VZCZCXRO9408
RR RUEHHM
DE RUEHHI #2538/01 2771213
ZNR UUUUU ZZH
R 041213Z OCT 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 3590
INFO RUEHHM/AMCONSUL HO CHI MINH 1912
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGV/USMISSION GENEVA 1128
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 02 HANOI 002538 
 
SIPDIS 
 
STATE FOR S, E, EAP/MLS AND EB/TPP/BTA/ANA 
STATE PASS USTR DAVID BISBEE AND JONATHAN MCHALE 
COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD WTRO VM
SUBJECT: Ministry of Trade Conveys Oral Points on PNTR Deal re: 
Textiles 
 
REF: HANOI 02513 
 
SENSITIVE - DO NOT POST ON INTERNET 
 
¶1. (SBU) Summary:  On October 4, the Vice Minister of Trade Luong 
Van Tu called in the CDA to convey orally the contents of a draft 
letter from Minister of Trade Tuyen to Secretary Gutierrez and USTR 
Schwab protesting the "mechanism" on textiles and apparel outlined 
in their letter to Senators Dole and Graham.  In the letter, the MOT 
argues that first, the mechanism in practice discriminates against 
Vietnam in violation of WTO rules; second, it creates uncertainty 
for importers of Vietnamese textiles/apparel, effectively inducing 
them to observe a voluntary quota system in some respects worse than 
a formal one; and third, it deprives Vietnam of its "only direct 
benefit from WTO accession" and breaks the delicate balance of 
concessions in the bilateral agreement.  The letter urges USTR to 
withdraw the mechanism and remove the discriminatory treatment of 
Vietnam.  Vice Minister Tu confirmed that the letter had not been 
sent and would not be sent until the Ministry had heard from the 
U.S. side.  End Summary. 
 
¶2. (SBU) On October 4, Vice Minister of Trade Luong Van Tu called in 
the CDA to convey orally the contents of a letter to Commerce 
Secretary Gutierrez and USTR Schwab concerning the "arrangement" 
 
SIPDIS 
between USTR and Senators Dole and Graham on Vietnamese textile 
imports to the United States.  Earlier, Minister of Trade Tuyen had 
convoked the CDA on September 29 to express Vietnam's initial 
concerns, saying that Vietnam had prepared a letter of protest 
(reftel).  Since that meeting, we have been providing points 
clarifying the U.S. position.  There have also been exchanges 
telephone between USTR and the GVN.  In these exchanges, we advised 
against Vietnam initiating an exchange of formal letters. 
 
¶2. (SBU) Tu opened the October 4 meeting in a serious but low key 
manner.  He referred to the rapid development of the U.S.-Vietnamese 
bilateral relationship over the past few years and expressed his 
personal regard for his colleagues in USTR.  He said that Minister 
Tuyen, in consideration of the U.S. side's request to be informed in 
advance of the contents of any proposed formal letter, had asked him 
to hold the meeting with the CDA.  He then read a draft letter from 
Minister Tuyen to Commerce Secretary Gutierrez and USTR Schwab. 
 
¶3.  (SBU) Summary of letter: 
 
Allow me to share our concerns regarding your letter to Senators 
Dole and Graham.  Thank you for the good will and cooperation from 
the United States during the WTO negotiations and thank you for your 
efforts to smooth the way for a favorable vote on PNTR.  However, 
the contents of your letter (to Senator's Dole and Graham) raise 
deep concerns. 
 
First, the mechanism proposed in practice discriminates against 
Vietnamese exports and as such is counter to WTO's 
non-discrimination principles. 
 
Second, the mechanism causes uncertainty for U.S. importers of 
Vietnamese textiles and apparel and will force them to voluntarily 
restrain imports, in effect creating a voluntary quota system that 
is in some respects worse than a formal quota system, since no one 
knows what amount of textiles/apparel is safe to export.  The lack 
of consultation is regrettable. 
 
Third, the only direct benefit to Vietnam from WTO and PNTR is the 
ability to export textiles/apparel to the United States without 
quota restrictions.  Vietnam does not want to join WTO only to see 
voluntary quotas continue.  However, in deference to U.S. concerns, 
Vietnam agreed to a special mechanism for textiles and apparel in 
the bilateral market access agreement.  This mechanism and other 
concessions, represents a balance of concessions.  Tuyen personally 
believes that the additional mechanism breaks this balance. 
 
(Tuyen) urges Secretary Gutierrez and USTR Schwab to withdraw the 
mechanism and to do all they can to delete its discriminatory 
provisions.  He looks forward to a positive response. 
 
End summary of letter. 
 
¶4. (SBU) The CDA assured the Vice Minister that he would promptly 
convey his points and the contents of the draft letter to Washington 
 
HANOI 00002538  002 OF 002 
 
 
and thanked him for sharing the letter and seeking comment.  Tu 
assured him that the letter had not been sent and would not be sent 
until MOT heard from Washington.  The CDA reiterated the letter from 
Secretary Gutierrez and USTR Schwab to Senators Dole and Graham did 
 
SIPDIS 
not create a new "mechanism."  He noted that USTR is working with 
U.S. apparel importers to address concerns.  Tu thanked the CDA and 
repeated three points: the Ministry would not send the letter until 
it received feedback from the U.S. side; Vietnam does not want a new 
mechanism; and he and Minister Tuyen understood that USTR is 
"working hard."  He closed saying that he looked forward to a 
positive response from the United States. 
ALOISI