This record is a partial extract of the original cable. The full text of the original cable is not available.

111027Z Oct 01

 2001HANOI02634 - UNCLASSIFIED
 
 
 
                           UNCLASSIFIED     PTQ7953

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FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 4347
INFO AMCONSUL HO CHI MINH CITY 
ASEAN COLLECTIVE
USDOC WASHDC
USDA WASHDC
DEPTTREAS WASHDC

UNCLAS SECTION 01 OF 02 HANOI 002634 
 
SIPDIS 
 
STATE ALSO PASS USTR 
 
E.O. 12958: N/A 
 
TAGS: ETRD KTEX VM
SUBJECT: VIETNAM LABELLING: MADE IN WHEREVER -- RESPONSE 
 
REF:  A)  STATE 163735 
 
                       UNCLASSIFIED 
 
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      B)   HO CHI MINH CITY 833 
 
¶1.  WE RAISED OUR CONCERNS OVER RECENT REPORTS THAT VIETNAM 
HAD SUSPENDED THE APPLICATION OF COUNTRY OF ORIGIN LABELING 
REQUIREMENTS IN ITS NEW LABELING LAW WITH MINISTRY OF TRADE 
(MOT) VICE MINISTER LUONG VAN TU IN LATE SEPTEMBER; MOT 
INDICATED THEY WOULD REVIEW OUR REQUEST.  WE STRESSED THAT 
THE ORIGINAL REGULATION WAS A POSITIVE STEP FOR VIETNAM AND 
HELPED ASSURE THAT DOMESTIC REGULATIONS PREVENTED ABUSES BY 
ILLEGAL TRANSSHIPPERS OR OTHER TYPES OF FRAUD.  PER REF A, 
WE URGED VIETNAM TO RESCIND THE SUSPENSION AND RESTORE THE 
REGULATION TO ITS ORIGINAL EFFECTIVENESS. 
 
¶2. WE WERE ABLE TO FOLLOW UP WITH VICE MINISTER TU DURING 
THE RECENT VISIT OF EAP/BCLTV DIRECTOR JUDITH STROTZ 
(SEPTEL).  TU SAID THIS WAS AN ISSUE WITH WHICH HE WAS VERY 
FAMILIAR AS IT WAS UNDER HIS DIRECT SUPERVISION.  THE 
REQUIREMENT THAT ALL EXPORTED GOODS BE LABELED "MADE IN 
VIETNAM" HAD BEEN SUSPENDED ONLY FOR A LIMITED NUMBER OF 
COMPANIES PRODUCING GOODS IN EXPORT-PROCESSING ZONES UNDER 
SPECIFIC CONTRACTS THAT PREDATED THE NEW LAW. HE NOTED THAT 
THE SUSPENSION OF THE REQUIREMENT HAD BEEN APPROVED BECAUSE 
THESE COMPANIES HAD COMPLAINED THAT THEIR EXISTING PRE- 
LABELING LAW CONTRACTS REQUIRED THEM TO DELIVER PRODUCTS 
WITHOUT THE LABELS, AND THUS REQUESTED THE CONTRACTS BE 
GRANDFATHERED.  HOWEVER, TU STRESSED THIS SUSPENSION OF THE 
REQUIREMENTS WOULD ONLY APPLY TO PRODUCTS DELIVERED UNDER 
THESE CONTRACTS AND ONLY UNTIL THE CONTRACTS WERE FULFILLED. 
ANY NEW CONTRACTS THESE COMPANIES CONCLUDED WITH FOREIGN 
BUYERS WOULD NEED TO COMPANY WITH THE NEW LABELING 
REQUIREMENTS.  TU EMPHASIZED THAT VIETNAM, AND HE 
                       UNCLASSIFIED 
 
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PERSONALLY, IS VERY SERIOUS ABOUT FIGHTING COMMERCIAL FRAUD. 
 
¶3.  ECON/C SOUGHT CLARIFICATION AND ASSURANCES FROM TU THAT 
SUSPENSION APPLIED ONLY TO THOSE FEW CASES AND THAT ONCE 
SUSPENSION RAN OUT, VIETNAM WOULD NOT EXTEND IT OR APPROVE 
ANY MORE SHIPMENTS OF PRODUCTS WITHOUT PROPER LABELING. TU 
CONFIRMED THAT THIS WAS THE CASE. 
 
¶4.  IN SEPARATE CONVERSATIONS, HOWEVER, WITH THE DIRECTOR OF 
MOT'S QUALITY MANAGEMENT AND MEASUREMENT DEPARTMENT, MR. LE 
MINH TAM, WE WERE PROVIDED A DIFFERENT DESCRIPTION OF THE 
POLICY CHANGE.  (NOTE:  MOT'S QUALITY MANAGEMENT AND 
MEASUREMENT DEPARTMENT, WHICH REPORTS TO VICE MINISTER TU, 
HAS DIRECT REGULATORY JURISDICTION OVER THE COUNTRY-OF- 
ORIGIN LABELING ISSUE.  END NOTE).  ACCORDING TO TAM, THE 
ORDER ISSUED BY THE PRIME MINISTER SUSPENDING THE LABELING 
REQUIREMENT ALLOWS VIETNAM CUSTOMS TO WAIVE THE COUNTRY-OF- 
ORIGIN LABELING REQUIREMENT ON EXPORTED GOODS FROM ANY 
COMPANY THAT REQUESTS SUCH A WAIVER.  THE PM'S ORDER, 
ACCORDING TO TAM, DOES NOT LIMIT APPLICATION OF THE WAIVER 
TO ANY SPECIFIC COMPANIES, PRODUCTS OR CONTRACTS.  HE DID 
CONFIRM THAT THE PM'S ORDER EXTENDED THE AUTHORITY TO WAIVE 
THE RULES ONLY THROUGH DECEMBER 31, 2002.  TAM DECLINED TO 
PROVIDE EMBASSY A COPY OF THE PM'S ORDER, ASSERTING IT WAS 
NOT A PUBLIC DOCUMENT, BUT ONLY AN INTERAGENCY 
COMMUNICATION. 
 
¶5.  WHEN WE POINTED OUT THE INCONSISTENCIES BETWEEN WHAT TAM 
AND VICE MINISTER TU HAD TOLD US, TAM ACKNOWLEDGED THERE WAS 
CONFUSION OVER HOW THE WAIVERS SHOULD BE APPLIED.  HE NOTED 
MOT HAD NOT FORESEEN MANY OF THE ISSUES THE WAIVER HAD 
                       UNCLASSIFIED 
 
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RAISED AND WAS TAKING ANOTHER LOOK AT THE ISSUE.  WHEN WE 
FURTHER NOTED THAT THE LACK OF TRANSPARENCY AND CONSISTENCY 
IN THE APPLICATION OF THE RULES WAS IN CONTRADICTION WITH 
VIETNAM'S BTA OBLIGATIONS, TAM ADMITTED THE RULE WOULD NOT 
WITHSTAND SCRUTINY ONCE THE BTA WAS IMPLEMENTED AND IT WOULD 
LIKELY NEED TO BE WITHDRAWN AT THAT TIME. 
 
¶6.  SEPARATELY, ON A RECENT VISIT TO HAIPHONG'S EXPORT 
PRODUCTION ZONES, ECON/C HAD AN OPPORTUNITY TO RAISE THIS 
ISSUE WITH A NUMBER OF FIRMS PRODUCING FOOTWEAR AND TEXTILES 
AND THEIR STATEMENTS ECHOED WHAT WE HEARD FROM TU.  THEY 
WERE CLEARLY AWARE OF THE LAW AND THE TEMPORARY SUSPENSION 
IN SOME LIMITED CASES.  SOME FIRMS' PRODUCTS WERE LABELED, 
SOME WEREN'T, ALTHOUGH ALL THE FIRMS STATED THAT PER LOCAL 
LAW, THE CERTIFICATES OF ORIGIN CLEARLY INDICATED VIETNAM AS 
THE SOURCE OF THE PRODUCTS. 
 
¶7.  THE EXPORT FIRM MANAGERS WERE VERY OPEN AND UP FRONT 
ABOUT THE LABELING REQUIREMENTS OF THEIR FOREIGN 
CONTRACTORS.  ONE PRIVATE VIETNAMESE-TAIWANESE JOINT VENTURE 
WAS PRODUCING FOOTWEAR FOR DEBENHAM'S DEPARTMENT STORE IN 
THE UK AND ALL SHOES AND BOXES WERE CLEARLY LABELED "MADE IN 
VIETNAM".  THE MANAGER CONFIRMED THAT THE LABELS WERE A 
SPECIFIC REQUIREMENT BY THE IMPORTER AND WERE SUPPLIED BY 
THE FOREIGN PRODUCTION PARTNER.  A SECOND SOE-TAIWAN JOINT 
VENTURE WAS EXPORTING TO SHOES TO THE TAIWANESE MARKET - 
SANS LABELS PER THE CONTRACTOR'S REQUIREMENT.  ANOTHER JOINT 
                       UNCLASSIFIED 
 
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VENTURE TEXTILE FIRM WAS PRODUCING HIGH-QUALITY KNITWEAR 
UNDER THE BRAND NAME "BETTY BARCLAY" WHICH WAS APPARENTLY 
INTENDED FOR THE GERMAN MARKET (ACCORDING TO THE ATTACHED 
BRAND LABELS) BUT NO WHERE WAS LABELED "MADE IN VIETNAM", 
NOT EVEN ON THE SHIPPING BOXES WHICH WERE ADDRESSED TO THE 
CONTRACTOR IN TAIWAN. 
 
¶8.  COMMENT:  TU'S ASSURANCES THAT THE SUSPENSION OF THE 
RULE APPLIED ONLY TO GRANDFATHERING SEVERAL EXISTING 
CONTRACTS FOR A STRICTLY LIMITED PERIOD WERE WELCOME IF 
ACCURATE, BUT OUR CONVERSATIONS WITH MOT STAFF RAISE SERIOUS 
QUESTIONS ABOUT HOW THE RULES ARE ACTUALLY BEING APPLIED. 
WE WILL CONTINUE TO PRESS MOT FOR A CLEAR EXPLANATION AND 
ASSURANCES THAT THE WAIVER OF THE COUNTRY-OF-ORIGIN 
REQUIREMENT WILL BE TERMINATED ASAP. 
 
PORTER 
 
                       UNCLASSIFIED