Vietnamese Official Discusses MCA, TIFA Proposal, Apparel

UNCLAS SECTION 01 OF 02 HANOI 000294 SIPDIS STATE FOR EAP/MLS STATE PASS USTR DBISBEE SENSITIVE BUT UNCLASSIFIED SIPDIS E.O. 12958: N/A TAGS: ETRD ECON EAID KTEX VM SUBJECT: Vietnamese Official Discusses MCA, TIFA Proposal, Apparel (U) This cable is sensitive but unclassified. Not for internet. REF: A) STATE 7634 B) STATE 14171 C) HANOI 233 ¶1. (SBU) Summary: During a February 7 meeting with USTR, Commerce Department, and Embassy representatives, Office of the Government International Relations Department Director Mr. Bui Huy Hung pressed USTR on details for a potential Trade and Investment Framework Agreement (TIFA),expressed concern over the United States proposed apparel monitoring mechanism for Vietnam, and showed interest in continuing to discuss ways Vietnam might become more competitive for Millennium Challenge Account (MCA) funds in the future. Paras 10-11 detail Vietnam's response to the action request in Ref B. End summary. Details on the TIFA -------------- ¶2. (SBU) After congratulating Vietnam on its January 11, 2007 accession to the World Trade Organization, USTR Director for Southeast Asia David Bisbee began the meeting by reviewing the recent conversation in Davos, Switzerland between Deputy U.S. Trade Representative Karan Bhatia and Vietnamese Minister of Trade Truong Dinh Tuyen. Ambassador Bhatia and Minister Tuyen discussed the possibility of signing a Trade and Investment Framework Agreement (TIFA) between the United States and Vietnam, with Tuyen expressing his desire that the TIFA not be "too general." Bisbee also mentioned that Assistant USTR Barbara Weisel met with Vice Trade Minister Luong Van Tu and other MOT officials on February 1 to propose formally launching TIFA talks (reftel C). Bisbee appealed to Hung, who also serves for Vietnam as the general secretary of the Bilateral Trade Agreement (BTA) Joint Council, to assist on the coordination aspect of the TIFA negotiation, noting that a TIFA will be a valuable tool for Vietnam. Citing examples of the kinds of issues that could be addressed in a TIFA, Bisbee said it could provide a regular forum for Vietnam to manage WTO implementation, seek approval to become a beneficiary of the Generalized System of Preferences (GSP) program and discuss apparel related issues. The TIFA itself is not a very specific document, noted Bisbee, but could include general language that helps bolster bilateral cooperation on these outstanding issues. ¶3. (SBU) Bisbee added that the TIFA would not need to duplicate the �0A;management structure of the BTA. The TIFA committee could consist of the same people as the BTA Review Committee, and would include a work plan that focused on possible issues such as IPR issues, or building blocks for an eventual Bilateral Investment Treaty (BIT). The TIFA's language and the structure of its implementation, said Bisbee, is very flexible and can be adapted to best serve Vietnam's needs. ¶4. (SBU) Director Hung began his response to Bisbee's presentation by explaining that the GVN has developed an action plan that will ultimately show each ministry's role in implementing WTO obligations. He promised to share this plan with the United States once it is approved for release (which he estimated would occur after the Tet holiday). Hung noted that the TIFA would be a useful mechanism for helping to implement these obligations. Hung also asked for an explanation of how USTR had concluded TIFAs with other ASEAN countries in the past. ¶5. (SBU) After some further exchange on the TIFA structure, Bisbee and Hung agreed that the TIFA should be a very general document, but include a specific work plan that would evolve over time, and that the TIFA Joint Council Committee should be chaired by someone from the GVN who could ensure interagency coordination and cooperation. They also agreed that future annual reviews of the BTA could take place under the TIFA dialogue in a consolidated process. ¶6. (SBU) After clarifying the nature of the TIFA implementation process, Hung said he is in a better position to secure agreement on signing a TIFA and will speed up the process within the GVN. He promised to be in touch with Bisbee soon with more information. IT Procurement Decree and GSP -------------- ¶7. (SBU) Bisbee then tried to raise the labeling issue currently under discussion with the Ministry of Trade (see septel),but Hung deferred to other agencies because he had not read up on the issue. Bisbee promised to send him more information, and then turned instead to the problems related to the Information Technology (IT) Procurement Decree (Decree 169). The original Decree appeared inconsistent with Vietnam's WTO commitments regarding State-owned enterprises, noted Bisbee. The most recent changes to the draft implementing circular more clearly excluded SOEs, which is a positive step, however, the U.S. IT industry is still seeking a more technology neutral and non-preferential procurement approach, said HANOI 00000294 002 OF 002 Bisbee. Bisbee added that USTR will continue to work with the Ministry of Posts and Telematics to support U.S. industry's efforts to raise their concerns. ¶8. (SBU) Bisbee and Hung also briefly discussed the steps Vietnam would have to take in order to gain approval to become a beneficiary of the Generalized System of Preferences (GSP) program. Hung observed that the GVN is trying to learn about the GSP in greater detail, and hopes that in the near future it might be eligible for the program. The two agreed to continue talking about the subject in the coming months. Apparel monitoring -------------- ¶9. (SBU) Bisbee also assured Hung that Ambassador Bhatia plans to visit Vietnam in the near future, and will bring a representative from the Department of Commerce's Import Administration to help clarify the apparel monitoring mechanism to be established in the near future. He noted that there is some misunderstanding surrounding the monitoring issue and that the visit by Deputy USTR Bhatia and the Department of Commerce will provide more clarity about U.S. anti-dumping procedures. Hung said the GVN would welcome such a visit. Millennium Challenge Account -------------- ¶10. (SBU) Econoff delivered the talking points on the Millennium Challenge Account (MCA) provided in Ref A and Ref B, as well as a copy of Vietnam's FY2007 scorecard. Econoff stressed that even though Vietnam technically passed the indicators according to the MCA's criteria, its low scores in the Ruling Justly category, as well as the lack of any change in those areas, is a problem. Hung asked specifically in what areas Vietnam needed to improve its performance, and Econoff singled out per Ref B Voice and Accountability, Civil Society, and Political Rights as well as Corruption. Econoff also stressed that even if Vietnam is not able to improve these scores right away, it is important to demonstrate to the MCA decision-makers the potential for transformational change in these areas. ¶11. (SBU) Hung made clear that he understood, and that he would talk to the Ministry of Foreign Affairs in greater detail about the subject since it is the lead agency for programs like this. Hung said that the OOG is looking at MCA for ways to mitigate the potential negative social impact of WTO accession on the poor. Econoff replied that while MCA does not necessarily focus on poverty alleviation or job creation, a program to develop truly independent domestic non-governmental organizations in rural areas might be a way to meet the MCA's expectations and some of the GVN's own focus. Hung said the GVN would consider this information and contact the USG should they have questions in the future. ¶12. (U) David Bisbee cleared this cable. ALOISI