Identifier
Created
Classification
Origin
05HOCHIMINHCITY944
2005-09-07 06:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Ho Chi Minh City
Cable title:  

WTO ACCESSION CONCERNS STRESSED IN EB/CBA MERMOUD HCMC

Tags:  ECON EINV ETRD PREL TBIO VM WTO 
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070606Z Sep 05
UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000944 

SIPDIS

SENSITIVE

DEPT PASS TO USTR - EBRYAN


E.O. 12958: N/A
TAGS: ECON EINV ETRD PREL TBIO VM WTO
SUBJECT: WTO ACCESSION CONCERNS STRESSED IN EB/CBA MERMOUD HCMC
VISIT

REF: A) HCMC 879 B) HCMC 914 C) HCMC 935

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000944

SIPDIS

SENSITIVE

DEPT PASS TO USTR - EBRYAN


E.O. 12958: N/A
TAGS: ECON EINV ETRD PREL TBIO VM WTO
SUBJECT: WTO ACCESSION CONCERNS STRESSED IN EB/CBA MERMOUD HCMC
VISIT

REF: A) HCMC 879 B) HCMC 914 C) HCMC 935


1. (SBU) Summary: Special Representative J. Frank Mermoud
discussed commercial issues, WTO accession, and Vietnam's business
climate in Ho Chi Minh City September 1. Amcham governors
expressed concern with GVN intransigence on WTO related issues.
HCMC officials confirmed these fears and were unusually frank and
pessimistic about support for economic reform. Mermoud met with
the Young Businesspeople's Association and spoke with local press.
End Summary.


2. (SBU) In a full day of meetings September 1, Special
Representative for Commercial and Business Affairs, J. Frank
Mermoud, met with business and government leaders to press for
trade and investment liberalization and for several specific
pending deals. AmCham members supported Vietnam's WTO accession,
but raised concerns that the GVN still sees negotiations as a zero-
sum game in which it will concede as little as possible. AmCham
members reiterated concerns that the GVN was using WTO-related
legislation to increase government control(reftels.) AmCham noted
lack of communication between officials drafting legislation and
WTO negotiators. GVN officials have told some AmCham members that
their marching orders are to "give away the minimum" in
negotiations and in legislation.


3. (SBU) Over lunch hosted by the Consul General, Dr. Luong Van Ly
and Mr. Truong Trong Nghia provided a frank and somewhat
pessimistic assessment of pending WTO-related legislation and
economic policy trends. (NOTE: Ly, Deputy Director of the HCMC
Department of Planning and Investment and Nghia, Vice President of
the HCMC Investment and Trade Promotion Centre (strictly protect
both) are the two key senior working level officials in HCMC on
trade, investment and economic policy issues. Both are close to
Deputy Prime Minister Vu Khoan and are strong economic reform
advocates. END NOTE.)


4. (SBU) Ly expressed relief that Vietnam's WTO accession would
not happen in 2005, with mid-2006 as a more likely date. There
was simply no way, he said, to process the required legislation by
year-end. Ly and Nghia agreed that much pending legislation,
including the draft Investment Law, was a move backwards rather
than forwards (See reftels for US business concerns on pending
legislation.) Ly stressed that there was considerable opposition
to trade liberalization by some Vietnamese business interests and
state-owned enterprises with strong connections to the GVN. In
his view, the legislation needed for accession will have to be
very general. Once Vietnam is in the WTO, trade and investment
will drive further reform through implementing decrees. But, he
confided, reformers did not have the political ability to obtain
strong specific legislation and implementing decrees upfront. In
his view, the U.S. should support Vietnam's WTO accession since
membership will be the lever for reform.


5. (SBU) Ly explained that the Party and its Politburo are the
ultimate authority on policy issues but that implementation
depended on the government. Disagreements within the government
could prevent decisions from moving forward. He explained that
key to the power of the Prime Minister was the responsibility to
refer issues to the Politburo. Ly stated that he and his circle
were backing Deputy Prime Minister Vu Khoan to succeed Phan Van
Khai next year but he was pessimistic about Vu Khoan's prospects.


6. (SBU) Special Rep. Mermoud and Commercial Officer also raised a
number of pending advocacy issues. Ly noted that a U.S. firm's
complaints about the outcome of a flawed tender process needed to
be raised at a political level in Hanoi since the competing
bidder's Vietnamese agents were extremely well connected. Two
other pending U.S. deals should be moving following some
unofficial guidance from the two Vietnamese officials.


7. (U) Mermoud attended a dinner with six members of the Young
Businesspeoples Association. YBA members discussed how the lack
of a developed commercial banking system and real estate
speculation has created a credit crunch for small and medium size
businesses. The entrepreneurs also described a lack of
information about the opportunities awaiting them when Vietnam
joins the WTO. Mermoud encouraged the YBA to address these
concerns with the GVN and to look for strategic partners with
similar interests, such as AmCham.


8. (U) Mr. Mermoud has cleared this message.


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