VZCZCXRO8992
RR RUEHHM
DE RUEHHI #0678/01 0820935
ZNR UUUUU ZZH
R 230935Z MAR 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 1215
INFO RUEHHM/AMCONSUL HO CHI MINH CITY 0767
RUEHBJ/AMEMBASSY BEIJING 6675
RUEHGZ/AMCONSUL GUANGZHOU 0646

UNCLAS SECTION 01 OF 02 HANOI 000678 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MLS 
DEPT PASS USTR FOR BWEISEL AND GHICKS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON CM VM
SUBJECT: VIETNAM-CHINA TRADE: REPORT FROM LANG SON PROVINCE 
 
SENSITIVE BUT UNCLASSIFIED PROTECT ACCORDINGLY. 
 
REF: (A) Guangzhou 5377 (B) Guangzhou 4831 
 
¶1. (SBU) Summary:  Econ Counselor met with provincial and 
customs officials in Lang Son province, one of two main 
transit provinces for goods to and from China on March 16- 
¶17.  Customs officials at Tan Thanh claimed that 80 percent 
of goods crossing the checkpoint were fruit, smuggling of 
pirated goods was no longer a problem, and that the ban on 
poultry imports from China is effective.  While Trafficking 
in Persons (TIP) is an infrequent occurrence, drug smuggling 
remains a problem, and customs, police, and the border army 
in both Vietnam and China cooperate on both these issues. 
Customs officials' confidence regarding the degree of 
monitoring and control at this small border checkpoint begs 
the question as to how so many counterfeit products from 
China end up in Vietnam.  End Summary. 
 
A Major Transit Point for Trade with China 
------------------------------------------ 
 
¶2. (SBU) Econ/C visited Lang Son province March 16-17, and 
met with provincial and customs officials.  Located 180 km 
from Nanning in China and to the northeast of Hanoi, Lang 
Son is one of two main transit provinces for goods to and 
from China.  The total volume of trade with China through 
Lang Son reached a high of USD 700 million in 2001, of which 
USD 450 million were imports to Vietnam.  In 2005 the amount 
of two-way trade fell to USD 380 million, of which USD 305 
million were imports to Vietnam.  The province has a 253 km 
border with China, two international border checkpoints, and 
3 additional crossings that permit Vietnamese and Chinese 
citizens to move through the border to the nearest province. 
Several of Vietnam's major transportation routes traverse 
Lang Son, including highway 1A (Vietnam's main north-south 
thoroughfare) and an international railroad line.  An 
expressway linking Nanning to Lang Son City has been 
completed on the Chinese side; officials hope to begin 
construction on the Vietnamese side next year. 
 
¶3. (SBU) In addition to meeting with officials, Econ/C 
visited the Lang Son market, famous in northern Vietnam for 
its electronics.  Televisions, DVD players, karaoke 
machines, kitchen appliances, as well as other goods were 
readily available at bargain prices.  While the majority of 
products for sale were Chinese brands, and possibly 
smuggled, many computer products appeared to be counterfeit. 
Also readily available were digital terrestrial decoder 
boxes, used to receive the 100 percent pirated Vietnam 
Television Technology Investment and Development Company 
(VTC) programming. 
 
How DO those counterfeit goods end up in Hanoi? 
--------------------------------------------- -- 
 
¶4. (SBU) Econ/C visited the Tan Thanh "frontier economic 
zone," a border checkpoint established to permit the 
movement of Vietnamese and Chinese citizens and goods from 
border areas, and the least formal of the five border 
crossings in Lang Son province.  Citizens of the two 
countries are allowed to cross without visas, but cannot go 
more than 30 kilometers from the border.  According to 
customs officials, there has been a significant increase in 
cross-border trade in recent years, evidenced by increased 
tax revenues.  Officials claimed that fruit comprises 80 
percent of imports through the Tan Thanh checkpoint. 
(Comment:  Given the amount of cheap Chinese electronics for 
sale in the Lang Son market and the fact that Tan Thanh 
customs officials inspect only 13 percent of shipments, this 
statistic could easily be unreliable.  We also note that Ref 
B reports that according to the Vietnamese Consul General in 
Nanning, China primarily exports machinery equipment and raw 
materials to Vietnam and Vietnam exports bananas and 
agricultural products to China.  End comment.)  Machines, 
consumables, and motorbikes enter Lang Son through one of 
two international or two national checkpoints. 
 
¶5. (SBU) Customs officials claimed that they have not seen 
counterfeit goods at the Tan Thanh checkpoint, but noted 
that by law, they are allowed to stop goods only if they 
receive a petition from enterprises, which has not occurred. 
A number of raids have been have carried out in the border 
area in cooperation with the police and border army, and 
customs officials suggested this has resulted in a decrease 
in smuggling counterfeit goods through the checkpoint. 
Seized products included DVDs that were destroyed by a 
 
HANOI 00000678  002 OF 002 
 
 
specially convened taskforce.  Customs officials said they 
have made efforts to strengthen IPR enforcement by paying 
increased attention to trademarks, but cited the need for 
training and more detailed regulations. 
 
Avian Influenza, TIP, Drugs, and Textiles 
----------------------------------------- 
 
¶6. (SBU) Officials said that measures implemented to prevent 
the import of poultry infected with avian influenza (AI) 
from China through Lang Son province, which has not had any 
reported cases of AI, were effective, and have resulted in 
an 80-90 percent decrease in the number of smuggled birds. 
However, smugglers have continued using unofficial crossings 
on Lang Son's long border with China.  Customs officials 
said that any discovered birds were promptly destroyed. 
(Note: Vietnamese media reported recently that Chinese 
chickens and ducks are being smuggled in large numbers due 
to their low price compared to birds raised in Vietnam.  End 
Note.) 
 
¶7. (SBU) Customs officials stated that they had not seen 
many cases of Trafficking in Persons (TIP), though they were 
aware of the problem and said that a number of victims had 
escaped from China and returned to Vietnam, where they 
received assistance from the Government.  In most cases, 
young women are lured to China with the promise of high 
paying jobs that end up being prostitution.  The customs, 
police and border armies of both countries work closely 
together on this issue.  Drug smuggling continues to be a 
problem in the area.  Police have intercepted a number of 
smuggling operations, and seized 3.6 kilos of heroin in the 
largest drug bust. 
 
¶8.  (SBU) Officials also stated that there had been no 
instances of textile transshipments through the checkpoint. 
They claimed that no completely or partially finished 
garments were imported, only fabric and fiber. 
 
Valuation Procedures 
-------------------- 
 
¶9. (SBU) Customs officials were aware of Vietnam's 
requirement that duties from most countries be assessed 
based on transaction value.  They stated that customs 
officers inspect receipts, which they can check against an 
information system, and may adjust the price if they suspect 
fraud.  While the office had computers, they can only 
process email.  A World Bank customs project is expected to 
provide funding for them to link to a modern system. 
 
Comment: 
------- 
 
¶10. (SBU) Geography has given Lang Son province the 
potential to benefit from growing trade between Vietnam and 
China.  However, the poor and winding road from Tan Thanh to 
Lang Son City will have to improve for this to become a more 
important trade route.  While officials appeared confident 
in their assertions that most of what came in was fruit, 
they were not entirely convincing.  For one thing, many 
Vietnamese in Hanoi will not eat fruit from China since the 
popular notion is that it contains excessive amounts of 
chemicals.  A popular Hanoi anecdote is of an allegedly 
Chinese apple that retained its apparent freshness for two 
months outside.  Given this apparent consumer distaste for 
Chinese fruit, it is entirely possible that this border 
crossing affords an attractive entry point for the many 
illegal items such as counterfeit DVDs and handbags that are 
evident in Hanoi and elsewhere. 
 
MARINE