Vietnam: March 22-44 Consultations on Maritime

UNCLAS SECTION 01 OF 04 HANOI 000753

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STATE FOR EAP/BCLTV, AND EB/TRA
TRANSPORTATION FOR MARITIME ADMINISTRATION

E.O. 12958: N/A
TAGS: EWWT EINV PREL VM
SUBJECT: Vietnam: March 22-44 Consultations on Maritime
Cooperation

Sensitive but unclassified protect accordingly.


1. (SBU) Summary: The U.S. Maritime Administration (MARAD)
and the Ministry of Transportation (MOTr) met March 22-24 in
Hanoi to discuss the potential for conclusion of a bilateral
maritime services agreement in the near future. The
Vietnamese side provided a draft agreement, which served as
the basis for discussion on issues a future bilateral
agreement should cover. The U.S. delegation highlighted the
need for a "forward looking" agreement that would enable
U.S. investors to provide a full range of maritime services
in Vietnam and expand options for investment with up to 100
percent foreign equity in the maritime sector. At the
conclusion of the discussions, the U.S. delegation committed
to revise the Vietnamese draft agreement to reflect the
issues discussed and to present a new draft to the GVN as
soon as possible. The Vice Minister of Transportation
reiterated the GVN's interest in concluding a bilateral
agreement in time for a proposed trip to Washington by the
Prime Minister in June this year. End Summary.

Productive Talks
--------------


2. (U) A delegation of Transportation Department (DOT)
officials, headed by the Maritime Administration's Associate
Administrator for Policy and International Trade, Bruce J.
Carlton, met with GVN transport officials March 22-24 in
Hanoi to discuss the possibility of negotiating a bilateral
maritime services agreement. Mr. Nguyen Cong Duc, Vice
Chairman of the Vietnam National Maritime Administration
(Vinamarine),led the Vietnamese delegation, which also
included representatives of the MOTr, Vietnam National
Shipping Lines (Vinalines) and the Ministry of Foreign
Affairs.


3. (SBU) The discussions were friendly and productive.
After both sides briefly described the state of maritime
services in their respective countries, they highlighted
high-level interest in the possibility of concluding a
maritime agreement. The U.S. side emphasized interest in
long-term development of maritime relations, including
establishing a framework in which U.S. shipping companies
could provide a full range of maritime services in Vietnam
in areas such as multi-modal and logistics operations. The
Vietnamese side agreed that a bilateral agreement should be
forward looking and should foster investment in both
countries.

Legal Framework
--------------


4. (U) According to the GVN delegation, the two primary
pieces of legislation that control activities in the
maritime sector in Vietnam are the 1990 Maritime Code of
Vietnam, which provides a broad framework for maritime
activities and the 1996 Law on Foreign Investment (amended
in 2000). The GVN is in the process of thoroughly revising
both of these laws. The National Assembly is scheduled to
approve the revisions to the Maritime Code in May and to the
Foreign Investment Law in November. In addition, a 2001
Government Decree (No. 10/2001/ND-CP) provides detailed
regulations on limitations on investment in the maritime
services sector. According to this decree, foreign
investors are limited to 49 percent equity investment in
joint ventures in a range of maritime services. Foreign
investment is prohibited in two services: sea ship agencies
and sea towage services.


5. (SBU) MARAD Associate Administrator Carlton said that
while Vietnam's current regulations limit foreign investment
to 49 percent, the two sides need to look at ways to move
toward 100 percent foreign equity in the maritime sector
"relatively quickly." This will bring investment in to
Vietnam's market and help grow its economy. Vinamarine Vice
Chairman Duc responded that he is thinking along the same
lines as the U.S. side. It is critical for Vietnam to
change its laws at this time, he added. The National
Assembly is involved in a comprehensive law-making process
as part of Vietnam's WTO accession process. It is our
"policy and intent to open the market and generate a better
environment for foreign investment," he concluded. Hinting
that the two sides should not focus too much attention on
the constraints of Vietnam's legal system, and that the GVN
could be flexible on the equity cap issue, Mr. Tran Manh Ha,
Director of the Legal department of Vinalines added that
U.S.-Vietnam discussions on the limitations on foreign
investment "don't need to wait for changes in the law. The
two sides can have a longer vision."

Key Elements
--------------


6. (SBU) Using a draft bilateral agreement provided by the
GVN as a framework, the two sides discussed key elements of
a potential agreement, including the following:

-- Advance notification of arrival. The USG requires that
ships coming to the United States give 96-hour advance
notification of arrival. Vietnam requires 72 hours prior
notice.

- Seafarers' documentation. The U.S. side noted that any
language on seafarers' documents in a bilateral agreement
should be in line with international conventions dealing
with this issue, including ILO Convention 185 and the
International Maritime Organization's International Ship and
Port Facility Security (ISPS) Code. (Note: ILO 185 allows
use of biometric technology on seafarers' identity
documents. End note.) The U.S. side also noted that since
September 11, the United States has eliminated the use of
crew list visas (for both aviation and maritime services).
Appropriate treatment of visa issues and identity documents
in maritime agreements is extremely important to the United
States.

- Most-favored Nation (MFN) versus national treatment (NT)
for shipping services. The U.S. side noted that in Annex H,
Article 4.3(b) of the U.S.-Vietnam Bilateral Trade Agreement
(BTA),Vietnam had committed to eliminate discriminatory
port charges by December 2004. Any discussion of applying
MFN rather than NT for port charges would constitute a step
back from that agreement. The GVN acknowledged the need for
a maritime agreement to comply with BTA principles.

- The relationship between a bilateral maritime agreement
and the two parties' other international commitments (such
as membership in ASEAN or APEC.)

- Market access and investment. The U.S. side expressed
strong interest in ensuring that an agreement would include
opportunities for expanded market access and investment
opportunities for U.S. shipping companies. The U.S. side
noted that a priority goal for the agreement would be to
enable U.S. carriers to move from the current 49 percent cap
on equity to a majority share (51 percent) and then to 100
percent foreign owned investments within a relatively short
time frame.

- Remittance of income. The U.S. side noted that this issue
had been dealt with in the U.S. Vietnam Bilateral Air
Services Agreement signed in 2003 and suggested a parallel
approach should be used for maritime services.

- Cooperation on investigation of maritime casualties in the
territorial waters of each country.

- Cooperation on search and rescue activities.

- Education and training for seafarers. Both sides
expressed strong support for developing mechanisms for
educational and training exchanges.

Courtesy Call on Vice Minister of Transport
--------------


7. (SBU) On the last day of the talks the U.S. delegation,
accompanied by Econ/C, paid a courtesy call on Vice Minister
of Transportation, Tran Doan Tho. At this meeting, VM Tho
noted the GVN is "vigorously preparing" for a visit by Prime
Minister Phan Van Khan to the U.S. this summer and expressed
hope that a bilateral maritime agreement could be included
in time for such a visit. MARAD Associate Administrator
Carlton responded that the discussions in Hanoi have
resulted in a very comprehensive roadmap for negotiation of
a bilateral agreement. He also highlighted the U.S. side's
commitment to revise the GVN draft agreement based on the
discussions and provide a copy to the MOTr for consideration
"very quickly."

Memorandum of Consultations
--------------


8. (U) The discussions concluded on March 24 with the
signing of a Memorandum of Consultation. Text of the MOC
follows:

Memorandum of Consultation

Delegations representing the Governments of the United
States of America and of the Socialist Republic of Vietnam
held bilateral consultations in Hanoi on March 22 to 24,
2005, to discuss prospects for a bilateral maritime
agreement. The U. S. delegation was chaired by Mr. Bruce J.
Carlton, Associate Administrator for Policy and
International Trade, U.S. Maritime Administration. The
Vietnamese delegation was chaired by Mr. Nguyen Cong Duc,
Vice Chairman of the Vietnam National Maritime
Administration. The discussions proceeded in a friendly and
productive atmosphere; delegation lists appear as Attachment

A.

The discussions focused on the interest of the two countries
in fostering a mutually beneficial maritime relationship.
The delegations first acquainted each other with their
respective governments' perspectives on the state of the
international shipping industry, its rapid pace of
development, and its potential for supporting the economic
growth of both Vietnam and the United States. Discussions
then addressed key elements of a bilateral agreement based
on the draft prepared by the Vietnamese side, including a
comprehensive assessment of the potential scope and form of
such an agreement, mechanisms for encouraging investment and
opportunities for cooperation. The U.S. side will provide
the Vietnamese side a revised draft reflecting these
discussions as soon as possible. Lastly, the two sides
briefed each other on their government's successful
implementation of new global maritime security mandates.
With the intention of maintaining the momentum developed
from this positive exchange, the delegations agreed to
recommend to their respective governments that negotiation
of an agreement be given high priority.

For the U.S. delegation:
Bruce J. Carlton

For the Vietnamese delegation:
Nguyen Cong Duc

Hanoi
March 24, 2005

Annex A

List of the U.S. Delegation

Mr. Bruce J. Carleton, Associate Administrator for Policy
and International Trade, U.S. Department of Transportation,
Maritime Administration

Mr. Gregory B. Hall, Director of International Activities,
U.S. Department of Transportation, Maritime Administration

Mr. Brian T. Varney, International Economist, U.S.
Department of Transportation, Maritime Administration

Mr. Christopher T. Tourtellot, Attorney, U.S. Department of
Transportation

Mr. Samuel R. Watson, Economic Counselor, U.S. Embassy Hanoi

Ms. Jessica L. Adkins, Economic Officer, U.S. Embassy Hanoi

Ms. Vo Lan Phuong, Economic Assistant, U.S. Embassy Hanoi

List of the Vietnamese Delegation
--------------
Mr. Nguyen Cong Duc, Vice Chairman, Vietnam National
Maritime Administration (Vinamarine)

Mr. Nguyen Vinh Loc, Deputy Director General, International
Cooperation Department, Ministry of Transport

Mrs. Pham Thi Phuong, Deputy Director General, Legal
Department, Ministry of Transport

Mr. Nguyen Viet Dung, Head of International Cooperation
Section, Vietnam National Maritime Administration
(Vinamarine)

Mrs. Ho Huong Giang, Americas Department, Ministry of
Foreign Affairs
Mr. Nguyen Hoang, Expert, Ministry of Transport

Mr. Tran Viet Ha, expert, International Cooperation
Department, Ministry of Transport

Mr. Tran Manh Ha, Director of Legal Department, Vietnam
National Shipping Lines (Vinalines)


9. (U) This cable was cleared by MARAD.

MARINE