Vietnam: Status of Key WTO legislation

UNCLAS SECTION 01 OF 02 HANOI 000567

SIPDIS

SENSITIVE

STATE PLEASE PASS TO USTR EBRYAN, GHICKS
STATE ALSO FOR E, EB AND EAP/BCLTV
STATE PASS USAID FOR CHAPLIN/ANE
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ETRD ECON VM IPROP WTO
SUBJECT: Vietnam: Status of Key WTO legislation

Ref: Hanoi 0017


1. (SBU) Summary: On March 3, the Ambassador hosted a lunch
with staff and consultants of the USAID-funded Support for
Trade AcceleRation (STAR) Project and representatives of the
European Union to discuss the status of GVN efforts to
accede to the WTO. The following is a summary of STAR
technical assistance on key pieces of WTO-related
legislation. Other aspects of the discussion will be
reported septel. For a broader overview of ongoing STAR
technical assistance on implementation of the U.S.-Vietnam
Bilateral Trade Agreement (BTA) and WTO accession, see
reftel. End Summary.


2. (SBU) On March 3, the Ambassador hosted a lunch with
staff and consultants of the USAID-funded Support for Trade
AcceleRation (STAR) Project and representatives of the
European Union to discuss the status of GVN efforts to
accede to the WTO. EU Ambassador Markus Cornaro, EU Trade
Counselor, Econ/C, USAID Country Manager and Econoff
(notetaker) also attended the lunch. The STAR team said
that the GVN is currently undertaking an "amazing amount" of
legal reform and STAR is providing assistance on about
twenty laws and regulations. Several STAR consultants are
in Vietnam now providing the GVN assistance on laws likely
to be passed by the National Assembly (NA) this year.
Following are their comments:

Customs
--------------


3. (SBU) Stuart Seidel, an attorney with Baker & McKenzie
and a former Assistant Commissioner of U.S. Customs, is
working as a STAR consultant assisting the GVN with Customs
reform. According to Seidel, the 2002 Customs Law and
subsequent implementing regulations passed by the GVN have
established a good framework for implementation of the WTO
Customs Valuation Agreement (CVA). However, implementation
of the CVA has raised serious concerns within the GVN about
loss of revenues, due in large part to under-invoicing by
importers. The GVN's current inability to address this
problem is due primarily to a lack of adequate post-
clearance audit procedures. STAR is working with the
General Department of Customs (GDC) on revisions to the
Customs Law. Although the NA is scheduled to approve
revisions to the law in May, it is very likely approval will
be delayed until November according to Seidel.


4. (SBU) STAR is also assisting GVN efforts to amend the Law
on Import and Export Duties, which deals with the process of
collecting tariff and other trade tax revenues. STAR
recently supported a seminar in HCMC on this legislation and
has provided comments on the draft amendments. Seidel noted
that STAR is working to ensure there is a high level of
coordination between the drafting teams working on the Law
on Import and Export Duties and on the Customs Law.


5. (SBU) In terms of WTO accession, Seidel said that the two
most problematic customs-related issues the GVN needs to
address in the immediate term are 1) the lack of effective
enforcement of border measures protecting intellectual
property and 2) the lack of adequate procedures for
administrative review of customs decisions. Seidel noted,
however, that Vietnam has made significant reforms on
customs and the "whole mindset" of Vietnamese Customs
officials has changed. He expressed optimism that Vietnam
is "well on its way" to meeting WTO customs obligations.

Commercial Transactions
--------------


6. (SBU) Claude Rohwer, Associate Dean of the McGeorge Law
School at Pacific University, is a STAR consultant providing
technical assistance to the GVN on establishing a strong
legal framework for commercial transactions. In Vietnam,
commercial transactions are governed by three key pieces of
legislation: the Civil Code, the Commercial Law and the
Ordinance on Economic Contracts. According to Rohwer,
although accession to the WTO may not specifically require
changes to these laws and regulations, revision of the
legislation is critical for the establishment and
functioning of a market economy. STAR is providing the GVN
with assistance in revising completely both the Civil and
Commercial Codes. Rohwer emphasized the need for the GVN to
broaden the application of the Civil Code to include all
commercial transactions and to expand the scope of the
Commercial Law to include trade in services. STAR has also
advised the GVN to repeal the outdated Ordinance on Economic
Contracts. The NA is scheduled to pass amendments to both
the Civil Code and the Commercial Law in May.

Electronic Transactions
--------------


7. (SBU) Paula Breunig, Legal Council for the Center for
Democracy and Technology, is consulting with STAR to provide
assistance to the GVN on passage of an Electronic
Transactions Law. STAR technical assistance is focused on
ensuring that the law is in step with international
standards for e-transactions; that the law creates an
enabling environment for e-commerce; and, that the law
limits (to the extent possible) the State's role in e-
transactions. The drafting team (the Science and Technology
Committee of the NA) is working on the sixth draft of the
law; the NA is scheduled to review the draft in May and
approve it in November. As with the Commercial Law, the
Star Team pointed out, while the WTO may not specifically
require passage of an E-Transactions Law, it is a critical
component of the framework for a market economy.

IPR
---


8. (SBU) According to John Bentley, STAR's Chief Legal
Advisor, the GVN is making progress on drafting a
comprehensive IPR Law to meet WTO accession requirements.
The NA is currently scheduled to review the draft law in May
and approve it in November. The drafting team, led by the
Legal Department of the Ministry of Science and Technology
(MOST),is "very capable" according to Bentley. STAR is
also working with the GVN on a new law on the enforcement of
judgments. Implementation of this law will improve the
GVN's ability to enforce judicial decisions on IPR cases and
other commercial disputes. The NA is scheduled to pass this
law in early May 2006.


9. (SBU) Bentley also highlighted that, with assistance from
STAR, the GVN recently promulgated a new Civil Procedure
Code (CPC). The CPC contains important IPR-related
provisions required by the WTO, including the use of
provisional measures such as injunctions. According to
Bentley, the passage of the CPC was "groundbreaking" for
Vietnam.

Enterprise and Investment Laws
--------------


10. (SBU) Fred Burke, Managing Partner for Baker & McKenzie,
is consulting with STAR to help the GVN draft new,
comprehensive Enterprise and Investment Laws. GVN drafters
recently completed first drafts of both pieces of
legislation; the NA is scheduled to comment on the laws in
May 2005 and approve them in the spring of 2006. However,
the GVN is now considering whether it is possible to push
this timeline forward so one or both of these laws can be
finished by the end of this year.


11. (SBU) According to Burke, while WTO accession might not
specifically require passage of a new Enterprise Law, this
legislation is critical for implementing outstanding BTA
obligations such as enabling U.S. investors to establish
joint-stock companies in Vietnam. (Note: This obligation
was due in December 2004. End Note.) Failure to meet BTA
obligations in a timely manner will send negative signals to
the business community and others regarding the GVN's
ability to implement WTO obligations after accession, Burke
added. The Investment Law, on the other hand, will contain
critical provisions specifically required for WTO accession,
including application of the Trade-Related Investment
Measures (TRIMs) Agreement and procedures for implementing
market access commitments for both goods and services. It
is important for the GVN to complete the Investment Law
prior to accession, the Star Team stressed.

MARINE