Identifier
Created
Classification
Origin
05HANOI3343
2005-12-21 09:55:00
UNCLASSIFIED
Embassy Hanoi
Cable title:  

SUCCESSFUL MARITIME NEGOTIATIONS IN VIETNAM

Tags:  EWWT ETRD VM 
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This record is a partial extract of the original cable. The full text of the original cable is not available.

210955Z Dec 05
UNCLAS SECTION 01 OF 02 HANOI 003343 

SIPDIS

STATE FOR EAP/MLS, EB/TRA AND EB/TPP
STATE PASS MARAD FOR BRUCE CARLSON
STATE PASS USTR ELENA BRYAN AND GREG HICKS
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO
TREASURY FOR OASIA

SENSITIVE - DO NOT POST ON THE INTERNET

E.O. 12958: N/A
TAGS: EWWT ETRD VM
SUBJECT: SUCCESSFUL MARITIME NEGOTIATIONS IN VIETNAM


UNCLAS SECTION 01 OF 02 HANOI 003343

SIPDIS

STATE FOR EAP/MLS, EB/TRA AND EB/TPP
STATE PASS MARAD FOR BRUCE CARLSON
STATE PASS USTR ELENA BRYAN AND GREG HICKS
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO
TREASURY FOR OASIA

SENSITIVE - DO NOT POST ON THE INTERNET

E.O. 12958: N/A
TAGS: EWWT ETRD VM
SUBJECT: SUCCESSFUL MARITIME NEGOTIATIONS IN VIETNAM



1. (SBU) Summary: The United States and Vietnam initialed,
ad referendum, a draft Agreement on Maritime Transport after
three days of intensive negotiations on December 6-8, 2005.
The agreement provides shipping companies of each party the
right to form 51 percent joint ventures immediately and to
establish wholly owned subsidiaries within each other's
territory after five years. Up to now, state owned
monopolies had controlled Vietnam's maritime sector.
However, according to the annex, upon Vietnam's entry into
the WTO, one U.S. shipping company may establish a wholly
owned company in Vietnam before the five-year limit. While
the recent EU agreement included a similar right, U.S. terms
for equity joint ventures are more favorable. End Summary.


2. (U) A U.S. team led by Bruce Carlton, Associate
Administrator for Policy and International Trade, U.S.
Department of Transportation and a Vietnamese team led by
Mr. Vuong Dinh Lam, Chairman, Vietnam Maritime
Administration, held discussions December 6-8, and agreed,
ad referendum, on the text of an Agreement on Maritime
Transport. This was the third negotiating session in 2005.
The two sides met last June hoping to reach agreement in
time for Vietnamese Prime Minister Phan Van Khai's visit to
the United States, but their positions were too far apart at
that time. After lawyers on both sides have approved the
draft text, the two sides will seek a suitable date for
signing, possibly on the margins of one of next year's APEC
meetings in Vietnam.


3. (SBU) Liberalization of Vietnam's transportation sector
has been the critical focus of the negotiation of this
Maritime Agreement, although the Agreement also addresses
fundamental maritime transportation matters, such as vessel
documentation, immigration and customs, and assistance to
vessels in distress. While the United States maritime
market is open, state-controlled monopolies control nearly
every aspect of operation in Vietnam's maritime sector. Any
company wishing to do business in Vietnam must do so through
a joint venture, with the Vietnamese partner controlling the
majority share of the business decision-making and profits.


4. (SBU) The Agreement will give vessels of each party the
right to transport cargo and passengers between each other's
territory and the territory of third countries. Shipping
companies of each party will have the right to invest up to
51 percent of the legal capital (a controlling share) in
joint ventures in the territory of the other party. These
joint venture enterprises would be allowed to perform a
comprehensive range of maritime services, including: cargo
agency, cargo documentation, cargo management, ocean freight
forwarding, storage and warehouse services, and container
station and depot services. In five years, shipping
companies will be allowed to establish wholly owned
companies in each other's territory. The joint ventures
(and later the wholly-owned companies) will have the right
to use inland transportation in connection with ocean
shipping. Finally, entities of either party will have the
right to fund port construction and to operate such ports.
A separate annex to the agreement provides that, upon
Vietnam's entry into the WTO, one U.S. shipping company will
be permitted to set up a wholly owned subsidiary in Vietnam,
notwithstanding the five year limit. The term of the
Agreement is five years, with an automatic renewal
provision. There is the customary consultation provision
and termination clause that either Party may exercise at any
time.


5. (SBU) Comment: The agreement met the U.S. negotiating
team's goal of meeting or exceeding the rights that Vietnam
gave other foreign shipping companies in agreements that it
had signed with Singapore and with the EU. (A similar right
to one wholly owned company was recently granted to the EU,
but the U.S. obtained more favorable terms for equity joint
ventures.) The Agreement not only sets up the framework for
maritime shipping between the United States and Vietnam to
expand to meet future needs, but also should help Vietnam
attract the foreign investment it urgently needs to improve
its maritime transportation infrastructure. The United
States will also consider providing some assistance in the
maritime transport sector, such as maritime training to
Vietnamese seafarers, and the Maritime Administration is
exploring the possibility of other forms of development
assistance. End Comment.

MARINE