VZCZCXRO4717
RR RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #0345/01 0860828
ZNR UUUUU ZZH
R 260828Z MAR 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7465
INFO RUEHHM/AMCONSUL HO CHI MINH 4486
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 03 HANOI 000345 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USTR FOR BISBEE AND CLAMAN 
STATE FOR EEB/IFD/OIA GOETHERT 
SINGAPORE FOR TREASURY 
BANGKOK FOR JNESS 
TREASURY FOR SCHUN 
COMMERCE FOR A/S SPOONER AND SSU 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINV KIPR OVIP PGOV VM
SUBJECT:  DNSA PRICE'S VISIT TO VIETNAM 
 
HANOI 00000345  001.2 OF 003 
 
 
¶1.  (SBU) Summary:  Assistant to the President and Deputy National 
Security Adviser for International Economic Affairs Daniel M. Price 
visited Hanoi for official meetings on March 20-21.  He received 
assurances of Vietnam's interest on a BIT, on addressing IPR issues, 
and on USG technical assistance on bond market development.  The 
Government of Vietnam (GVN) also queried Price on the Generalized 
System of Preferences (GSP) and on designation of Vietnam as a 
market economy.  Press coverage was significant and very positive. 
End Summary. 
 
MPI MINISTER PHUC SAYS VIETNAM INTERESTED IN A BIT 
--------------------------------------------- -- 
 
¶2. (SBU) In a March 21 meeting, Planning and Investment (MPI) 
Minister Vo Hong Phuc told Deputy National Security Adviser (DNSA) 
for International Economic Affairs Daniel Price that concluding a 
Bilateral Investment Treaty (BIT) would be "very significant," and 
that it would help push U.S. investment and the overall U.S.-Vietnam 
relationship to a higher level.  Noting that Vietnam recently signed 
a BIT with Japan, Phuc said he "looks forward to concluding" one 
with Washington as well.  Phuc thought that experts from both sides 
"should meet more regularly" and step up efforts "to conclude an 
agreement."  Phuc told the DNSA that the GVN is "politically 
committed" to negotiating a BIT and stressed that the experts going 
with the Minister to the United States next month will be prepared 
to discuss the agreement.  (Note: We view Phuc's comments as 
significant because we will need high-level commitment to force a 
reluctant GVN bureaucracy to negotiate a BIT.) 
 
¶3. (SBU) Minister Phuc also noted that Vietnamese business people 
also need to learn more about U.S. laws and regulations, which is 
partly why a host of local business leaders will accompany him on 
his trip to the United States in the second week of April.  DNSA 
Price expressed his interest in seeing Phuc in Washington and 
emphasized that the two sides must seize opportunities to push BIT 
talks forward because "negotiation resources are scarce." 
 
¶4. (SBU) Minister Phuc agreed that creating a transparent, 
predictable and stable environment is critically important to 
drawing more foreign investment to Vietnam.  Vietnam needs to 
attract more U.S.-based strategic investors, he added. He claimed, 
however, that Vietnam deserves "preferential treatment" because of 
its developing country status.  In clarifying this point, Phuc 
pointed to the issues of technology transfer, investment market 
openness and "favorable conditions" for exporters.  DNSA Price 
responded that in almost all cases in the U.S., foreign investors 
are treated the same as U.S. domestic companies.  Moreover, Vietnam 
would have a chance to raise national treatment exceptions if it 
enters into BIT negotiations. 
 
MOF WELCOMES TECHNICAL ASSISTANCE, EXPLAINS FINANCIAL SERVICES 
--------------------------------------------- 
 
¶5. (SBU) In a cordial meeting at the Ministry of Finance (MOF), 
Vice-Minister Tran Xuan Ha reviewed, in comprehensive detail, 
Vietnam's progress on implementing macro-economic reform and its WTO 
commitments, despite the fact that it is a developing country that 
comes from a "low starting point."  Ha praised U.S. technical 
assistance, including USAID's STAR program, and noted the MOF's 
"improved relationship" with the U.S. Department of Treasury, which 
is now providing the GVN with key technical assistance on tax, 
insurance and SME credit guarantee.  Ha was enthusiastic that the 
GVN would soon be receiving more assistance from Treasury to develop 
Vietnam's capital and debt markets. 
 
¶6.  (SBU) DNSA Price emphasized to Vice Minister Ha that capital 
market liberalization is a very high U.S. priority.  In particular, 
he asked about Vietnam's commitment to allow access to 100 percent 
foreign-owned fund management companies and securities firms.  From 
a U.S. investment banking perspective, Price said, activities of 
underwriting, securities trading, asset management and financial 
advisory are often all integrated, and he expressed concern about 
treating such services separately from securities / fund management 
firms and thus creating unnecessary over-regulation and division. 
Ha explained that Vietnam hoped to liberalize such financial service 
markets earlier than its 2012 WTO commitment.  He further explained 
that Vietnam's current regime had different regulations for 
securities firms and asset management firms but that 
Vietnamese-owned firms could currently provide such broad and 
integrated services.  Ha said it was the MOF's intention to allow 
100 percent foreign-owned asset management companies to operate in 
 
HANOI 00000345  002.2 OF 003 
 
 
Vietnam before the 2012 WTO deadline. 
 
MOIT ON GSP AND MARKET STATUS 
----------------------------- 
 
¶7.  (SBU) In his meeting with Industry and Trade Minister (MOIT) Vu 
Huy Hoang, DNSA Price again raised the BIT, calling it the "next 
critical step" in the U.S.-Vietnam economic partnership.  Price, 
however, warned Hoang that Vietnam must do more to implement and 
uphold intellectual property rights (IPR) under the WTO and 
Bilateral Trade Agreement. While Hoang agreed there was more work to 
do, he said the GVN had been striving to fulfill its commitments 
under these agreements. 
 
¶8.  (SBU) Price next encouraged the GVN to open its markets to U.S. 
beef, following a recent endorsement by the World Organization for 
Animal Health (OIE) that designated U.S. beef products as safe for 
global trade.  Hoang replied that the Vietnam's Ministry of 
Agriculture and Rural Development (MARD) would take the lead on beef 
imports and would continue to work with the United States on this 
issue. 
 
¶9.  (SBU) DNSA Price also endorsed further economic integration in 
East Asia and observed that the ASEAN region is the United States' 
number one trading partner and fifth largest export market.  Hoang 
said Vietnam highly appreciated the U.S.'s active relationship with 
ASEAN and noted that President Nguyen Minh Triet had just ratified 
the landmark ASEAN Charter the previous day, making Vietnam the 
fifth ASEAN nation to do so (after Singapore, Burma, Laos and 
Malaysia).  The Charter, signed in 2007, aims to commit ASEAN 
members to promote human rights and democratic principles. 
 
¶10.  (SBU) Min. Hoang also told DNSA Price and the Ambassador that 
Vietnam intends to apply for GSP.  Both Price and the Ambassador 
observed that IPR and labor are two areas that remain particularly 
problematic for Vietnam and could hinder its chances for GSP 
consideration. 
 
¶11.  (SBU) Turning to Vietnam's current designation as a "non-market 
economy," Hoang asked if the U.S. Department of Commerce could 
evaluate individually, rather than collectively, the six criteria 
used to determine market economy status.  Hoang said this 
methodology would allow the GVN to focus exclusively on the problem 
areas while demonstrating to its regional trade partners that it had 
satisfied some of the criteria.  Price replied that he did not 
believe that a decision on less than all six criteria would make 
much of a difference but said that he would pass along the message 
to Commerce. 
 
OOG'S PHUC ON VIETNAM'S COMMITMENTS, IPR AND BEEF 
--------------------------------------------- - 
 
¶12.  (SBU) Office of Government Minister-Chairman Nguyen Xuan Phuc 
warmly welcomed DNSA Price to Vietnam, on his own and on behalf of 
the Prime Minister, noting that he personally appreciated Price as a 
trusted interlocutor on trade issues due to his "open, honest and 
straightforward approach."  Chairman Phuc highlighted his country's 
sincerity in fulfilling its BTA and WTO commitments.  He reassured 
Price of the GVN's resolve to continue to establish a market-based 
economy and to open the economy in sensitive sectors, including 
insurance, finance and banking. 
 
¶13.  (SBU) DNSA Price congratulated Phuc for Vietnam's recent 
progress, and expressed his confidence that the country is now ready 
to take the next step of beginning BIT discussions with the U.S.  In 
particular, the DNSA noted that it will be necessary to show 
continued progress on IPR protection in Vietnam as well as expanding 
market access for U. S. beef.  Noting that his team had discussed 
both issues earlier in the day during the TIFA Senior Officials 
Meeting (Septel), Chairman Phuc reiterated the Prime Minister's 
recent directive on setting criminal penalties for commercial-scale 
IPR violations as well as Vietnam's determination to resolve market 
restrictions for beef to the satisfaction of both parties. 
 
¶14.  (SBU) DNSA Price told the OOG Chairman that he would be holding 
a press conference directly following his meeting at the OOG, where 
he intended to publicly commend the GVN for moving toward greater 
administrative predictability, consistency and transparency through 
its Project 30 (the GVN's new administrative reform project).  Phuc 
thanked the DNSA for U.S. assistance programs like STAR and the 
National Competitive Initiative (VNCI) in support of its 
 
HANOI 00000345  003.2 OF 003 
 
 
administrative reforms efforts and requested that the United States 
give serious consideration to providing further support.  Phuc 
closed the session by again thanking Price for his openness and 
Mission Vietnam for being a reliable partner. 
 
VISIT GETS POSITIVE PRESS COVERAGE 
---------------------------------- 
 
¶15.  (SBU) Price closed the day with an open press event for local 
and foreign journalists.  After delivering remarks on his earlier 
meetings, the bilateral relationship (including the BIT) and 
Vietnam's regional and global integration, Price took questions from 
a number of reporters.  British (BBC), U.S., Chinese, and many 
domestic outlets carried extensive positive coverage of the visit in 
the following days.  Domestic press focused on the DNSA's forecast 
that Vietnam would weather is current inflationary spell, his praise 
for Project 30, and his message on strengthening bilateral trade 
ties. 
 
¶16.  (U) This cable was cleared with DNSA Price prior to his 
departure from Vietnam. 
 
MICHALAK