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

UNCLAS SECTION 01 OF 04 HANOI 002700 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA GOODMAN AND WICKMAN 
STATE PASS USTR ELENA BRYAN AND GREG HICKS 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV PREL PHUM KIRF PGOV OVIP VM WTO ASEAN BTA IPROP SOE
SUBJECT: AUSTR Weisel Visit to Hanoi: WTO Getting Closer 
 
SENSITIVE - NOT FOR INTERNET DISTRIBUTION 
 
¶1.  (SBU)  Summary.  In meetings with the Minister of Trade, 
the Vice Chairman of the National Assembly Economic and 
Budgetary Committee, and the Vice Chairman of the Office of 
Government, Assistant U.S. Trade Representative Barbara 
Weisel delivered the message that U.S. and Vietnamese WTO 
negotiators were close on the issues and that bilateral 
negotiations could be concluded in a few months if both 
sides stay focused and maintain momentum.  She stressed that 
good bilateral and multilateral packages as well as complete 
implementation of the U.S.-Vietnam Bilateral Trade Agreement 
(BTA) would be essential to win Congressional support for 
Permanent Normal Trade Relations (PNTR) status for Vietnam. 
Her Vietnamese interlocutors assured her that they are 
striving to pass legislation that is WTO and BTA consistent. 
They urged the United States to lower its demands in light 
of Vietnam's transition economy status and suggested that 
negotiations be raised to a ministerial level.  The 
Ambassador accompanied Weisel to the Trade Ministry and the 
Office of Government.  End Summary. 
 
Minister of Trade 
----------------- 
 
¶2. (SBU) In his October 11 meeting with AUSTR Barbara 
Weisel, Trade Minister Truong Dinh Tuyen said that that  the 
ASEAN Trade Ministers had recently decided to speed up the 
liberalization of services with a focus on 11 sectors. Tuyen 
commented that the United States focuses too much on its 
bilateral relations with ASEAN member states and pays too 
little attention to ASEAN as a whole.  He urged the United 
States to combine its efforts on bilateral and ASEAN 
relations. 
 
¶3. (SBU) Agreeing on the need for the United States to have 
relations with ASEAN as well as with its members, Weisel 
remarked that of the ASEAN countries, all of which are in 
her portfolio, Vietnam is the country in which U.S. 
businesses are most interested.  Because of this interest 
and the potential opportunities here, Ambassador Portman had 
asked her to go to Hanoi to discuss WTO accession, BTA 
implementation and the future vote on Permanent Normal Trade 
Relations (PNTR) in Congress.  Weisel handed the Minister a 
letter from U.S. Trade Representative Portman. 
 
¶4. (SBU) Noting that Vietnam's Working Party meeting in 
Geneva in September had gone well, Weisel said she expects 
progress to continue.  However, to build support for the 
PNTR vote, Congress must agree that BTA implementation has 
been satisfactory.  Since the spotlight will be on Vietnam 
next year as it hosts APEC, this would be a good time to 
conclude WTO accession.  USTR wants to shepherd a smooth 
PNTR process, so it is important that there be no surprises. 
Although Vietnam's BTA implementation has generally been 
good, there are five key areas of concern: trading rights, 
distribution rights, IPR, investment and transparency. 
Legislation in some of these areas still needs to be 
enacted. 
 
¶5. (SBU) Pledging that Vietnam would meet its BTA 
obligations, Tuyen distinguished between implementing 
obligations and exceeding them.  For example, Vietnam had 
not granted trading rights to Ford Motor Company because the 
BTA does not yet provide such rights in the auto sector. 
Tuyen said that he had received a paper from AmCham 
outlining concerns with BTA implementation and plans to meet 
with them in November after his trip to China.  The Minister 
stressed that the GVN is doing its best on IPR, but it is a 
difficult issue in Vietnam and elsewhere in Asia.  Vietnam 
is perfecting its legislation, trying to implement laws 
effectively, and enhancing awareness.  The Vietnamese people 
are now more aware of the benefits of IPR rights and 
therefore more willing to respect the rights of others. 
However, noting that IPR is connected with technological 
development which takes time, Tuyen asked for understanding. 
 
¶6. (SBU)  Weisel explained that the concern on trading and 
distribution rights was that implementing regulations impose 
licensing requirements and fees, which roll back BTA 
achievements.  Tuyen assured her that this was a 
misunderstanding.  He had not yet seen the draft decrees in 
question, but would make sure that any BTA inconsistent 
language was removed and would listen to comments from 
AmCham.  On trading rights, the GVN is relying on advice 
from the USAID-funded STAR program (Support for Trade 
Acceleration), which would ensure that the decree met BTA 
requirements.  Expressing appreciation for the Minister's 
assurances, Weisel said she looked forward to good 
discussions on the IPR issue with the National Assembly 
delegation in Washington the following week.  She also noted 
that she hopes to receive the latest draft of the IPR law's 
implementing regulations before those discussions. 
 
¶7. (SBU) Despite some significant improvements, some aspects 
of the draft investment law raise concerns, particularly the 
approval procedure for investments over USD 20 million, 
Weisel said.  This provision could discourage investment, 
she stressed.  USTR would provide detailed comments later. 
Tuyen said that the law had to be in accord with BTA 
investment chapter obligations without violating WTO rules 
on trade-related investment measures (TRIMS).  The GVN also 
would like for the law to create a favorable climate for 
investment, so it would welcome comments. 
 
¶8. (SBU) Turning to Vietnam's WTO accession, Weisel said 
that the U.S. side was waiting to hear from Vietnam on some 
of the issues from the September Working Party meeting in 
Geneva.  The U.S. side owes the Vietnamese some background 
on some issues as well.  This work should be completed as 
soon as possible so we can arrange the next meeting. 
Pointing out that Vietnam has concluded bilateral 
negotiations with 22 partners, the Minister urged the United 
States not to set standards so high that Vietnam would lose 
the incentive to negotiate.  Weisel emphasized that the 
United States shares Vietnam's desire to move quickly. 
Following Geneva, the two sides have an agreed agenda to 
follow and "we can get it done if we keep focused."  The end 
is in sight and a conclusion in the next few months would be 
possible, but staying focused is important, she added. 
 
National Assembly 
----------------- 
 
¶9. (SBU)  Weisel met with Tao Huu Phung, Vice Chairman of 
the Economic and Budgetary Committee of Vietnam's National 
Assembly.  Phung stressed that the National Assembly is 
actively making laws to meet all the requirements of the 
United States and the WTO.  In the last session, the 
National Assembly had passed a number of laws including the 
customs law, the law on export taxes, the competition law, 
as well as laws on anti-dumping and on subsidies.  In the 
next session starting October 18, the Assembly plans to 
enact 14 new laws and ordinances, including the common 
investment law and unified enterprise law, as well as laws 
on negotiable instruments, foreign exchange, and taxation. 
These new laws are intended to create a level playing field 
for foreign and domestic companies.  The unified enterprise 
law will replace separate laws on state and private firms 
and will make state-owned enterprises (SOEs) more market- 
oriented and independent from the Government.  The tax law 
will unify tax rates on domestic and imported products, 
including autos, beer, distilled spirits and cotton.  The 
Government will adopt implementing regulations as the laws 
are passed and the Assembly will oversee implementation.  In 
2006, the Assembly will pass another 16 laws and 
regulations, including laws on electronic transactions, 
telecom, property registration, land use, housing and 
personal income tax.  Such rapid activity demonstrates 
Vietnam's efforts to meet WTO accession requirements. 
 
¶10. (SBU)  In response to Weisel's questions on the 
investment law, the Vice Chairman said that the aim of the 
law is to simplify administrative procedures by combining 
business registration and investment licensing and by 
creating a one-stop shop for businesses.  The law and 
regulations will be transparent about which sectors are 
restricted for investment.  It will set up a level playing 
field for foreign and domestic business.  Phung said that 
the draft IPR law would be very detailed so that the 
implementing regulations would probably add very little. 
The latest drafts of the law and regulations are not yet 
available since they have undergone major changes, he noted. 
He was aware that a National Assembly delegation would soon 
go to the United States to study IPR and that USTR would 
need copies of the regulations for these discussions. 
 
¶11. (SBU)  On WTO accession, Weisel said that the United 
States shares Vietnam's goal of accession and hopes to 
complete bilateral negotiations in the next few months.  She 
observed that she receives more business inquiries about 
Vietnam than about any other country in her portfolio. 
After the recent productive working party meetings in 
Geneva, both sides know where they need to go.  Phung said 
that the United States has high requirements for Vietnam, 
but commented that Vietnam's ability to meet those 
requirements is low.  He urged the United States to lower 
its demands.  Weisel replied that the two sides were fairly 
close and if the two negotiating teams could do their work, 
negotiations could be completed.  However, to persuade 
Congress to pass PNTR for Vietnam, USTR will have to show 
complete BTA implementation and a strong WTO accession 
package.  On BTA implementation, she noted that problems 
remain with trading and distribution rights as well as with 
licensing fees.  The Vice Chairman said that the USAID- 
funded STAR program is helping Vietnam on BTA implementation 
and that USTR should bring implementation problems to STAR's 
attention so that they could be resolved. 
 
Office of Government 
-------------------- 
 
¶12. (SBU) Meeting with Vice Chairman Nguyen Quoc Huy at the 
office of government, AUSTR Weisel repeated her message that 
the "end is in sight" and both sides must redouble their 
efforts to complete the bilateral negotiations.  She hoped 
to be able to schedule another negotiating meeting as soon 
as both sides complete their "homework" from negotiations in 
Geneva.  She also emphasized the importance of BTA 
implementation.  Passage of PNTR will require both a good 
bilateral and multilateral package and a good record on BTA 
implementation.  On the whole, BTA implementation has gone 
smoothly, but a few areas of concern, such as trading 
rights, remain.  The interim solution for implementing 
trading rights pending passage of new legislation is not 
working well.  This involves having an MOT point of contact 
work with firms to ensure that the commitment is honored 
even though the implementing regulations do not yet exist. 
So far no U.S. company has received a general license to 
trade, only licenses for specific shipments.  Furthermore, 
the implementing regulations for the draft trading and 
distribution laws are likely to impose additional or new 
licensing requirements or fees that would undermine rights 
granted in the BTA. 
¶13. (SBU) Huy replied that on the margins of the Prime 
Minister's visit to Washington, the U.S. side had raised 
some BTA implementation issues that the GVN is working to 
resolve.  He welcomed U.S. comments on the draft investment 
law.  All draft laws are available on the National Assembly 
website and if the U.S. side discovers any provisions that 
would violate BTA provisions, it should notify the GVN so 
that the laws can be fixed.  On IPR, Huy admitted that 
Vietnam has difficulty enforcing IPR, but noted that, 
compared with China, Vietnam is making progress.  IPR is in 
the interest of Vietnam as well as the United States; 
Vietnamese musicians and artists are now interested in it. 
On the bilateral WTO negotiations, Huy said that the Prime 
Minister had just written to President Bush making two 
requests: that, taking into consideration that Vietnam is a 
transition economy, the United States should lower its 
demands and that the two sides should hold another round of 
negotiations in October. 
 
¶14. (SBU) Weisel said that she looked forward to seeing the 
letter to the President.  The United States is eager to meet 
again with the Vietnamese, but a meeting would be more 
productive once Vietnam has submitted new offers on 
agricultural and non-agricultural goods.  On telecom and 
financial services, the two sides still need to look at the 
ideas they explored last month in Geneva to see whether they 
can close.  The U.S. goal is to conclude an agreement on 
commercial terms that it can successfully present to 
Congress. 
 
¶15. (SBU) The Ambassador stressed the importance of BTA 
implementation because of its effect on American attitudes. 
The U.S. business community supports Vietnamese accession to 
the WTO.  However, as the end of the negotiation process 
comes closer, businesses look to their own interests and how 
these are reflected in the agreement.  To be constructive, 
the AmCham had drafted a position paper, which it shared 
with the GVN.  Suggesting that the GVN take the paper 
seriously, the Ambassador commented that Trade Minister 
Tuyen intends to meet with the AmCham, which is an excellent 
idea.  Ultimately, the attitude of American business will be 
pivotal as Congress considers PNTR. 
 
¶16. (SBU) The Ambassador also raised Boeing's problem in 
getting paid.  He said that he appreciated Huy's help in 
getting the paperwork out of the Prime Minister's office. 
However, two weeks later, Boeing has still not been paid due 
to a delay in obtaining approval from Vietnam Airlines' 
Board of Directors.  The Ambassador asked Huy to help.  Huy 
responded that the GVN is still struggling with its poor 
"administrative system." He said that this will be fixed in 
time, but made no promise on the payment to Boeing. 
 
¶17. (SBU) Returning to the issue of bilateral negotiations 
on WTO accession, Huy suggested that it was time to raise 
the negotiations to the ministerial level on both sides.  He 
said that Minister of Trade Tuyen was ready to go to the 
United States to work out a deal this month and he hoped 
that the U.S. side would support such a trip.  The 
Ambassador said that he saw no advantage for Tuyen to go to 
the United States until Vietnam had submitted new offers. 
AUSTR Weisel added that Vietnam wants a political-level 
decision, but the U.S. position is that the agreement must 
be on commercial terms.  The agreement must have U.S. 
business support in order to get PNTR through Congress. 
 
MARINE