VIETNAMESE OFFICIALS POSITIVE ABOUT TRADE TIES DESPITE

UNCLAS SECTION 01 OF 02 HANOI 000703

SENSITIVE
SIPDIS

STATE FOR EAP/MLS MBROWN
SINGAPORE FOR TREASURY
TREASURY FOR SCHUN
USTR FOR DBISBEE
USAID FOR DAA/ASIA MELLIS AND EAA DSHARMA

E.O. 12958: N/A
TAGS: ECON ETRD ECIN EINV VM

SUBJECT: VIETNAMESE OFFICIALS POSITIVE ABOUT TRADE TIES DESPITE
CHALLENGES

HANOI 00000703 001.2 OF 002



1. (SBU) Summary. In meetings with visiting Deputy U.S. Trade
Representative Demetrios Marantis, Deputy Prime Minister Hai and
other senior Vietnamese officials were enthusiastic and positive
about the rapid development of bilateral trade relations. The
Vietnamese officials pledged to agree on dates for Bilateral
Investment Treaty (BIT) discussions, urged that Vietnamese exports
of basa and tra fish not be covered under a proposed new U.S.
regulatory regime for catfish, noted the partial opening of the
Vietnamese beef market, and requested information on their request
for GSP status. DUSTR Marantis said that the United States strongly
shared the interest in continuing to pursue expanded trade
opportunities through the Trade and Investment Framework Agreement
(TIFA) and BIT talks. The U.S. was reviewing possible participation
in Trans-Pacific Partnership (TPP) negotiations but had made no
decisions. Marantis stated that support for trade in the U.S. had
weakened, and in this new atmosphere, the GVN's recent negative
human rights actions could endanger further development of bilateral
trade ties. Marantis said that GSP would require improvement of
labor rights and IPR protection in Vietnam and emphasized that the
GVN's proposed partial opening of its beef market was not
acceptable. End summary.


2. (U) During his July 16-17 visit to Hanoi, DUSTR Marantis met with
Deputy Prime Minister Hoang Trung Hai, Trade and Industry Minister
Vu Huy Hoang, Planning and Investment Vice Minister Coa Viet Sinh,
and Agriculture and Rural Development Vice Minister Bui Ba Bong. He
also met with U.S. business representatives and gave a trade speech
to a group of university students. In the meeting with DPM Hai,
Ambassador Michalak, U.S. Ambassador to Vietnam, raised the pending
$4 billion Chevron gas-to-power project which had stalled.
Subsequently, Chevron reported that agreement was reached. The
signing ceremony for the project occurred on July 23.

SHARED ENTHUSIASM FOR BILATERAL TRADE PROGRESS
--------------


3. (SBU) In his meetings, DUSTR Marantis lauded the rapid and broad
progress of bilateral trade ties based on the Bilateral Trade
Agreement (BTA) and regular discussions under the Trade and
Investment Framework Agreement (TIFA). He encouraged his
interlocutors to build on this success and move the trade
relationship forward even more. Marantis noted that one mechanism
was ongoing discussions on a BIT. He urged the GVN to respond to
U.S. proposals for dates for additional rounds of talks in September
and later in the year. The Vietnamese officials said they shared
the enthusiasm for the growing trade relationship and TIFA talks and
agreed to work with the U.S. side to set dates for BIT discussions.


EARLY WARNING ON HUMAN RIGHTS
--------------


4. (SBU) DUSTR Marantis said that Vietnam's recent negative actions
on human rights could present problems for bilateral trade ties.
Support for trade in the U.S. had waned, as demonstrated by the
draft Trade Act recently signed by 107 Congressman, and unless
Vietnam improved its human rights record, it would become more
difficult to continue to advance our bilateral trade agenda. The
Vietnamese responded that the GVN respects human rights and each
country has its own characteristics. Human rights should not become
an impediment to progress on trade. DPM Hai stated that there were
other channels to address human rights issues. The Trade Act was
not good for the U.S. image.

U.S. REVIEWING TPP
--------------


5. (SBU) Marantis told his Vietnamese counterparts that the U.S. was
reviewing its participation in the TPP. USTR Ronald Kirk would be
attending the upcoming Singapore meeting on the TPP. Vietnamese
officials responded that they appreciated the chance to participate
in the TPP as an associate member and were working hard to prepare
for negotiations.

IPR CRIMINALIZATION NEEDS MORE WORK FOR WTO COMPLIANCE
--------------


HANOI 00000703 002.2 OF 002



6. (SBU) Marantis said he appreciated Vietnam's efforts on IPR
protection, but noted that recently passed Vietnamese legislation
that criminalized IPR violations was vague and the two sides should
work together on the implementing regulations for the new law to
ensure it complied with Vietnam's WTO obligations. The Vietnamese
responded that their aim was to comply with WTO commitments and said
they would work with the U.S. side on the implementing regulations.


HURDLES REMAIN IN AGRICULTURAL TRADE
--------------


7. (SBU) Vietnamese officials urged that Vietnamese exports of basa
and tra fish not be covered under a proposed new U.S. regulatory
regime for catfish. They also asked the USG to apply the zeroing
principle on shrimp anti-dumping cases. DUSTR Marantis said the
U.S. understood the importance of the basa/tra issue to Vietnam and
would be transparent in handling the issue. The GVN and seafood
industry would have an opportunity to comment and the USG would work
with Vietnam on any transition to a new rule.


8. (SBU) Vietnamese officials noted that the GVN had offered to open
its beef market to boneless beef over 30 months of age. They had
done this to fulfill commitments made at the June 2008 summit and to
Senator Baucus. DUSTR Marantis expressed appreciation for the GVN's
efforts on beef but made clear that this partial market opening was
not enough, as there is "no sound scientific basis" for Vietnam to
not import bone-in beef over 30 months old. The two sides would
need to hold additional discussions. MARD Vice Minister Bong agreed
to this suggestion. Marantis said the USG would respond to the
GVN's proposal to establish an Agricultural Working Group to deal
with agricultural issues.

VIETNAM MUST IMPROVE LABOR AND IPR TO GET GSP
--------------


9. (SBU) DUSTR Marantis told DPM Hai that the U.S. was prepared to
offer GSP to Vietnam but only after Vietnam improved its labor
standards and IPR protection. Labor would likely be the more
difficult issue and U.S. law required that Vietnam be "taking steps"
to adhere to fundamental labor standards, such as freedom of
association and collective bargaining. DPM Hai responded that
Vietnam was working hard to reform its labor laws and obtain GSP
status.


10. (SBU) The Vietnamese side requested that the U.S. Department of
Commerce not apply CVD law in an ongoing case to Vietnamese exports
of plastic bags. The CVD case was dangerous to trade relations and
the exports of both countries, especially those of Vietnam.
Vietnamese officials also said they were working on relevant
procedures to become an observer to the Government Procurement
Agreement.

AUSTR WEISEL REVIEWS TRADE AGENDA
--------------


11. (SBU) In a lengthy July 16 meeting with Vietnamese Office of the
Government Director Bui Huy Hung, AUSTR Barbara Weisel previewed the
issues to be raised by DUSTR Marantis the following day. She noted
the increasing concern about Vietnam's human rights record and said
human rights and trade could not be separated. Hung and Weisel also
reviewed the status of key bilateral trade issues.


12. (U) This telegram was cleared by USTR.

MICHALAK