US embassy cable - 03HANOI1842

UNCLAS SECTION 01 OF 03 HANOI 001842 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB and EAP/BCLTV 
STATE PASS USTR FOR EBRYAN AND CBURCKY 
USDOC PLEASE PASS USPTO - PETER FOWLER 
USDOC FOR AUTO AFFAIRS SCOTT KENNEDY 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ECON, KIPR, IZ, VM, WTO, IPROP 
SUBJECT: TRADE MINISTER ON WTO, HUMAN RIGHTS, OIL FOR FOOD 
 
REF A: HANOI 1814   REF B:  HANOI 1559 
 
SENSITIVE BUT UNCLASSIFIED -- PROTECT ACCORDINGLY. 
 
1.  (SBU) SUMMARY: In a July 17 meeting with Minister of 
Trade Truong Dinh Tuyen, the Ambassador noted that GVN 
efforts to raise auto tariffs, impose tariff-rate quotas 
(TRQs) on a number of agricultural products, and reorganize 
the agencies responsible for protection of intellectual 
property rights have created doubts regarding the Government 
of Vietnam's (GVN) commitment to acceding to the WTO by 
2005.  The Minister reiterated his interest in meeting with 
USTR Zoellick and DOC Secretary Evans during his trip to the 
U.S. in September, sought U.S. support for Vietnam's 
continued participation in the Oil for Food program, and 
complained about the Vietnam Human Rights act. At the 
conclusion of the meeting, Ambassador and Minister Tuyen 
signed the bilateral textile agreement.  End Summary. 
 
VISIT TO THE U.S. 
----------------- 
 
2.  (U) At the invitation of the Chicago Council on Foreign 
Relations, Minister Tuyen plans to travel to the U.S. in 
September to attend the "Chicago Conference on the Global 
Economy."  Minister Tuyen told Ambassador that the 
conference alone is not a sufficient reason for the Prime 
Minister to approve his trip to the U.S. and asked the 
Ambassador to support his requests for meetings with USTR 
Zoellick and DOC Secretary Evans.  Ambassador commented that 
the conference presented a good opportunity for travel to 
the U.S., told Minister Tuyen that Ambassador Zoellick had 
already agreed to meet with him (tentatively on September 
18), and assured the Minister that he would continue to 
support efforts to arrange the meeting with Secretary Evans. 
Ambassador also urged Minister Tuyen to coordinate plans for 
his trip with the other Cabinet ministers (i.e. the 
Ministers of Foreign Affairs, Planning and Investment, and 
Defense), all of whom will also be traveling to the U.S. in 
the fall. 
 
OIL FOR FOOD 
------------ 
 
3.  (U) Minister Tuyen told the Ambassador that Vietnam is 
still awaiting instructions from U.N. Committee 661 on 
exporting goods to Iraq under the Oil for Food program and 
asked for U.S. support within this Committee.  In addition 
to priority goods, the Minister noted, the GVN is also 
hoping for approval of contracts for export of tea to Iraq. 
Tea cultivation is part of a poverty reduction program in 
Vietnam and the exports to Iraq are a critical component of 
that program, the Minister added.  After noting that 
Vietnam's past position on Iraq has not been helpful, 
Ambassador described the current procedure in place for 
approving contracts.  Given the kinds of products Vietnam 
wishes to export, the Ambassador noted, most of Vietnam's 
contracts should get priority, and some individual contracts 
may already have been approved.  The Ambassador advised the 
Minister to have Vietnam's mission to the U.N. contact the 
U.N. Office of Iraq Programs.  Minister Tuyen provided 
Ambassador with a copy of a letter MOT sent the Office of 
Iraq Programs in the U.N.  (Note:  A copy of the letter has 
been faxed to EAP/BCLTV.  End note.) 
 
VHRA 
---- 
 
4. (SBU) Minister Tuyen expressed his objections to the 
passage of the VHRA amendment to the State Department 
Authorization bill by the U.S. House of Representatives. 
The Minister noted that, while this topic is not one that a 
Trade Minister would normally raise, he felt a need to 
express his views on the issue as a Communist Party of 
Vietnam Central Committee member.  Minister Tuyen advised 
Ambassador that if the VHRA is approved, there will be a 
very negative impact on the bilateral relationship, "even in 
areas of particular interest to the U.S."  He also said he 
believed that forces exist in the U.S. that oppose the 
further development of the bilateral relationship. 
 
5. (SBU) Ambassador responded by highlighting the connection 
between human rights and Vietnam's investment climate.  When 
investors see that the legal system is biased and people can 
be thrown in jail for expressing their opinions, they 
consider investment to be risky, he said.  Foreign investors 
want an independent legal system that is not controlled by 
one political party.  They also want access to the Internet 
unimpeded by firewalls, legislation governing content, or 
police screening email.  Vietnam cannot separate human 
rights and economic issues, the Ambassador advised. 
 
WTO ACCESSION 
------------- 
 
6. (SBU) The Ambassador told Minister Tuyen that some recent 
GVN decisions have caused him to question Vietnam's 
commitment to accede to the WTO in 2005.  First, the 
imposition of TRQs on certain agricultural products that 
have not been subject to quota is a step in the wrong 
direction, he said.  Before Vietnam enters the WTO, it will 
have to eliminate the TRQs.  The GVN's imposition of TRQs 
creates a new obstacle that must be negotiated away. 
Second, raising auto tariffs is another step backward. 
Normally, as countries prepare to accede to the WTO, they 
lower tariffs.  Harmonization should result in decreasing, 
not increasing, tariff rates.  Additionally, the Ambassador 
pointed out that efforts to force companies to have greater 
local content are also counter to WTO principles.  (Ref A 
includes Ambassador's discussion of these issues with the 
Ministry of Finance.)  Finally, the Ambassador noted that 
the recent reorganization of agencies administering 
intellectual property rights (IPR) (ref B) could make it 
more difficult for Vietnam to enforce IPR than before.  The 
GVN has taken half of the National Office of Intellectual 
Property's (NOIP) portfolio and moved it to MOT, despite the 
significant investment donors have made in enhancing NOIP's 
capacity.  The Ambassador asked how effectively Vietnam will 
be able to handle trademark registration now. 
 
7. (SBU) Minister Tuyen affirmed that the GVN has 
comprehensively reviewed its position on WTO accession and 
wants to accelerate the process.  There is a "strong 
determination from other agencies and me" to make progress, 
the Minister asserted.  However, even in that context, it 
should be noted that non-tariff barriers (NTBs) and TRQs 
need to be addressed appropriately.  The BTA includes NTBs, 
and other countries continue to use them.  With respect to 
TRQs, the Minister noted that China was allowed to retain a 
TRQ on soybeans.  Vietnam is in a better position than 
China, as the GVN does not use quantitative restrictions and 
imposed the TRQs only as a transition measure.  In response 
to the Ambassador's question regarding how long the TRQs 
would be in place, Minister Tuyen responded that the GVN 
would make this decision "within the context of WTO 
negotiations." 
 
8. (SBU) Regarding auto tariffs, the Minister asserted that 
the foreign-invested companies need to think long-term. 
While the tariffs may cause the companies some short-term 
harm, the tariffs will benefit both the companies and 
Vietnam's growth and development in the long run.  The 
imposition of higher auto tariffs was not designed to 
protect domestic producers, the Minister argued.  No 
domestic manufacturer can produce enough spare parts to 
satisfy demand.  The only players in the market are the 
foreign-invested companies, and the policy was designed for 
them.  With respect to Ford in particular, the Minister 
argued that if Ford invests more in Vietnam, it will find 
good conditions for its investment.  The only real problem 
Ford (and the other auto manufacturers) face is the small 
scale of Vietnam's internal market.  In response to 
Ambassador's remark that parts manufactured in ASEAN 
countries will face lower tariffs, thereby benefiting auto 
parts producers in Thailand and elsewhere, the Minister 
simply responded that the GVN would need to have a final 
review of the policy. 
 
9. (SBU) On the reorganization of IPR agencies, Minister 
Tuyen noted that it was Vietnam's earlier centrally planned 
economic hierarchy that had decided to give responsibility 
for IPR to the Ministry of Science and Technology rather 
than to the Ministries of Trade or Industry, which is the 
norm in most countries.  Because MOT already has the Market 
Management Police who are responsible for investigating 
counterfeit goods in the marketplace, it will be "more 
reasonable and more effective" to have trademarks under MOT. 
Minister Tuyen added that it would have made more sense to 
move all of NOIP's responsibilities (trademarks and patents) 
to MOT, but he was "not a complete winner."  (Note: NOIP 
retained control over patents.  End note.)  The Ambassador 
noted that he hoped to see more crackdowns under MOT 
leadership and suggested that the two sides revisit the 
issue in six months to see if IPR enforcement had improved. 
 
TEXTILE SIGNING 
--------------- 
 
10.  (U) At the end of the meeting, Ambassador and Minister 
Tuyen signed the bilateral textile agreement that had been 
initialed in Washington in April.  The original signed 
agreement has been pouched to EAP/BCLTV. 
 
11.  (SBU) COMMENT: Despite Minister Tuyen's assurances to 
the contrary, the commitment of officials at the highest 
levels of the government and the party to making the hard 
decisions necessary to move Vietnam's WTO accession forward 
remains unclear.  Minister Tuyen, like all the other GVN 
officials with whom we have raised the auto tariff and TRQ 
issues, artfully ignored the strong link the Ambassador drew 
between the GVN's backward policies and (lack of) progress 
on WTO accession.  We will continue to raise these issues 
with the GVN.  On IPR, we will hold Minister Tuyen to his 
pledge that MOT will now do a better job of clearing 
counterfeit goods from the marketplace.   We will not, 
however, be holding our breath. 
BURGHARDT