TRADE MINISTER ON WTO, HUMAN RIGHTS, OIL FOR FOOD

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