VIETNAM SUPPORTS MAINTAINING ITA DUTY-FREE COVERAGE

UNCLAS HANOI 000404 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/MLS COMMERCE FOR ERIC HOLLOWAY STATE PASS USTR FOR DAVID BISBEE AND JASON BERNSTEIN GENEVA PASS TO USTR E.O. 12958: N/A TAGS: ETRD ECON WTRO VM SUBJECT: VIETNAM SUPPORTS MAINTAINING ITA DUTY-FREE COVERAGE (U) SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET. REF: STATE 22242 ¶1. (SBU) Summary: In a March 1 meeting, the Ministry of Trade's (MOT) Multilateral Trade Policy Department Deputy Director General, Luong Hoang Thai, expressed support for the U.S. position on maintaining duty-free coverage of information technology (IT) products covered under the World Trade Organization (WTO) Informational Technology Agreement (ITA),as detailed in reftel. Mr. Thai committed to ask Vietnam's representatives in Geneva to attend the March 6 informal ITA Committee meeting and voice support for the U.S. position. ASEAN countries typically develop a unified position on these issues, Thai explained, commenting that possible new European Union (EU) duties on certain products covered by the ITA would negatively impact exports from many ASEAN countries - thereby making an ASEAN-wide statement supporting the U.S. position "highly likely." The MOT will direct Vietnam's representative in Geneva to push for such a statement. End Summary. ¶2. (SBU) In a March 1 meeting, Ministry of Trade's Multilateral Trade Department Deputy Director General Luong Hoang Thai agreed with United States opposition to new duties by ITA member countries on technologically advanced versions of ITA-covered products. Although still relatively small, Vietnam's exports of ITA products to the European Union are growing rapidly, Thai said. Furthermore, new tariffs by the European Union could potentially hamper future development in Vietnam's IT industry - an area the Prime Minister has targeted as a key growth sector in the coming years. ¶3. (SBU) Mr. Thai said that Vietnam's representatives in Geneva informed him that this issue was discussed during the first round of informal discussions on January 19. He committed to ask them to attend the second round of discussions on March 6 and voice support for the U.S. position. Econoff provided Thai a copy of the U.S. proposal (G/IT/W/26) circulated during the January 19 meeting along with ITA trade statistics detailing EU imports of ITA-covered products. DDG Thai noted that he would incorporate this trade data in the ministry's request to Geneva. ¶4. (SBU) Although Vietnam's experience in the World Trade Organization (WTO) is short, having only been a member since January 11, it typically works to develop a unified position with fellow ASEAN members on WTO-related matters such as this, Thai explained. Referring to the EU import statistics, DDG Thai noted that countries like Singapore, Malaysia, the Philippines, Thailand and Indonesia would also stand to lose should the EU apply new tariffs on their IT exports. He presumed, therefore, that it would be "highly likely" the ASEAN countries will agree to publicly support the U.S. position during the March 6 meeting. The Ministry of Trade will instruct its Geneva-based representatives to push for such an agreement with other ASEAN member representatives in Geneva, Thai said. ¶5. (SBU) DDG Thai concluded the meeting by thanking the United States for bringing this important issue to the Ministry of Trade's attention. He expressed his hope that this would be among the first of many opportunities for our countries to cooperate in the WTO. MARINE