRICULTURE LINES, 
ABOUT 700 OR SO INDUSTRIAL PRODUCTS (E.G., AUTOS, CHEMICALS, ETC) 
AND FINANCIAL SERVICES, TELECOM AND A FEW OTHER HORIZONTAL 
ISSUES.  US SIDE RELATED ISSUES TO PNTR DEBATE, NOTING WHICH THAT 
MANY OF THE REMAINING ISSUES WILL FEATURE PROMINENTLY IN ANY PNTR 
DEBATE IN THE UNITED STATES.  FOR EXAMPLE: IN AGRICULTURE, IT IS 
UNTENABLE FOR THE US TO ACCEPT HIGH RATES OF DUTY ON BEEF AND 
PORK, AREAS WHERE VIETNAM HAS GRANTED CHINA ZERO DUTY IN ITS 
BILATERAL FTA AGREEMENT; IN SUBSIDIES WHERE VIETNAM IS TRYING TO 
ADDRESS PROHIBITED SUBSIDIES, BUT STILL IS SOMEWHAT IN A "TRUST 
US" MODE; OR IN THE TREATMENT OF PUBLISHING AND PRINTED MATERIAL 
AND THE INTERSECTION OF SERVICES AND TRADING RIGHTS.   WHILE 
THERE ARE GAPS, MOST OF THE ISSUES APPEAR ON A PATH THAT COULD 
LEAD TOWARDS SATISFACTORY RESOLUTION, WITH SOME WORK ON BOTH 
SIDES.  HOWEVER, WORRYING SIGNS ARE LACK OF PROGRESS ON NON- 
TARIFF BARRIERS (PROHIBITIONS AND BANS ON MOTORCYCLES AND 
ENCRYPTED PRODUCTS AND CONFUSION ABOUT LEGISLATION AND DECREES 
WHICH COULD POTENTIALLY UNRAVEL BTA COMMITMENTS OR UNWIND WTO 
CONCESSIONS (E.G., LIMIT THE FORMS OF BUSINESS THAT HAVE ACCESS 
TO SERVICES COMMITMENTS.)   U.S. SHARED THE SEPTEMBER 12 AMCHAM 
PAPER WITH VIETNAMESE SIDE.  VIETNAM HAS MADE IMPORTANT PROGRESS 
WITH THE U.S. AND ITS TRADING PARTNERS, BUT U.S. IS NOT/NOT THE 
LAST WTO MEMBER STILL IN BILATERALS WITH THEM ON GOODS AND 
SERVICES.  U.S.  SIDE REITERATED ITS INTEREST IN MOVING AHEAD 
EXPEDITIOUSLY ON THE BILATERAL NEGOTIATIONS AND NECESSARY 
MULTILATERAL PROGRESS. 
 
2.  FOLLOW UP WILL BE IMMEDIATE, AND DEPENDING UPON PROGRESS AND 
PREPARATIONS.  ANOTHER FACE-TO-FACE NEGOTIATING SESSION MAY BE 
SCHEDULED IN OCTOBER.  NO DATES OR VENUES WERE AGREED BUT 
NEGOTIATORS WILL STAY IN TOUCH.  ON MULTILATERAL SIDE AS WELL, 
THE WORKING PARTY CHAIRMAN EXHORTED DELEGATIONS TO COMPLETE THEIR 
BILATERAL NEGOTIATIONS BUT HAS NOT/NOT SCHEDULED ANOTHER WP 
MEETING.   OUR SENSE IS THAT NEGOTIATORS UNDERSTAND THE WORK THAT 
NEEDS TO BE DONE AND THAT THE PACE OF WORK GENERALLY IN THE WTO 
AND DOMESTIC WORK NEEDED BY VIETNAM WILL TAKE THE NEGOTIATIONS 
INTO 2006.  CHIEF NEGOTIATOR KHANH AT CONCLUSION OF MEETING TOLD 
AUSTR DWOSKIN THAT HE WAS PLEASED WITH PROGRESS AND FELT VERY 
HAPPY ABOUT THE BILATERAL NEGOTIATIONS.  END SUMMARY AND COMMENT. 
 
U.S. HOSTED "FRIENDS" MEETING 
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3.  AS IS CUSTOMARY IN ACCESSIONS, US TEAM CONVENED KEY 
DELEGATIONS TO ASSESS SITUATION AND MAXIMIZE POTENTIAL FOR 
PROGRESS IN THE WP MEETING.  MEETING INCLUDED AUSTRALIA, CANADA, 
EU, JAPAN, AND NORWAY.   ALL NOTED STEADY BUT INCREMENTAL 
PROGRESS ON NEGOTIATIONS WITH THE VIETNAMESE.  THE EU NOTED THE 
CURRENT BAN ON IMPORT OF USED VEHICLES, WILL BE PROBLEMATIC. 
JAPAN, EU, CANADA AND NORWAY NOTED THAT THEY HAVE CONCLUDED 
BILATERAL NEGOTIATIONS, ALTHOUGH CANADA HAS NOT YET SIGNED ITS 
AGREEMENT.  AUSTRALIA RAISED CONCERNS ABOUT INVESTMENT, SOE/STE, 
BUSINESS LICENSING AND REGISTRATION, SUBSIDIES AND INCENTIVES, 
SALT TARIFF RATE QUOTAS, ADMINISTRATION OF TARIFF RATE QUOTAS 
MORE BROADLY, THE DEFINITION OF PUBLIC GOODS/ GOVERNMENT 
PROCUREMENT AND AGRICULTURE (SPS AND PROBLEMS RELATED TO THE 
BILATERAL).  U.S SHARED CONCERNS THAT SOME DRAFT GOVERNMENT 
DECREES MAY HAVE THE EFFECT OF RE-REGULATING OR BUREAUCRATIZING 
REGISTRATION AND LICENSING PROCESSES THAT HAVE BEEN SIMPLIFIED 
AND STREAMLINED SINCE THE U.S.-VIETNAM BILATERAL TRADE AGREEMENT 
(BTA) WAS IMPLEMENTED IN DECEMBER 2001. DRAFT DECREES ON TRADING 
RIGHTS, MULTI-LEVEL SALES, FRANCHISING AND REPRESENTATIVE OFFICES 
ARE OF PARTICULAR CONCERN.  U.S. NOTED IMPROVEMENT ON CUSTOMS 
VALUATION, IPR AND TRADING RIGHTS BUT THAT PROBLEMS REMAIN WITH 
SUBSIDIES, STATE OWNED ENTERPRISES/STATE TRADING ENTERPRISES 
(SOE/STE) AND EQUITIZATION.  JAPAN AND THE EU SHARED U.S. 
CONCERNS ON TRADING RIGHTS AND PROHIBITED SUBSIDIES.     NOTE: 
NEGOTIATOR KHANH RAISED CONCERNS THAT THE U.S. HAD CONVENED THIS 
MEETING, SUGGESTING THAT WE HAD ORGANIZED A SESSION TO ENSURE 
THAT VIETNAM WOULD NOT/NOT COMPLETE ITS WORK IN 2005.  KHANH 
KNOWS BETTER, IN FACT, AS U.S. HAS CONVENED FRIENDS IN THE PAST 
TO HELP PUSH THE PROCESS.  WE WOULD BE INTERESTED TO KNOW IF POST 
HEARS ABOUT THIS.  END NOTE AND COMMENT. 
 
FORMAL WORKING PARTY MEETING 
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4.  VIETNAM'S WORKING PARTY ON ACCESSION RECONVENED TO REVIEW THE 
REVISED DRAFT WORKING PARTY REPORT (WT/ACC/SPEC/VNM/5/REV.1), 
DISCUSS THE STATUS OF THE LEGISLATIVE ACTION PLAN FOR WTO 
IMPLEMENTATION, AND REVIEW THE STATUS OF BILATERAL NEGOTIATIONS 
FOR GOODS AND SERVICES COMMITMENTS.  VIETNAM HAS COMPLETED 
BILATERAL NEGOTIATIONS WITH ARGENTINA, BRAZIL, BULGARIA, CANADA, 
CHILE, CHINA, CHINESE TAIPEI, COLOMBIA, CUBA, THE EU, EL 
SALVADOR, IRELAND, INDIA, JAPAN, KOREA, NORWAY, PARAGUAY, 
SINGAPORE, SWITZERLAND, TURKEY, AND URUGUAY.  ONLY TEN BILATERAL 
AGREEMENTS ON GOODS AND SERVICES HAVE BEEN SUBMITTED FORMALLY TO 
THE SECRETARIAT.   NEGOTIATIONS CONTINUE WITH AUSTRALIA, HONDURAS 
AND DOMINICAN REPUBLIC, MEXICO, NEW ZEALAND AND THE U.S. 
DELEGATIONS IGNORED THE CHAIRMAN'S PLEA TO DROP OPENING 
STATEMENTS IN EXCHANGE FOR ADDITIONAL TIME FOR SUBSTANTIVE 
DISCUSSION OF THE ISSUES.  WHILE VIETNAM DID NOT REPEAT ITS 
FAMILIAR CALL FOR COMPLETION OF THE NEGOTIATIONS BY THE TIME OF 
THE WTO MINISTERIAL IN HONG KONG, IN MID-DECEMBER, OTHER WP 
MEMBERS DID, I.E., SINGAPORE, CHINA, CUBA, CHINESE TAIPEI, JAPAN 
AND INDIA.  THESE DELS HAD CLEARLY COORDINATED STATEMENTS, 
STRESSING VIETNAM'S POVERTY AND NEED FOR TRANSITIONS TO IMPLEMENT 
WTO PROVISIONS.  AUSTRALIA, THE EU, NEW ZEALAND, SWITZERLAND, 
MEXICO, CANADA AND THE U.S. DEMURRED, AND NOTED THAT MUCH WORK 
REMAINED TO BE COMPLETED WHILE EXPRESSING STRONG SUPPORT FOR THE 
ACCESSION. 
 
5.  OUTSTANDING SUBSTANTIVE CONCERNS IDENTIFIED BY DELEGATIONS 
INCLUDED:  INVESTMENT (EU, SWITZERLAND, NEW ZEALAND, AUSTRALIA, 
AND U.S.); STATE-OWNED AND STATE TRADING ENTERPRISES (U.S. AND 
EU); EQUITIZATION (AUSTRALIA, EU, AND US); TRADING RIGHTS 
(AUSTRALIA, CANADA, EU, SWITZERLAND, U.S.); QUANTITATIVE 
RESTRICTIONS/LICENSING (AUSTRALIA, EU, U.S.), SUBSIDIES 
(AUSTRALIA, EU, U.S.); SPS (AUSTRALIA, U.S.); AND TRIPS (U.S. AND 
SWITZERLAND).  THE U.S. HAS WORKED THE MOST CLOSELY WITH VIETNAM 
ON THE WP REPORT AND USED THE OPPORTUNITY FLAG QUESTIONS ON: 
DIRECTED LENDING; FOREIGN EXCHANGE CONTROLS; DISCRIMINATORY 
INTERNAL TAXES; CUSTOMS VALUATION; AND TECHNICAL BARRIERS TO 
TRADE, WHICH SHOULD ENABLE US TO OBTAIN CHANGES TO THE WP RESULT. 
WHETHER DUE TO BAD TRANSLATION OR UNWILLINGNESS, VIETNAM DID NOT 
RESPOND SUBSTANTIVELY TO MANY DELEGATIONS' QUESTIONS.  IMPORTANT 
PIECES OF LEGISLATION WERE REQUESTED FOR REVIEW, INCLUDING THE 
DRAFT ORDINANCE ON STANDARDIZATION, AMENDED LEGISLATION ON 
CUSTOMS VALUATION, AND THE NEW INVESTMENT LAW. 
 
6.  NEXT STEPS:  COMMENTS ARE TO BE SUBMITTED TO THE SECRETARIAT 
BY OCTOBER 6, FOLLOWING WHICH VIETNAM WILL RESPOND AND THE 
SECRETARIAT WILL REVISE THE REPORT.  SIGNIFICANTLY, THE CHAIRMAN 
 
SIPDIS 
DID NOT ANNOUNCE DATES FOR THE NEXT WP MEETING IN HIS CLOSING 
STATEMENT.  RATHER, HE URGED DELEGATIONS TO INTENSIFY THEIR 
BILATERAL NEGOTIATIONS FOR GOODS AND SERVICES MARKET ACCESS AND 
FILE COMPLETED SIGNED AGREEMENTS QUICKLY FOR CONSOLIDATION IN 
VIETNAM'S SCHEDULES.  HE TOOK NOTE OF VIETNAM'S PROGRESS IN 
ENACTING NEW LAWS AND URGED IT TO MAINTAIN THE PACE OF 
IMPLEMENTING ITS LEGISLATIVE PROGRAM FOR WTO IMPLEMENTATION.  HE 
ASKED VIETNAM TO SUBMIT NEWLY ENACTED LAWS TO THE SECRETARIAT AS 
SOON AS POSSIBLE.  NOTE:  WORK IN THE BILATERAL MEETINGS SHOULD 
FACILITATE DRAFTING OF THE REPORT, A POINT FOR WHICH THE U.S. 
DOES NOT SEEM TO BE RECEIVING CREDIT FROM THE VIETNAMESE.  WE ARE 
AS FAR AS WE ARE IN THE DRAFT REPORT DUE LARGELY TO THE WORK THE 
U.S. TEAM HAS DONE WITH DRAFTING, RESEARCH AND REVIEW SINCE THE 
LAST MEETING.  END NOTE. 
 
U.S. VIETNAM BILATERAL NEGOTIATIONS 
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7.  U.S. AND VIETNAM TEAMS CONDUCTED BILATERAL NEGOTIATIONS ON 
AGRICULTURE MARKET ACCESS, INDUSTRIAL GOODS, SERVICES AND 
MULTILATERAL ISSUES, MANY OF WHICH WERE THE SUBJECT OF OUR 
APROACH PAPERS IN THE LAST BILATERAL ROUND.  DISCUSSIONS WERE 
VERY FRANK AND CANDID AND HOMEWORK WAS IDENTIFIED FOR BOTH SIDES 
AS NOTED BELOW. 
 
AGRICULTURE MARKET ACCESS 
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8.  THE TWO SIDES HAD A FRANK AND USEFUL EXCHANGE, HOWEVER THEY 
REMAIN FAR APART ON THE TARIFF TREATMENT OF BEEF AND PORK, TWO OF 
THE UNITED STATES' TOP PRIORITIES.  U.S. NEGOTIATORS TOOK THE 
OPPORTUNITY TO EXPLAIN IN MORE DETAIL U.S. INTERESTS IN THE 
REMAINING AREAS, AND PROVIDED A FRANK ASSESSMENT OF THE 
IMPORTANCE OF COMMITMENTS ON PRODUCTS, LIKE PORK, WHICH WOULD BE 
LOOKED AT CAREFULLY IN A DEBATE ON PNTR.  DISTILLED SPIRITS 
CONTINUES TO BE A POINT OF CONTENTION, AS U.S. NEGOTIATORS INSIST 
THAT VIETNAM ELIMINATE THE ELEMENTS OF ITS EXCISE TAX ("SPECIAL 
CONSUMPTION TAX" OR SCT) THAT DISCRIMINATE AGAINST IMPORTS. 
WHILE VIETNAM INDICATED IT HAD INTRODUCED LEGISLATION TO APPLY 
THE SAME SCT LEVEL TO ALL TYPES OF WINE, AS IT PREVIOUSLY 
COMMITTED TO DO WITH RESPECT TO BEER, IT INSISTED THAT ITS 
TREATMENT OF SPIRITS MIRRORS THE PRACTICE OF SOME OTHER COUNTRIES 
IN ITS REGION.  U.S. NEGOTIATORS COUNTERED THAT A NUMBER OF OTHER 
COUNTRIES IN THE REGION HAD INSTITUTED A SINGLE EXCISE RATE FOR 
SPIRITS, INCLUDING AS A RESULT OF WTO LITIGATION.  AT THE CLOSE 
OF THE MEETING, VIETNAM INDICATED IT WILL PROVIDE A NEW TARIFF 
OFFER TO THE U.S.  THE TWO SIDES WILL ALSO CONTINUE DISCUSSIONS 
ON THE SPIRITS TAX. 
9.  ACTION/FOLLOW-UP.  VIETNAM WILL PROVIDE A REVISED TARIFF 
OFFER, AND WILL FURTHER REFLECT ON SPIRITS EXCISE TAX.  U.S. WILL 
CONSULT FURTHER WITH INDUSTRY AFTER RECEIVING INPUTS FROM 
VIETNAM. 
 
INDUSTRIAL TARIFFS AND RELATED NTBS 
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10.  FURTHER PROGRESS WAS MADE ON NARROWING THE LIST OF PRIORITY 
GOODS UNDER NEGOTIATIONS.  THE SESSION STARTED WITH DIFFERENCES 
ON CLOSE TO 2,000 LINES AND NOW LESS THAN 700 LINES ARE OF 
CONCERN.  THE TWO SIDES EXCHANGED INFORMATION ON BOTH PRODUCT 
PRIORITIES AND PRODUCT SENSITIVITIES AND WERE ABLE TO FINISH 
NEGOTIATIONS IN SIX ADDITIONAL PRODUCT SECTORS, BUILDING ON THE 
THREE SECTORS COMPLETED IN EARLIER DISCUSSIONS.  REMAINING 
OUTSTANDING ISSUES INCLUDE PAPER, AGRICULTURAL AND CONSTRUCTION 
EQUIPMENT, CIVIL AVIATION, PHARMACEUTICALS, CHEMICALS AND 
AUTOS/AUTO PARTS.  THE AUTO SECTOR CONTINUES TO BE A DIFFICULT 
AREA, IN PART BECAUSE VIETNAM CONTINUES TO INCREASE ITS ALREADY 
SUBSTANTIAL SPECIAL CONSUMPTION TAX (SCT) FOR THIS SECTOR.  NOTE: 
U.S. SIDE NEEDS TO REVIEW THE SITUATION WITH U.S. COMPANIES, AS 
PRESENT OFFER OF 75% ON AUTOS WILL BE A TOUGH SELL FOR PNTR, BUT 
VIETNAMESE SUGGEST THAT ONE REASON FOR HIGH RATES IS TO PROTECT 
EXISTING INVESTMENTS. 
 
11.  WE REVIEWED FOUR MAJOR CATEGORIES OF NON-TARIFF MEASURES: 
MOTORCYCLES WITH MOTORS LARGER THAN 175CC; ELECTRONIC IMPORTS 
WITH ENCRYPTION TECHNOLOGY; REMANUFACTURED ELECTRONICS; AND 
CHEMICALS THAT ARE PROHIBITED OR IMPORTED ONLY CONDITIONALLY.  IN 
EACH CASE, THE RESTRICTION WILL EFFECTIVELY BLOCK PROMISING U.S. 
EXPORTS AFTER ACCESSION, E.G. LARGE MOTORCYCLES, VARIOUS ITA 
PRODUCTS, AND CERTAIN CHEMICALS WHOSE USE IN THE UNITED STATES 
AND ELSEWHERE IS CONTROLLED, BUT HARDLY PROHIBITED.  VIETNAM 
OFFERED ONLY TO CODIFY THE CURRENT BAN ON LARGE MOTORCYCLE 
IMPORTS AND SHOWED SIMILAR RELUCTANCE TO REVISIT THE APPLICATION 
OF THE OTHER RESTRICTIONS IN LIGHT OF U.S. CONCERNS.  WHILE THE 
DISCUSSION IMPROVED UNDERSTANDING OF THE BASIS FOR THE 
RESTRICTION, THE WTO JUSTIFICATION FOR THE MEASURES IS POOR. 
BOTH SIDES AGREED TO PROVIDE ADDITIONAL INFORMATION, CONSULT WITH 
DOMESTIC INTERESTS TO HELP CLARIFY ISSUES, AND RESUME DISCUSSIONS 
ON THESE AND OTHER NTBS.  NEVERTHELESS, VIETNAM MADE IT CLEAR 
THAT IT IS NOT READY TO ALTER ITS POLICIES ON THE FOUR CATEGORIES 
REVIEWED AT THIS MEETING. 
12.  ACTION/FOLLOW-UP.  VIETNAM:  WILL PROVIDE REVISED OFFER. 
U.S. WILL START CONSULTATIONS WITH INDUSTRY ON OUTSTANDING ISSUES 
TO FURTHER ADDRESS/CLARIFY PRIORITIES AND POSSIBLE SOLUTIONS ON 
NTBS.  ONE AREA U.S. WILL NEED TO REVIEW IS WHAT ADDITIONAL 
REGULATION MAY BE PLANNED WHERE VIETNAM IS ELIMINATING TRADING 
RIGHTS, BOTH UPON ACCESSION AND AFTER TRANSITIONS, AND FACTOR THE 
RESULT INTO TARIFF OFFER. 
 
SERVICES 
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13.  NEGOTIATORS CONTINUE TO MAKE PROGRESS SINCE LAST BILATERAL. 
IN ANOTHER INNOVATION, U.S. AND VIETNAM MANAGED TO HAVE EXTENSIVE 
CONFERENCE CALL TO INCLUDE U.S. TREASURY NEGOTIATOR TO REVIEW 
BANKING AND SECURITIES ISSUES.  KHANH AND LEM WERE ORIGINALLY 
SCEPTICAL THAT THIS COULD BE USEFUL, BUT AGREED THAT THIS WAS A 
PRODUCTIVE MODE TO CONTINUE DISCUSSIONS. 
 
14.  NEGOTIATIONS WERE FRANK AND PRODUCTIVE.  RESPONSIVENESS FROM 
VIETNAM AFTER SINCE THE LAST BILATERAL DISCUSSION IN JUNE ALLOWED 
US TO CLOSE SEVERAL (OF THE LESS IMPORTANT) SECTORS DURING THIS 
MEETING. DIFFERENCES HAVE BEEN NARROWED TO A FEW DIFFICULT, BUT 
IMPORTANT SECTORS SUCH AS TELECOMMUNICATIONS, FINANCIAL SERVICES 
AND ENERGY SERVICES.  FOR THESE AREAS, BOTH SIDES HAVE SHOWED 
FLEXIBILITY AND HAVE AGREED TO WORK TOGETHER ON STRATEGIES TO 
REACH A POSSIBLE FINAL PACKAGE.  HOWEVER, IMPORTANT CHALLENGES 
REMAIN, INCLUDING WHAT APPEARS TO BE A TROUBLING PATTERN OF USING 
IMPLEMENTING DECREES THAT MAY UNDERMINE SOME BTA COMMITMENTS AND 
NEW LEGISLATION DRAFTED TO IMPLEMENT VIETNAM'S WTO OBLIGATIONS. 
WE HAVE ADDRESSED EXISTING DRAFT DECREES, BUT FURTHER LEGAL 
DOCUMENTS WILL REQUIRE ACTIVE MONITORING. 
 
15.  ON FINANCIAL SERVICES, THE OFFER ON INSURANCE ONLY LACKS A 
COMMITMENT FOR BRANCHING, SOMETHING THAT VIETNAM THINKS IS NOT OF 
INTEREST TO U.S. INDUSTRY; U.S. SIDE SUGGESTED THAT THERE WERE 
VARIOUS WAYS TO ADDRESS BRANCHING, INCLUDING USE OF TRANSITIONS. 
ON BANKING AND SECURITIES, VIETNAM WILL REVIEW AGAIN SECURITIES 
POSITIONS, INCLUDING IN PARTICULAR THE SITUATION FOR BRANCHING. 
U.S. HAD BEEN UNDER THE IMPRESSION THAT BRANCHING WAS GOING TO BE 
OFFERED AS A RESULT OF THE 2006 LEGISLATION.  ON BANKING, THERE 
WAS A USEFUL DISCUSSION ABOUT THE PROBLEMS AND CONCERNS ABOUT 
FURTHER BRANCHING AND THE USE OF SUBSIDIARIES.  ON TELECOM, 
NEGOTIATIORS WERE INSTRUCTED TO CONSIDER POSSIBLE PACKAGE 
BUILDING ON IDEA OF SEPARATING FACILITIES-BASED FROM NON- 
FACILITIES BASED SERVICES AND IDENTIFYING PRIORITY SUBSECTORS 
WITHIN THOSE TWO CATEGORIES. 
 
16.  ACTION/FOLLOW-UP.  ON KEY ISSUES -- BANKING:  U.S. TO 
PROVIDE VIETNAM WITH INFORMATION ABOUT BRANCHING, INCLUDING 
ACTIVITIES OF HEADQUARTERS AND SCOPE OF BUSINESS AND AUTHORITIES. 
U.S. IS TO LOOK AT 30% ACQUISITION LANGUAGE OFFER A REVISION; 
U.S. TO SUGGEST SOME LANGUAGE FOR THE WP REPORT.  OTHER CLEANUP 
AS AGREED.  VIETNAM WILL COME BACK TO US SIDE REGARDING DECREES, 
INCLUDING PUBIC SECTOR. 
 
MULTILATERAL ISSUES 
 
17.    IMPORT LICENSING:  REVIEW OF VIETNAM'S NEW IMPORT 
LICENSING PROCEDURES QUESTIONNAIRE FOCUSED ON THE SCOPE OF 
VIETNAM'S CURRENT AND PROSPECTIVE USE OF IMPORT LICENSING 
MEASURES, E.G., WHEN CURRENT TRADING RIGHTS RESTRICTIONS ARE 
PHASED OUT.  THE U.S. SOUGHT ADDITIONAL INFORMATION ON LICENSING 
PROCEDURES USED TO ADMINISTER TRQS AND THE ROLE OF LINE 
MANAGEMENT AGENCIES IN GRANTING THE LICENSES.  WHILE THE REVISED 
QUESTIONNAIRE RESPONSES WERE HELPFUL, SPECIFICS ON HOW THE SYSTEM 
OPERATED WERE THIN.  VIETNAM AGREED TO PROVIDE MORE INFORMATION 
ON PROCEDURES AND REQUIREMENTS FOR APPLICANTS.  THE U.S. AGREED 
TO PROVIDE WRITTEN COMMENTS AND QUESTIONS TO HELP IMPROVE THE 
DOCUMENT FOR FURTHER REVISION. 
 
18.  TRADING RIGHTS:  GOOD PROGRESS WAS MADE IN DISCUSSIONS ON 
TRADING RIGHTS, BASED ON U.S. SUGGESTIONS ON AN APPROACH TO 
ADDRESSING THIS SECTOR PRESENTED TO VIETNAM IN JUNE.  WE REVIEWED 
VIETNAM'S NEW TRADING RIGHTS RESTRICTIONS AS PRESENTED IN THE 
REVISED DRAFT WORKING PARTY REPORT, AND ATTEMPTED TO DRAW OUT THE 
DIFFERENCES BETWEEN TRADING RIGHTS AND STATE TRADING.  VIETNAM 
AGREED THAT SOME TRADING RIGHTS RESTRICTIONS NEEDED TO BE 
REVIEWED AGAIN.  WE ALSO USED THE OPPORTUNITY TO DISCUSS CONCERNS 
ABOUT PRINTED AND PUBLISHED MATERIALS, AND THE ACTUAL SITUATION 
IN VIETNAM, WHICH KANH PROMISED TO PROVIDE FURTHER DETAILS.  THE 
TWO SIDES ALSO DISCUSSED VIETNAM'S PROSPECTIVE BUSINESS 
REGISTRATION SYSTEM NEEDED TO EXPAND TRADING RIGHTS AND 
IDENTIFIED INCONSISTENCIES WITH GATT ARTICLES III AND XI IN THE 
CURRENT PLAN, INCLUDING STIPULATIONS THAT ONLY FIRMS INVESTED IN 
VIETNAM OR RESIDENTS OF VIETNAM WOULD BE ABLE TO OBTAIN TRADING 
RIGHTS. 
 
19.  STATE-OWNED ENTERPRISES (SOE)/STATE TRADING ENTERPRISES 
(STE): AFTER CONSIDERABLE DISCUSION INTENDED TO CLARIFY THE 
CURRENT SITUATION, , THE U.S. AGREED TO USE THE INFORMATION 
GAINED TO REDRAFT THE WORKING PARTY REPORT SECTION WHICH 
ADDRESSES SOE/STE, INCLUDING DRAFT COMMITMENT LANGUAGE, WITH THE 
OBJECTIVE OF REACHING COMPROMISE BETWEEN CUREENT U.S. AND 
VIETNAMESE PROPOSALS.  VIETNAM OFFERED TO MAKE A COMMITMENT THAT 
THE STATE DOES NOT INTERVENE IN COMMERCIAL ACTIVITIES OF SOES, 
ALTHOUGH WE ARE UNSURE AS TO HOW THIS RELATES TO REGULATING 
PUBLIC UTILITIES.  FURTHER WORK NEEDS TO BE DONE ON THE 
DEFINITION AND IDENTIFICATION OF PUBLIC GOODS AND SERVICES. 
PROGRESS WAS MADE IN UNDERSTANDING THE TERMINOLOGY ON CORPORATE 
FORMS OF SOES, TRANSPARENCY AND RELATED ISSUES.  VIETNAM AGREED 
TO PROVIDE ADDITIONAL INFORMATION ON THE WAY IN WHICH SOES WITH 
UNIQUE TRADING RIGHTS IN PARTICULAR SECTORS WILL OFFER FOREIGNERS 
THE OPPORTUNITY TO PARTICIPATE IN THESE SECTORS.   NOTE:  THIS 
WILL BE AN IMPORTANT ISSUE GIVEN THE U.S. REQUIREMENTS OF SECTION 
1106 OF THE 1988 TRADE ACT. 
 
20.  INDUSTRIAL SUBSIDIES/NON-MARKET ECONOMY PROVISIONS:  WE 
REVIEWED ALL OF VIETNAM'S SUBSIDY PROGRAMS TO DETERMINE WHICH 
PROGRAMS WERE PROHIBITED UNDER THE WTO SUBSIDIES AGREEMENT.  THE 
TWO SIDES AGREED THAT MOST PROHIBITED SUBSIDIES WILL BE 
TERMINATED UPON ACCESSION, WHILES OTHERS ARE UNDER CONSIDERATION 
FOR A TRANSITION PERIOD, THE TERMS AND LENGTH OF WHICH IS A TOPIC 
FOR ADDITIONAL DISCUSSION.  VIETNAM AGREED TO PROVIDE A NEW, 
REFORMATTED SUBSIDIES NOTIFICATION WHICH WILL BE USED AS A BASIS 
FOR FURTHER DISCUSSION.  NOTE:  VIETNAM IS WORRIED ABOUT HAVING 
TO PROVIDE DATA HERE AND THAT THIS WILL SLOW THE PROCESS DOWN. 
AS A PRACTICAL MATTER, GETTING A HANDLE ON THE SUBSIDY ISSUE WILL 
BE ESSENTIAL FOR THE PNTR DEBATE AND FOR THE U.S. TO BE ABLE TO 
JUSTIFY AGREEING TO TRANSITIONS OF ANY KIND RELATED TO SUBSIDY 
PROGRAMS THAT ARE INCONSISTENT WITH THE WTO.  ON A RELATED 
MATTER, VIETNAM OBJECTED TO THE LANGUAGE IN THE U.S. SUBSIDY 
APPROACH DEALING WITH NON-MARKET ECONOMY METHODOLOGY.  U.S. 
ADVISED THAT SOME LANGUAGE WOULD BE NECESSARY IN THIS REGARD AS 
LONG AS VIETNAM WAS A NON-MARKET ECONOMY.  NOTE: THE VIETNAMESE 
SIDE ATTEMPTED TO ARGUE THAT UPON JOINING THE WTO VIETNAM WOULD 
BE, BY DEFINITION, A MARKET ECONOMY.  U.S. SIDE EXPLAINED 
COMMERCE PROCESS CAREFULLY AND OFFERED TO PROVIDE RELEVANT NME 
LANGUAGE FOR THE WP.  END NOTE. 
 
DELEGATIONS 
 
21.  VIETNAMESE TEAM INCLUDED: 
LUONG VAN TU - VICE MINISTER OF TRADE 
NGUYEN QUOC HUY - OFFICE OF THE GOVERNMENT 
PHAN CHI THANH - OFFICE OF THE GOVERNMENT 
VU HAI TRIEU - MINISTRY OF PUBLIC SECURITY 
NGUYEN VAN PHUC - OFFICE OF THE NATIONAL ASSEMBLY 
NGUYEN VAN LONG - OFFICE OF THE NATIONAL COMMITTEE FOR INT'L 
ECONOMIC COOPERATION 
TRAN QUOC KHANH - MINISTRY OF TRADE 
HA HUY TUAN - MINISTRY OF FINANCE 
HOANG PHUOC HIEP - MINISTRY OF JUSTICE 
PHAN TAM - MINISTRY OF POST AND TELECOMMUNICATION 
PHAM BAO LAM - NATIONAL BANK OF VIETNAM 
NGUYEN VIET VINH - MINISTRY OF AGRICULTURE 
 
22.  U.S. TEAM INCLUDED 
 
DOROTHY DWOSKIN - USTR 
CECILIA KLEIN - USTR 
GREG HICKS - USTR 
MIKHAIL ZELDOVICH - USTR 
DANIEL WATSON - USTR 
JON MCHALE - USTR 
ELENA BRYAN - USTR 
SARAH ROGGE - USTR 
ROY MALMROSE - USTR 
KATRICE KELLY - USDOC 
TOM FINE - USDOC 
BARBARA CHATTIN - USDA 
MARY ELLEN SMITH - USTR 
CARA MORROW - USDOC 
D.E. SONNEK - DEPT. OF STATE 
WILLIAM TAGLIANI - USTR