VIETNAM: DAUSTR BRYAN AND VICE MINISTER OF TRADE

UNCLAS SECTION 01 OF 03 HANOI 000993

SIPDIS

SENSITIVE

STATE ALSO FOR E, EB AND EAP/BCLTV
STATE PASS USTR EBRYAN, GHICKS
STATE ALSO PASS USAID
DOC FOR 4431/MAC/AP/OPB/VLC/HPPHO

E.O. 12958: N/A
TAGS: ETRD EINV EFIN VM WRTO BTA IPROP FINREF WTO
SUBJECT: VIETNAM: DAUSTR BRYAN AND VICE MINISTER OF TRADE
TALK BTA AND WTO.

SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY.

Ref (A) Hanoi 584
(B) Hanoi 794
(C) Hanoi 817


1. (SBU) Summary: During a meeting April 11 with Deputy
Assistant USTR, Elena Bryan, Vice Minister of Trade Luong
Van Tu highlighted efforts Vietnam has made to implement its
obligations under the U.S. - Vietnam Bilateral Trade
Agreement (BTA),suggested holding the BTA JC Chairman's
meeting in May, asked the USG to increase quotas on
Vietnam's textile and garment exports and requested that the
United States host another round of WTO bilateral
negotiations in Washington before the next WTO Working Party
meeting in Geneva in late May. DAUSTR Bryan noted that
Vietnam's efforts to implement its international obligations
should help with Vietnam's desire to attract additional
investment. She reminded the Vice Minister that Vietnam
needs to submit draft legislation and implementing
regulations to the WTO as soon as possible. Finally, she
advised the Vice Minister that the United States needs to
receive a revised services offer in writing before it can
begin to discuss a date for the next round of WTO bilateral
negotiations. She also noted that the United States would
need time to consult with advisors once the offer is
received. End Summary.


2. (U) On April 11, prior to the "expert level" meeting of
the BTA Joint Committee, DAUSTR Bryan, accompanied by USPTO
Attorney-Advisor, Jennifer Ness, U.S. Copyright Office
Policy Planning Advisor Steven Tepp, Econ/C and Econoffs
from Hanoi and HCMC, called on VM Tu to discuss the status
of BTA implementation. (Note: The BTA JC meetings will be
reported septel. End Note.) The tone of the meeting was
very upbeat, with the Vice Minister emphasizing the positive
impact the BTA has had on bilateral relations. In
particular, he cited strong growth in direct and indirect
bilateral trade over the past year, the presence of
"hundreds of U.S. companies" operating in Vietnam and the
surplus in U.S. services exports to Vietnam as examples of
positive developments.

Vietnam: Progress on BTA Implementation
--------------


3. (SBU) VM Tu specifically highlighted the progress the GVN
has made in implementing BTA obligations in the areas of
transparency and the protection of intellectual property
rights (IPR). With respect to transparency, the VM pointed
out that GVN drafters of laws and regulations regularly seek
out opinions from stakeholders, including foreign companies.
He also explained that National Assembly discussions are
open to the public and the GVN publishes its legislation in
the Official Gazette, in local media and on GVN agency
websites. Improving transparency is part of Vietnam's
reform process, the VM asserted. The GVN has set up a
committee responsible for reviewing all documents and
simplifying legislative procedures. Vietnam has made
significant progress in bringing its procedures in line with
BTA and WTO transparency standards, the VM added. On IPR,
VM Tu noted that Vietnam has joined the Berne Convention and
promulgated regulations to bring Vietnam into compliance
with Berne requirements. However, he said, Vietnam still
has "some problems in the area of IPR."


4. (SBU) VM Tu also cited improvements Vietnam has made in
increasing market access opportunities for U.S. companies,
in some cases ahead of the BTA implementation schedule. The
GVN provided MFN tariff treatment to U.S. goods two years
before the BTA took effect, he said. Additionally, there
are more than seventy 100 percent U.S. companies operating
in Vietnam now. In insurance services, the GVN has issued
one 100 percent investment license to an American insurance
company and has committed to issue two more licenses to U.S.
companies soon. Finally, the VM affirmed that Vietnam has
implemented its BTA obligations in the banking sector,
although only two U.S. banks have a presence in Vietnam.
(Note: The VM attributed the small number of U.S. banks to
the lack of strong OPIC presence in Vietnam. However, OPIC
has been active in Vietnam since 1998. End Note.) The Vice
Minister added that the GVN would like the USG to "create
favorable conditions for Vietnamese companies to do business
in the United States." "I have received criticisms from
Vietnamese banks that have been unable to get approval to
set up representative offices in the United States," he
complained.


5. (U) DAUSTR Bryan responded that the United States has
also taken efforts to facilitate bilateral economic
relations. The USG applied MFN and national treatment to
Vietnam in all areas except tariffs well before the BTA came
into effect. With respect to U.S. investment in Vietnam,
DAUSTR Bryan explained, U.S. companies are careful to ensure
that investment conditions are good before investing in a
new market like Vietnam. U.S. companies have become more
comfortable investing in Vietnam in the last few years,
partly because of the BTA. However, they are still looking
for signals that the investment climate is improving -
including better IPR protection, fewer restrictions on
investment and a court system that enforces contracts. As
Vietnam continues to implement its international obligations
and bolster its judicial system, it will likely see an
increase in U.S. investment, DAUSTR Bryan added.


6. (SBU) On insurance, DAUSTR Bryan noted, approval of long-
pending insurance licenses will send a positive signal to
the world financial community and help to encourage other
investment in Vietnam. However, she noted, there is a
perception in the United States that Vietnam applies
different rules to companies from different countries and
that the GVN trades market access in one sector for access
in another. In the United States, there are no licensing
requirements; Vietnamese companies are free to invest and
face the same regulatory rules as all other companies, she
stated.


7. (SBU) With respect to banking, DAUSTR Bryan explained
that after September 11, the USG implemented regulations
requiring the home countries of banks to have anti money-
laundering regulations in place before they could establish
representative offices in the United States. These rules
apply to banks from all countries on an MFN basis, she
noted. The VM immediately expressed strong support for U.S.
efforts to combat terrorism and money laundering and
reported that the GVN has submitted a draft anti money-
laundering decree to the Prime Minister for approval.
DAUSTR Bryan asked the Vie Minister to provide a copy of the
draft regulation as soon as possible. (Note: the Embassy
has repeatedly requested a copy of the draft decree on money-
laundering from the GVN without success for over a year.
End Note.)


8. (SBU) The Vice Minister suggested the two sides hold the
Chairman (Vice Minister) level meeting of the BTA JC in May
(Note: VM Tu was anticipating WTO bilaterals in Washington
in May. End Note.) DAUSTR Bryan responded that, should the
VM be in Washington for other reasons, this sounded
possible, but she would need to check the schedule of the
appropriate Deputy USTR.

WTO Accession
--------------


9. (SBU) Turning to Vietnam's WTO accession, VM Tu said he
was aware that the USG is concerned about Vietnam's ability
to complete the legislative requirements for WTO. The GVN
has decided it needs to speed up the legislative process, he
assured her. The Government has identified ten existing
laws and ordinances that need to be revised and fourteen new
laws and ordinances that need to be drafted in order to meet
WTO requirements. This legislation was included in the
legislative action plan the GVN sent to the WTO Secretariat
and the USG for review last week (Reftel B). The VM added
that the National Assembly (NA) has agreed to work to
approve all of this legislation in 2005 and will extend the
length of its two regularly schedule sessions this year
and/or add an additional session if necessary t complete the
task at hand.


10. (SBU) DAUSTR Bryan pointed out that although the WTO
Working Party has made it very clear that it wants to see
drafts of all laws, regulations and implementing regulations
before they are approved, Vietnam has not yet sent any
drafts to the WTO for review. In fact, the GVN's latest
submission to the WTO Secretariat contained only two laws:
the Law on Minerals and the Anti-Dumping Law. (Note: Both
of these laws were final versions. End Note.) The VM noted
that the Prime Minister recently issued instructions on
preparing draft legislation, translating the drafts and
submitting them to the WTO (reftel C). The GVN is very
focused on translating draft legislation at this time, he
said. As soon as the drafts are ready, Vietnam will begin
submitting them to the WTO.

Next Round of Bilats
--------------


11. (SBU) VM Tu then reiterated the written request he had
sent to the Ambassador (reftel B) for the United States to
host another round of WTO bilateral market access
negotiations in Washington at the end of April. DAUSTR
Bryan expressed appreciation for the work the GVN has done
and for the constructive round of talks held in Washington
in March. However, while the USG has Vietnam's revised
tariff offer, as has been discussed in previous meetings, it
will not begin to consider scheduling another round of
bilaterals until Vietnam provides a revised services offer
in writing. Once the offer is received, the USG will need
least four weeks to review it and consult with U.S.
industry. Given that, late April or early may is not a
realistic time frame for the next round of negotiations,
DAUSTR Bryan concluded. The Vice Minister responded that
the GVN will send the services offer "this week." Conceding
the point on the April timeframe, VM Tu requested that
bilats be held "sometime" before the next WTO Working Party
scheduled for late May. DAUSTR Bryan committed to convey
this information to AUSTR Dorothy Dwoskin.

Textile Quotas
--------------


12. (SBU) VM Tu also requested the USG consider increasing
the size of U.S. quotas on Vietnam's exports of textiles and
apparel. Both Vietnamese and U.S. companies have complained
that Vietnam is disadvantaged because its textile and
garment exports to the Unites States are still subject to
quota, he explained. DAUSTR Bryan responded that the United
States is not in a position to remove the quotas until
Vietnam accedes to the WTO.


13. (U) DAUSTR Bryan cleared this cable.

MARINE