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Viewing cable 07HANOI310, USG OFFICIALS DISCUSS TIFA, IPR AND TRADE IMPLEMENTATION

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Reference ID Created Released Classification Origin
07HANOI310 2007-02-22 06:35 2011-08-26 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Hanoi
VZCZCXRO4244
OO RUEHHM
DE RUEHHI #0310/01 0530635
ZNR UUUUU ZZH
O 220635Z FEB 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4656
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 5425
RUEHHM/AMCONSUL HO CHI MINH 2582
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 05 HANOI 000310 
 
SIPDIS 
 
DEPT FOR EAP/MLS 
DEPT PASS TO USTR DAVID BISBEE 
COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO AND EMIKALIS 
BANGKOK for USPTO JNESS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON ECPS KIPR EAGR USTR VM
SUBJECT: USG OFFICIALS DISCUSS TIFA, IPR AND TRADE IMPLEMENTATION 
WITH GVN 
 
 
(U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET. 
 
REF:  A) HANOI 233 
       B) HANOI 294 
 
1. (SBU) Summary:  Officials from USTR and the Department of 
Commerce discussed a range of current trade issues with Government 
of Vietnam (GVN) officials during a Febrary 6-9 visit to Hanoi, 
including: a potential Tade and Investment Framework Agreement 
(TIFA); itellectual property rights (IPR) enforcement; signl 
piracy; the GVN IT procurement policy; sanitar and phytosanitary 
(SPS) measures; recent decreeson cosmetics and labeling; data 
protection; a ne chemicals law; trading rights; updated tariff 
shedules; customs valuations; and pharmaceutical reresentative 
offices.  The GVN interlocutors indiated their willingness to work 
cooperatively to rsolve outstanding trade issues, and in many cases 
have already begun to address USG concerns.  The isit laid the 
groundwork for ensuring Vietnam imlements its World Trade 
Organization (WTO) commiments.  End Summary. 
 
TIFA 
---- 
 
2. (SBU) UST's Director for Southeast Asia David Bisbee and 
epartment of Commerce's (DOC) ASEAN Director ElenaMikalis met with 
a series of GVN officials to ure a positive response to USTR's 
proposal to initate negotiation of a Trade and Investment Framework 
Agreement (TIFA) under the Enterprise for ASEAN nitiative.  In 
meetings with the major stakeholdrs, including the Office of the 
Government (OOG) Ministry of Foreign Affairs (MFA), Ministry of 
rade (MOT) and Ministry of Finance (MOF), GVN officals 
consistently expressed support for a TIFA, bt explained that they 
must reach inter-ministeril consensus prior to formal agreement. 
An MOT oficial commented that an agreement on the TIFA textcould 
be reached "in ten minutes," after receivin approval from the Prime 
Minister.  Bisbee agree, adding that the TIFA is a very general 
framewok document requiring no new market access commitmets from 
either party.  Once in place, the two sies can develop an evolving 
work plan to address mre specific trade and investment issues of 
mutua interest.  The MOT contact confided that the PM'soffice has 
signaled its agreement, and MOT hopesfor formal written approval 
soon. 
 
3. (SBU) Seeral GVN agencies raised questions about the structre 
of a TIFA Joint Council (reftel D) and its ineraction with the 
existing Joint Council under te Bilateral Trade Agreement (BTA). 
Bisbee explaied that there would be no need to duplicate the 
tructure of the BTA Joint Council, adding that the TA structure 
could be appropriate for TIFA meetigs as well.  A TIFA Joint 
Council could, among oher functions, conduct the annual BTA review 
in  consolidated process, Bisbee said. 
 
Intellectua Property Rights (IPR) 
--------------------------------- 
 
4. (U) IPR enforcement agencies in Hano and HCMC briefed the USG 
officials on the statu of implementation of Vietnam's new 
IPR-related egal framework.  Vietnam's enforcement agencies mut 
familiarize themselves with the new regulationsand changing 
responsibilities, a contact at NOIPexplained, but these changes 
should ultimately iprove the GVN's enforcement capacity.  The MOT'sMarket Management Bureau (MMB) reported that it ha been tasked to 
chair an inter-ministerial task force to coordinate better IPR 
enforcement with local enforcement agencies, which may help shorten 
the adjustment period. 
 
5. (U) IPR officials from various agencies stressed the need for 
additional training for enforcement staff, particularly at the local 
level, to understand better IP rights and how to prosecute, 
adjudicate and enforce those rights.  Foreign language capabilities 
prevent many local officials from participating in donor-funded 
training courses, and GVN officials requested that future 
USG-sponsored training events provide for interpretation.  The USG 
visitors suggested the two sides work together to develop a joint 
strategy to strengthen IPR enforcement, including plans for future 
training.  An IPR strategy could be an important element of a TIFA 
work plan. 
 
6. (U) Bisbee and Mikalis also relayed IPR concerns raised by U.S. 
industries in HCMC (reftel C) and in Washington.  At each stop, 
Bisbee urged Vietnam to submit a robust report on its IPR 
enforcement activities as part of USTR's annual Special 301 Review 
 
HANOI 00000310  002 OF 005 
 
 
process.  The GVN officials agreed that it is important to 
demonstrate Vietnam's progress in protecting IPR.  The various 
agencies stated that they are sending details of their recent 
enforcement actions to the Embassy and/or Consulate General. 
 
Signal Piracy 
------------- 
 
7. (SBU) The Ministry of Posts and Telematics (MPT) International 
Cooperation Department Deputy Director General Dr. Phan Tam conceded 
that Vietnam has not yet fulfilled its BTA and WTO commitments to 
issue a regulation mandating that all cable and broadcast providers 
only transmit licensed content.  He reported that MPT has given 
"clear guidance" to Vietnam Television Technology Investment and 
Development Company (VTC), a digital terrestrial service provider 
operated by MPT, and other cable companies to cease broadcasting 
pirated signals.  (Note: VTC illegally broadcasts overspill 
satellite signals to end users using the state-owned fiber optic 
network for a one-time decoder box purchase fee.  End Note.)  Bisbee 
pointed out that MPT's failure to end VTC's distribution of stolen 
signals, when it is clearly in a position to do so, is a major 
concern of the United States.  This issue will likely arise in the 
upcoming Special 301 Review of IPR enforcement in Vietnam, Bisbee 
said.  Dr. Tam requested that U.S. industry provide a list of 
programs and channels that VTC is pirating so MPT can better 
intervene with VTC. 
 
IT Procurement 
-------------- 
 
8. (SBU) Bisbee thanked MPT's Dr. Tam for his assistance in working 
to address outstanding USG concerns with the government IT 
procurement policy set forth in the 2006 Decisions 169 and 223.  The 
current draft circular to guide implementation of these Decisions 
includes language that addresses some of the USG concerns with 
respect to Vietnam's WTO commitments by clearly excluding 
state-owned enterprises (SOEs) from coverage by the policy.  Bisbee 
suggested that MPT drafters undertake efforts to consolidate the 
various policy elements in Decisions 169, 223 and the new guiding 
regulation into one document, making the policy more clear and easy 
to follow. 
 
9. (SBU) The U.S. IT industry has ongoing concerns over the 
preferences and local content requirements of the policy, Bisbee 
continued.  Tam and Bisbee agreed that some of these concerns may be 
rooted in a misunderstanding of the policy's scope and intent.  A 
meeting between MPT and the industry would allow MPT to explain the 
policy to IT firms, while the industry could provide some "best 
practices" to help the GVN design a more technology-neutral and 
non-preferential procurement policy to meet its IT procurement 
needs, Bisbee said.  USTR and the Embassy will continue to work with 
MPT to support such a meeting. 
 
New Cosmetics Regulation 
------------------------ 
 
10. (U) The head of the Ministry of Health's (MOH) Cosmetics 
Division explained that the November 2006 Decision 35, which 
significantly broadened the range of foreign cosmetics products 
which must be registered before coming into Vietnam, was issued to 
harmonize Vietnam's regulations with ASEAN cosmetics standards.  MOH 
recognizes the immediate impact these new requirements have on U.S. 
cosmetics firms, and is therefore seeking to delay implementation to 
allow for an adjustment period.  It therefore issued Decision 13 to 
postpone the date of effectiveness for new products until April 
2007.  Domestic transparency requirements dictate that the decision, 
and therefore the policy's temporary suspension, will not take 
effect until March 1 -- 15 days after it was published in Vietnam's 
Official Gazette.  In the interim, MOH is sympathetic to, but can do 
little to allay, the potential difficulties foreign firms may 
encounter with customs officials. 
 
Sanitary and Phytosanitary (SPS) Measures 
----------------------------------------- 
 
11. (SBU) The Ministry of Agriculture and Rural Development (MARD) 
International Cooperation Department (ICD) Deputy Director General 
Ms. Hoang Thi Dzung informed the USG officials that her department 
will serve as Vietnam's SPS Enquiry Point and Notification 
Authority.  MARD requested additional USDA-funded programs to 
enhance Vietnam's SPS procedures.  Ms. Dzung also reported that the 
Minister of Agriculture supports ICD's recommendation to implement 
 
HANOI 00000310  003 OF 005 
 
 
Vietnam's SPS commitments following the U.S. model.  The minister 
also called for improving the national enquiry point network and 
creating better linkages to foreign networks, especially the U.S. 
Department of Agriculture (USDA).  To meet these goals, the ministry 
is developing an SPS action plan, which Dzung committed to share 
with USTR and the Embassy for comments before it is finalized in 
late March.  MARD plans to publish a guidebook to help domestic 
producers and traders understand the requirements of the WTO SPS 
agreement. 
 
12. (SBU) USTR's Bisbee responded by suggesting that Ms. Dzung work 
with the MOT to develop a prioritized list of technical assistance 
requests, which could be included in a future TIFA work plan.  He 
encouraged MARD to share future SPS regulations with the WTO as 
early as possible to avoid confusion and to meet Vietnam's WTO 
commitments.  Vietnam issued a new regulation in December requiring 
that all animal proteins imported for feed be DNA tested.  Even 
though Vietnam was not at the time a WTO member, Bisbee said, 
efforts should have been undertaken to follow a more transparent 
notification process in order to allow the United States to consult 
on the new requirements.  Furthermore, under the BTA, MARD should 
have consulted with the USG on technical regulations even prior to 
WTO membership.  Ms. Dzung said that because MARD did not notify the 
WTO of this new regulation, the Department of Animal Health has 
delayed implementation until June 30. 
 
13. (U) Under the U.S.-ASEAN TIFA, the United States is working with 
ASEAN member states to raise fruit irradiation standards to 
facilitate access to the U.S. market.  Dzung said that MARD has 
received the U.S. questionnaire, and intends to submit the 
information requested so that Vietnamese fruits, such as lychee and 
dragon fruit, stand a better chance of qualifying for import to the 
United States. 
 
Data Protection 
--------------- 
 
14. (U) The USG officials relayed concerns over Vietnam's procedures 
for registering agrochemicals and data protection measures. 
Vietnam's new IP Law and its WTO commitments require Vietnam to keep 
confidential data submitted as part of a registration dossier.  DDG 
 
SIPDIS 
Dzung acknowledged these commitments, and assured that MARD will 
keep dossier data secret and will not rely upon it for future 
license approval.  As a sign of its commitment, Dzung pointed to 
Vietnam's December accession to the International Union for the 
Protection of New Varieties of Plants (UPOV), which entails data 
protection measures. 
 
Labeling Decree 
--------------- 
 
15. (SBU) Bisbee raised concerns over the August 2006 Decree No. 89 
on Labeling of Goods with officials from the Ministry of Trade's 
Multilateral Trade Policy Department.  The Decree appears contrary 
to Vietnam's commitments on shelf-life contained in a May 31, 2006 
exchange of letters between Minister of Trade Truong Dinh Tuyen and 
Deputy United States Trade Representative Karan Bhatia.  In the 
exchange of letters, Vietnam committed to accept voluntary 
manufacturer-determined "best-if-used-by" dates on food products 
except for raw food materials and food additives.  Decree 89, 
however, mandates that all food, foodstuffs and drink labels must 
include an expiry date. 
 
16. (SBU) MOT's Multilateral Trade Policy Department Deputy Director 
Luong Hoang Thai asserted that the May 31 exchange of letters 
applied to the MOH's Food Hygiene Law prohibiting the import of food 
raw materials or additives with less than two-thirds shelf life 
remaining.  In his opinion, the letters commit Vietnam to accept 
"best-if-used-by" dates to permit the import of goods, and do not 
apply to Vietnam's labeling requirements.  Thai reported that per 
the May 31 letters, Vietnam has decided not to implement the 
ordinance on food imports, and will consult with other WTO members 
before instituting any new rules in this area.  Thai continued by 
stating that these actions bring Vietnam in full compliance with its 
commitments. 
 
17. (SBU) Bisbee responded that U.S. negotiators disagree with his 
interpretation of the intent of the letter.  The United States 
understands that the letters relate to the establishment of shelf 
life and not simply the use of shelf life for entry.  He asked for 
MOT's cooperation in seeking revisions to the Labeling Decree. 
 
 
HANOI 00000310  004 OF 005 
 
 
18. (SBU) DDG Thai explained that all products in Vietnam are 
labeled with the same phrase, which directly translates to mean 
"date to use."  He insisted that all domestic and foreign products 
were required to use the same wording, and that regardless, 
Vietnamese consumers would not recognize the difference between 
expiry and "best-if-used-by."  Decree 89 does not distort trade or 
in any way violate Vietnam's commitments, Thai declared.  Vietnamese 
regulations permit the manufacturer to determine the most 
appropriate standard to use in order to determine the "date to use" 
and do not require a mandatory standard for expiration date, said 
Thai. He suggested that the United States provide evidence that the 
Decree distorts trade if it wants to protest further the labeling 
provisions.  Bisbee said he would consult with his USG counterparts 
and would follow up with MOT in the near future. (Note: Foreign and 
domestic food products currently on the market in Vietnam all carry 
a "date to use" mark, confirming that Decree 89 does not change 
existing practice.) 
 
Chemicals Law 
------------- 
 
19. (U) Ministry of Industry's (MOI) International Cooperation 
Department Director Mr. Cao Quoc Hung reported that the MOI is 
completing a three-year drafting process for a new comprehensive 
Chemical Law.  According to Hung, the most recent draft has been 
posted to MOI's website and will soon be available for review in 
English on the OOG website.  The law aims to modernize Vietnam's 
chemical regulations and to comply with APEC commitments on the 
Globally Harmonized System (GHS) for the Classification and Labeling 
of chemicals.  Hung also noted that Vietnam's chemical industry is 
growing rapidly -- 18 percent in 2006 -- and there is a growing need 
for government regulation. 
 
20. (U) USTR's Bisbee encouraged the MOI to have an open dialogue 
with the USG and U.S. chemical industry as it prepares the draft 
law.  U.S. industry wants to help Vietnam establish a manageable 
administrative system.  As a first step, he proposed a digital video 
conference (DVC) with U.S. industry representatives to review and 
understand the draft law better, as well as to gain a clearer 
picture of what the new legislation aims to accomplish.  For 
example, U.S. experts could help Vietnam create a comprehensive list 
of permissible chemicals by combining lists developed by the U.S. 
Environmental Protection Agency (EPA), Japan and Australia.  Bisbee 
also offered to work with MOI to develop chemical registration 
regulations, which will be necessary before this law takes effect. 
 
 
21. (U) Hung thanked the USG for the offers of assistance.  He said 
that MOI is very concerned with ensuring that the final law can be 
effectively implemented and would therefore propose the idea of a 
DVC to his minister.  In response to Bisbee's questions about 
chemical registrations, Hung stated that the GVN intends to 
recognize the chemical lists of the United States, Japan, China and 
the European Union, and therefore chemicals on those lists will not 
be considered "new" to Vietnam.  He explained that after the law is 
posted on the OOG website, it will be available for public review 
and comment for at least 60 days.  Comments received during this 
period will then be incorporated and a new version will be re-posted 
for additional comments.  MOI intends to make a presentation on the 
law before the National Assembly in May with the goal of passing the 
law by the end of 2007. 
 
Trading Rights 
-------------- 
 
22. (U) Vietnam's WTO commitments distinguish between (a) the right 
to import and (b) trading, or distribution, rights (i.e., the 
services of warehousing and distribution).  Ministry of Trade 
officials affirmed Vietnam's commitment to provide the right of 
import for most goods into Vietnam immediately upon WTO accession. 
Distribution services, however, are to be phased in until 2009. 
(Note: Under Vietnam's WTO commitments, a foreign company can 
perform distribution services as a 49 percent partner in a joint 
venture in 2007; up to a 99 percent partner in a joint venture in 
2008; and a wholly-foreign owned company can apply for distribution 
licenses in 2009.  End note.) MOT's Import/Export Department is 
currently finalizing a decree that will codify Vietnam's commitments 
on importation rights.  This version, which should be promulgated in 
the next several weeks, incorporates earlier comments submitted by 
USG negotiators, Multilateral Trade Department DDG Thai said.   MOT 
officials report that Minister Tuyen has approved the draft, which 
is now before the inter-agency process for approval.  USTR's Bisbee 
 
HANOI 00000310  005 OF 005 
 
 
requested to see a draft.  Reminding the MOT that it committed to 
complete the Decree within 30 days of accession, Bisbee asked if the 
ministry could provide an official letter or some other document to 
provide interim coverage until the Decree takes effect. 
Multilateral Trade Department DDG Thai agreed to raise this 
possibility with the minister. 
 
23. (U) The GVN has not yet developed a license application form for 
companies interested in performing distribution services.  Absent an 
official application, MOT's America's Department Deputy Director 
Nguyen Hong Dzung reported that a U.S. firm must first find a local 
partner and then jointly send a letter requesting a license to MOT. 
 
 
Tariff Schedules 
---------------- 
 
24. (U) In meetings with Ministry of Finance (MOF) and Ministry of 
Trade, Bisbee conveyed U.S. industry reports that some Customs 
officials in HCMC continue to use pre-WTO tariff schedules.  MOF 
International Cooperation Department Director General Madame Nguyen 
Thi Bich said that the new tariff schedule, dated December 29, 2006, 
has been distributed to all local customs offices.  She committed to 
follow up with local HCMC Customs offices to verify use of the 
correct schedule.  MOT's Mr. Thai agreed to work with MOF to ensure 
a mechanism exists for companies to recover costs in cases such as 
this. 
 
Pharmaceutical Representative Offices 
------------------------------------- 
 
25. (U) Foreign pharmaceutical companies continue to worry about 
restrictions on the establishment of representative offices in 
Vietnam, Bisbee reported.  MOT officials requested additional 
information about the type of activities foreign pharmaceutical 
firms wish to perform.  USTR's Bisbee explained that it would be 
useful for MOT to sit down with the industry to understand the 
concerns better, warning that the restrictive regulations are 
causing some pharmaceutical companies to consider pulling out of 
Vietnam - something which is in neither country's interests.  MOT 
appeared open to the idea and Bisbee said he would follow up with 
industry representatives. 
 
Customs Valuation 
----------------- 
 
26. (U) Ministry of Finance's Madame Bich reported that MOF 
submitted a draft Decree on Valuations to the OOG in January. 
Several other ministries raised concerns over the draft, however, 
and inter-ministerial discussions are ongoing.  Madame Bich has 
conveyed USG comments on the draft decree to the drafting committee, 
and assured Bisbee that they have been taken into account.  She 
stated that the final language would comply with Vietnam's WTO 
commitments, and hopes the Decree will be finalized by the end of 
February. 
 
Comment 
------- 
 
27. (SBU) Throughout the week's meetings, the GVN interlocutors 
reciprocated the U.S. officials' desire to capitalize on current 
momentum to enhance bilateral trade relations.  Despite the "thorny" 
issues raised in some of these meetings, the discussions were 
productive and atmospherics remained consistently positive.  Though 
the GVN has many issues that will require much work to resolve, this 
visit helped lay the groundwork for further cooperation in making 
sure Vietnam meets its obligations as the WTO's newest member. 
 
28. (U) This cable has been cleared by USTR's David Bisbee. 
 
ALOISI