VIETNAM: AMBASSADOR'S CALL ON MOT VM TU

UNCLAS HANOI 002649

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA JBELLER
STATE PASS USTR FOR EBRYAN
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO
TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ETRD VM WTRO WTO BTA
SUBJECT: VIETNAM: AMBASSADOR'S CALL ON MOT VM TU

SENSITIVE BUT UNCLASSIFIED

1 (SBU) Summary: In a meeting September 21, Vice Minister
of Trade Luong Van Tu told the Ambassador that he believed
both the United States and Vietnam are "happy" with the
current state of the bilateral economic relationship and
that GVN officials would be available to meet with the USG
in the October 26-28 for WTO bilateral market access
negotiations. End Summary.

BTA Implementation
--------------


2. (U) VM Tu told Ambassador that, almost three years after
entry-into-force of the U.S. Vietnam Bilateral Trade
Agreement, he believes the United States and Vietnam are at
a point in the development of the bilateral economic
relationship where "both sides are happy." Although the
relationship is growing quickly, VM Tu stated, it started at
a very low level and there is a great deal of potential that
has not yet been explored. The VM praised USG efforts to
help implement the BTA, including USG provision of technical
assistance to Vietnam through the USAID-funded Support for
Trade AcceleRation (STAR) Project and USG support for trade-
promotion trips to Vietnam. He added that the BTA is only
the first step in developing the bilateral trade and
economic relationship between the Unites States and Vietnam.

Plans for WTO Bilats
--------------


3. (SBU) VM Tu noted that during Deputy USTR Josette
Shiner's visit to Hanoi in July, the U.S. and Vietnam had
discussed holding WTO bilateral market access negotiations
in October. To that end, he pointed out that the GVN had
provided the USG with a written response to the comments the
U.S. side had made on Vietnam's last WTO offer, and had
proposed holding bilats any time after October 15. The
Ambassador noted that the U.S. side is looking at holding
the bilats during the October 26-28 timeframe and VM Tu
quickly replied that the GVN would be available for meetings
in Washington on those dates.

Investment Issues
--------------


4. (SBU) VM Tu told the Ambassador that the GVN has worked
hard to create conditions favorable for foreign investment
in Vietnam and said that "most U.S. investments in Vietnam
are profitable." The GVN is happy with the presence of U.S.
companies, which employ a lot of Vietnamese labor, including
higher-level management staff. He explained that foreign
invested companies used to rely on expensive expatriate
managers, but increasingly they have been able to hire more
managers locally. For example, Proctor and Gamble initially
had twenty expatriate managers on staff, but has been able
to reduce that number to four by hiring Vietnamese managers.
At the same time, P&G has been able to increase its market
share in Vietnam. VM Tu noted that he has frequently told
U.S. investors that the GVN considers their success to be
GVN success as well. However, he added, there are some
"issues" it will take time to resolve and the GVN is looking
for the companies' understanding of conditions in Vietnam.


5. (SBU) Comment: In his first meeting with the Ambassador,
VM Tu made a concerted effort to put a very positive spin on
the bilateral economic relationship. Aside from noting that
the two sides should continue to work together on any
"problems" that arise, Tu did not choose to raise any of the
current irritants in the bilateral relationship, including
the ongoing anti-dumping case against shrimp or the recent
designation of Vietnam as a "Country of Particular Concern"
regarding religious freedom. End Comment.
MARINE