PRIME MINISTER'S VISIT TO JAPAN

UNCLAS SECTION 01 OF 02 HANOI 002767

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECON ETRD EINV ENRG KIPR JA VM
SUBJECT: PRIME MINISTER'S VISIT TO JAPAN

Ref: A) Hanoi 963 B) Tokyo 6249

HANOI 00002767 001.2 OF 002



1. (SBU) Summary: Prime Minister Nguyen Tan Dzung's recent trip to
Japan was intended to reaffirm the two countries' friendship and
cooperation in a highly visible manner. The PM's schedule included
a full array of high-level events and meetings (Ref B). In addition
to protocol-driven events, trade and investment were major themes of
the visit, highlighted by the participation in the PM's delegation
of both the ministers of Trade and Planning and Investment, along
with heads of over 60 trade associations, leading enterprises, banks
and industrial parks. The two sides agreed to begin official
negotiations for a Japan-Vietnam Economic Partnership Agreement
(JVEPA) in January 2007. PM Dzung also committed to continue
improving Vietnam's investment climate for foreign firms and to
strengthen IPR enforcement. According to Japanese Embassy sources,
Dzung played hardball to force the Japanese to make vague
commitments to huge infrastructure projects in return for Vietnam's
tough statements on North Korea. End Summary.

Laying the Groundwork for Increased Trade and Development
-------------- --------------


2. (SBU) According to MFA First Asia Department Deputy Director Vu
Huy Mung, the Vietnam-Japan relationship is solid and developing
well. Japan is one of Vietnam's top trade partners and there is
close cooperation on regional and international issues. Prime
Minister Dzung's trip had three objectives: 1) to reaffirm the
policy of maintaining friendship and cooperation with Japan, while
elevating relations to a new height; 2) to focus on economic,
commercial and assistance ties; and, 3) to create a friendly
relationship between the two new prime ministers.


3. (SBU) Key economic accomplishments, in Hanoi's eyes, were Japan's
affirmation of continued Official Development Assistance (ODA) in
coming years, focused primarily on infrastructure improvements and
high technology, and a call for the implementation of the
Japan-Vietnam Joint Initiative, intended to encourage a "new wave"
of Japanese investment in high technology, oil and gas production
and refining and nuclear power. PM Shinzo Abe promised special
attention to three infrastructure projects involving North-South
high-speed railways and expressways and a high-tech park. The
announcement that the two sides will launch negotiations for a
Japan-Vietnam Economic Partnership Agreement (JVEPA) in January 2007
is being touted as a significant development by the Vietnamese press
and Vietnamese economic experts.


4. (SBU) Dr. Luu Ngoc Trinh, Vice Dean of the Institute for World
Economics and Politics, noted that JVEPA would be a new form of
cooperation between the two sides -- packaging cooperation on trade,
ODA, investment, tourism, and science and technology. Such an
agreement could play an integral role in reaching the goal included
in the leaders' Joint Statement of nearly doubling two-way trade to
USD 15 billion by 2010. As a sign of the GVN's commitment to reach
this goal, PM Dzung promised to continue improving the investment
climate for foreign firms and recognized the need to enforce
intellectual property protection in speeches delivered during
investment seminars in Tokyo and Osaka. Following last year's
PMU-18 corruption scandal, in which Japanese ODA was alleged to have
been misdirected by GVN officials, PM Dzung made pointed efforts to
state his determination to fight corruption and continue economic
reforms. Commercial agreements with a value of over USD 600 million
were signed in the areas of electronics and textiles. The Japanese
side took note of PM Dzung's proposal to create a Vietnam-Japan
Joint Cooperation Committee at the ministerial level.

Regional Issues
--------------


5. (SBU) Concerning regional issues, the MFA's Mung said both sides
agreed to support each other in regional and international forums,
specifically in their respective aspirations for seats on the UN
Security Council. Both sides also expressed opposition to the
DPRK's nuclear test and called for DPRK restraint and a return to
the six-party talks. In elevating the relationship to a "strategic
partnership for peace and prosperity in Asia," Mung offered that the
two sides had achieved an important result. (Note: Vietnam's only
other "strategic partnership" is with Russia, declared in March
2001.) He further explained that the framework for this
relationship has been in place since 2002 and the two countries have
pursued a reliable partnership and long-term stability. In 2004,
the two countries signed a joint statement about the new "strategic
height" in their relations. So, while the relationship has until
now contained a strategic element, it is now made more explicit,
Mung explained.

Relations with Japan will be a GVN Priority
--------------


6. (SBU) Echoing Mung's official analysis, the Director General of
the Vietnam Institute for Northeast Asian Studies, Dr. Ngo Xuan
Binh, suggested that Vietnam wants close relations with Japan and

HANOI 00002767 002.2 OF 002


that expanding the relationship will be a GVN priority in the
future. According to Binh, there are no "difficult" bilateral
issues in the Vietnam-Japan relationship. When asked how China
might view PM Dzung's visit, he said the Chinese would be more
"interested" in U.S.-Vietnamese interactions than they are about
interactions between Vietnam and Japan. The warm reception that PM
Dzung received -- including his address to the Diet -- was described
by Binh as a "way of setting an example for Vietnam" so that when PM
Abe comes to Vietnam, he will be able to speak before the National
Assembly. Binh thought poorly of the economic impact of the trip,
pointing to a total of only five relatively small projects signed.
He agreed, however, that the various trade and investment-related
meetings conducted by PM Dzung could result in long-term economic
benefits.

Japan's Pragmatic Approach to Relations with Vietnam
-------------- --------------


7. (SBU) According to Japanese Embassy Political Counselor Satoshi
Nakajima, negotiating the joint statement came down to the wire as
PM Dzung's office insisted on including a explicit reference to the
three huge infrastructure projects, even though the Vietnamese
provided no details about the projects to the Japanese side. As
leverage, the GVN held out on the language regarding the DPRK. In
the end, the Japanese agreed to include mention of the projects,
although it did so without a firm commitment to follow through.
Concerning the negotiations on an economic partnership agreement
scheduled to begin in January 2007, Nakajima said he had no idea
what form the economic partnership might take, except that it would
probably have a large official assistance component, since that is
an area of bilateral economic relations that the GOJ controls.
Since the actual amount of trade and investment is largely
determined by private sector interest and decisions beyond the
control of the GOJ, the trade volume target and calls for investment
are viewed by the Japanese side as positive gestures without actual
commitments. Likewise, Nakajima was vague on the substance of the
"strategic partnership" with Vietnam, saying that the United States
is Japan's only real strategic partner.


8. (SBU) Nakajima continued that, while the two countries agreed to
promote cooperation in the area of nuclear energy, the GVN did not
want any reference in the joint statement to Japanese cooperation on
a nuclear power plant, in effect keeping its options open to choose
among potential suppliers. The reference to this issue in the joint
statement is limited to laying the legal and administrative
groundwork for cooperation on nuclear energy. Japan insisted on
including references to the importance of the IAEA Additional
Protocol, the Convention on the Physical Protection of Nuclear
Material and the Convention on Nuclear Safety, all agreements that
Vietnam has yet to sign.

Comment
--------------


9. (SBU) This trip was Prime Minister Nguyen Tan Dzung's first
bilateral overseas trip since assuming office in June. His only
other foreign visit, in September, was to the sixth Asia Europe
Meeting Summit held in Helsinki. While the PM's visit to Japan
seems short on concrete deliverables, from the GVN perspective it
most likely achieved all its objectives, including creating the
appearance of a stronger, more engaged relationship with a global
and regional power.

MARINE