WHAT DID ONE LONG, SKINNY COUNTRY TELL THE OTHER? JOIN

UNCLAS HO CHI MINH CITY 001063

SIPDIS


E. O. 12958: N/A
TAGS: ECON ETRD VM CI WTO
SUBJECT: WHAT DID ONE LONG, SKINNY COUNTRY TELL THE OTHER? JOIN
WTO, IMPROVE TRANSPARENCY AND RULE OF LAW


Summary
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1. Chilean President Ricardo Lagos and his delegation ended a
three-day visit to Vietnam by addressing a seminar devoted to
improving trade ties. Impressively, they delivered the message
that transparency is the key to economic growth and that WTO
accession is necessary to continue and protect that growth. The
meeting was ostensibly about trying to increase trade and
investment between the two nations, which was a paltry $19 million
last year. End summary.

Very Low Levels of Trade
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2. Following the APEC Leaders Meeting in Bangkok, Chilean
President Ricardo Lagos spent three days in Vietnam. Capping off
this visit, was a seminar called "Vietnam - Chile Business - New
Horizons for Corporation" in Ho Chi Minh City, at which he was
keynote speaker. Two hundred businessmen, along with local
officials, assembled at Ho Chi Minh City's Reunification Palace to
hear Vietnamese and Chilean speakers deliver hopeful messages of a
brighter trade relationship. Current trade is modest at best.
Trade peaked in 2001 at 26.6 million USD but dropped back to 19.1
million USD in 2002. Numbers are up so far this year, with trade
reaching 20 million USD during the first eight months of 2003.
Trade flowing from Vietnam to Chile includes garments, footwear,
handicrafts, seafood, and bicycles. The flow in the other
direction includes wood, fertilizer, animal feed, and accessories
used in Vietnam's garment industry. Overall, about 75 percent of
the trade is Vietnamese exports to Chile.

Keys to Success: Transparency, Predictability, and the WTO
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3. Transparency and predictability were twin refrains running
throughout the Chilean presentations. The keynote speech by
President Lagos kept to a message of past and future cooperation
but members of his delegation spoke more substantively. Without
explicitly linking Vietnam to a deficiency in these areas, the
Chileans made their point. Time after time, they argued that
transparency and predictability were the keys to attracting and
keeping investors, as well as developing the overall economy. The
speakers explicitly linked Chile's own economic successes to
transparency and predictability. The underlying message was quite
clear: Vietnam must address transparency and rule of law.


4. Ricardo Lagos-Weber, Director for Multilateral Economic Affairs
at the Chilean Foreign Ministry, also described the nature of
trading relationships and the importance of the WTO. The audience
heard that a byproduct of increased trade was trade conflicts with
other countries, that as a nation's economy grew it would begin to
impinge on the interests of others and this would naturally lead
to disputes. His message was that these disputes were a normal
part of international trade and a sign of growing economic power.
The speaker linked the outcome of these disputes to participation
in the WTO, saying that the only way smaller countries could be
assured of equitable results in conflicts with larger trading
partners was through the WTO.


5. Local Ho Chi Minh City officials, led by People's Committee
Chairman Le Thanh Hai, stressed HCMC's advantages for Chilean
investors and business people. Luong Van Ly of the Department of
Planning and Investment called Ho Chi Minh City "the economic,
educational, social, and cultural hub of the country."
Encouragingly, he also named transparency as the final target of
efforts to make the city an attractive destination for investors.

Comment
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6. While this seminar is unlikely to radically expand Chile-
Vietnam trade or dramatically accelerate economic reforms here,
the reminders, from a third-party, that legal reforms are key for
Vietnam's economic success are most welcome.

YAMAUCHI