USTR DISCUSSES WTO MEMBERSHIP, IT AND IPR WITH HCMC BUSINESS

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000178

SIPDIS

USDOC
SENSITIVE
SIPDIS

STATE FOR EAP/MLS AND EB/TPP/BTA/ANA
STATE PASS USTR DAVID BISBEE
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO AND EMIKALIS
TREASURY FOR OASIA
GENEVA FOR USTR
BANGKOK FOR USPTO JNESS

E.O. 12958: N/A
TAGS: ETRD ECON WTRO KIPR VM
SUBJECT: USTR DISCUSSES WTO MEMBERSHIP, IT AND IPR WITH HCMC BUSINESS
COMMUNITY

REF: HANOI 233 B) HANOI 310


1. (SBU) Summary: Area businesspeople discussed new trading
rules and changes to Vietnam's legal framework as a result
of its WTO membership with representatives of the Office of
the U.S. Trade Representative (USTR) and the U.S.
Department of Commerce, during a February 5-6 visit to Ho
Chi Minh City. The USG visitors provided American Chamber
of Commerce members with an overview of the U.S. - Vietnam
bilateral trade relations following Vietnam's accession to
the World Trade Organization in January of this year, and
the U.S. proposal to Vietnam to negotiate a Trade and
Investment Framework Agreement. USTR also explained many
of the important commitments Vietnam has undertaken as part
of its WTO accession agreement including comprehensive
tariff reductions, significant service sector
liberalization and adoption of WTO consistent rules in
areas such as trading rights, IPR, and transparency. In
turn, AmCham members outlined their plans to form a WTO
implementation committee to monitor implementation, and
asked a broad range of questions relating to specific
service sector commitments, trading rights, and customs
duties. In separate meetings representatives of U.S.
information technology (IT) companies registered concern
about new regulations that they believe could make it
difficult for U.S. companies to qualify for Vietnamese
government IT contracts. Legal experts outlined challenges
to adequately protecting intellectual property rights (IPR)
under Vietnam's new IPR law. The visit followed meetings on
February 1-2 in Hanoi and HCMC by Assistant United States
Trade Representative Barbara Weisel. In those meetings USTR
proposed to the GVN to move our bilateral relationship
forward along the path set out under the Enterprise for
ASEAN Initiative by negotiating a Trade and Investment
Framework Agreement (TIFA) (ref A). End summary.

AMCHAM
--------------


2. (SBU) David Bisbee, Director for Southeast Asia and
Pacific Affairs for USTR, and Elena Mikalis, Director for
ASEAN Affairs for the International Trade Administration at
the Department of Commerce, visited HCMC February 5-6 to
discuss Vietnam's WTO obligations and its legal reform
efforts with members of the U.S. business community here.
In a lengthy session with the American Chamber of Commerce,
USTR fielded questions and provided additional details and
clarifications on the terms and coverage of Vietnam's WTO
accession package. AmCham members admitted that more study
of the agreement was needed by members and that to better
monitor and track implementation of the commitments by
Vietnam, Amcham was considering forming a WTO
Implementation Committee. Bisbee encouraged the formation
of such a group and suggested that AmCham propose a formal
dialogue with the Ministry of Trade as part of the process
to facilitate a better understanding of the many legal and
regulatory developments underway to meet WTO commitments.


3. (SBU) The meeting also included lengthy discussions over
trading rights and distribution services. Members asked
for clarification of Vietnam's commitments, which include
the ability for all Vietnamese and foreign companies and
individuals to directly import most goods into Vietnam as
of January 1, 2007. Vietnam's commitments also provide for
foreign individuals and enterprises without a physical
presence in Vietnam to act as an importer of record, an
important provision for many U.S. exporters. Foreign firms
can engage in distribution services of most goods without
going through a Vietnamese intermediary in 2009. In the WTO
accession agreement, Vietnam improved upon the timetable
for granting trading rights established in the U.S.-Vietnam
Bilateral Trade Agreement (BTA) to meet its GATT
obligations, and reduced the range of products subject to
transition periods. For distribution services, Vietnam also
reduced the list of products excluded in Vietnam's WTO
commitments compared to the BTA.

IT
--

HO CHI MIN 00000178 002 OF 002




5. (SBU) Representatives of U.S. IT companies met with
Bisbee and Mikalis to voice their concerns about an IT
procurement policy announced by Vietnam in late July 2006
(Decision 169). USTR and Embassy Hanoi have worked closely
with the Ministry of Post and Telecommunication (MPT) since
July to raise USG and industry concerns about the policy,
which seeks to provide procurement preferences for
localized IT products and open source software. MPT
released a draft implementing circular on January 30 for
industry comments, and USTR urged the IT industry members
to raise their concerns directly with MPT. In response to
concerns raised by the USG in July, the MPT has worked to
revise the original Decision to limit coverage to only
government agencies and explicitly exclude state owned
enterprises. USTR and Hanoi Econoff explained to the
industry representatives that MPT was open to hearing from
industry about global procurement best practices, and
industry was urged to engage the GVN directly on this
issue. (Note: In meetings in Hanoi, USTR raised industry
concerns with MPT directly. (Ref B) End note.)

IPR
---


6. (SBU) Bisbee and Mikalis also met with lawyers and HCMC
government officials to discuss the implementation of
Vietnam's new IPR law, which came into effect in 2006. An
attorney at a foreign law firm reported that in her opinion
Vietnam's IPR enforcement activities had slowed as
authorities familiarized themselves with the new law and
its regulations. The attorney and a representative from
HCMC's Department of Science and Technology (DOST) observed
that new rules meant to preserve the impartiality of IPR
enforcement activities (by clearly separating registration
and enforcement activities) have, in the short term,
reduced the ability of experts at DOST and other agencies
to assist enforcement authorities in pursuing IPR
violations. During a discussion on USTR's Special 301
review of IP protection among major trading partners, DOST
requested USTR's assistance in establishing a dialogue
mechanism specific to HCMC's local efforts, similar to the
301 review but on a semi-annual basis. DOST explained that
provincial level implementation could be supported by
regular dialogue with USTR and other USG agencies on the
problems and bottlenecks experienced by the private sector.
DOST also acknowledged the valuable technical assistance
received from the U.S. Patent and Trademark Office (USPTO)
and the USAID-funded Support for Trade Acceleration (STAR)
program and reiterated the common request among Vietnam's
IP agencies for increased levels of technical assistance.


7. (SBU) The private sector attorney also explained her
understanding that in order for IPR rights-holders to
pursue those who sell counterfeit goods or goods that
violate trademarks, rights-holders must first send "cease
and desist letters" to violators. While these letters are
meant to be used as evidence that violations have taken
place, they often tip off infringers, who are then able to
evade prosecution. In subsequent meetings in Hanoi with IP
authorities and advisors to the STAR program, it was
clarified that the relevant decree requires 'cease and
desist' letters only in cases of unfair competition, not in
cases of clear trademark infringement.


8. (U) Mr. Bisbee and Ms. Mikalis cleared this cable.
WINNICK