VZCZCXRO7753
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #1139/01 2770928
ZNR UUUUU ZZH
P 030928Z OCT 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8573
INFO RUEHHM/AMCONSUL HO CHI MINH 5191
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 001139 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS MBROWN 
SINGAPORE FOR TREASURY 
TREASURY FOR SCHUN 
USTR FOR DBISBEE 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECIN ECON PGOV VM
SUBJECT: REVIEWING THE TRADE AGENDA: TRANSPAC, BIT, IMPORT 
LICENSING, GSP, U.S. VISITS AND DISTRIBUTION 
 
REF: A) Hanoi 1127 (GVN Discusses Economic Situation"); 
B) Hanoi 1072 ("Pharma, IPR and Market Access Top TIFA Agenda"); 
C) Hanoi 871 ("Vietnam Not Rushing Trade Deals"); 
D) Hanoi 345 ("DNSA Price's Visit to Vietnam") 
 
HANOI 00001139  001.2 OF 003 
 
 
¶1. (U) This cable is sensitive but unclassified.  For official use 
only, not for dissemination outside USG channels or posting on the 
internet. 
 
¶2. (SBU) Summary: Embassy Hanoi discussed a number of trade and 
investment agenda items with Government of Vietnam (GVN) officials 
from the ministries of Industry and Trade, Planning and Investment, 
Justice and Foreign Affairs.  From those conversations, Vietnam 
seems to be moving fast in its consideration of the Trans-Pacific 
Strategic Economic Partnership Agreement (Transpac, previously known 
as P4), but has decided that, for the time being, it will only 
observe.  On BIT, the Vietnamese are concerned that they are not 
ready for negotiations, even though they continue to provide 
assurances that there will be a first round before the end of the 
year.  The GVN also says it is focusing on overcoming Generalized 
System of Preferences (GSP) hurdles, and on easing business concerns 
on import licensing and distribution.  End summary. 
 
TRANSPAC 
-------- 
 
¶3. (SBU) The Government of Vietnam (GVN) appears to be moving fast 
on Transpac.  The Ministry of Industry and Trade (MOIT) is leading 
inter-ministerial discussions on Vietnam's position, and appears 
ready to formally state its interest in the pact.  Our MOIT contacts 
told us that on October 2, Minister Vu Huy Hoang would write to the 
Vietnamese Embassy in Washington with instructions to approach the 
United States to indicate that Vietnam wants to join Transpac as an 
observer. 
 
¶4. (SBU) Vietnam has already asked the Mission-funded STAR program 
for assistance in analyzing the impact of joining Transpac.  The 
STAR advisory team is holding off for now, at least until Assistant 
USTR Barbara Wiesel, who is slated to visit Vietnam in mid-October, 
has had a chance to brief the Vietnamese in full about the program. 
 
¶5. (SBU) When Vietnam may issue its first public statements on 
Transpac is still being debated internally.  Although a contact from 
the Ministry of Foreign Affairs speculated that Vietnam may go 
public as early as mid-October during the APEC Symposium in 
Singapore, MOIT officials assured us that a decision has not been 
made and that Vietnam also has a long way to go before it commits 
itself to participating more fully. 
 
NAILING DOWN BIT DATES 
--------------------- 
 
¶6. (SBU) While concerned ministries have told Post that Vietnam will 
hold first-round BIT negotiations before the end of the year (REF 
A), nailing down dates has proved elusive.  The Ministry of Planning 
and Investment (MPI), which has the lead on the BIT, has told post 
that it is not prepared to negotiate -- "we're not even 10% ready," 
the lead negotiator told us.  On October 2, Econoff talked to two 
other negotiating team members, from the Ministries of Foreign 
Affairs and Justice, and they acknowledged not having held any 
discussions on BIT since the two sides committed to launching 
negotiations on June 2 during Prime Minister Dung's visit to 
Washington. 
 
¶7. (SBU) On September 25, the Ambassador wrote letters to MPI 
Minister Vo Hong Phuc and Office of the Government Minister Nguyen 
Xuan Phuc, apprising them of the need to move on scheduling 
negotiations.  The lead negotiator and some members of the 
Vietnamese BIT negotiating team left on September 27 to Canada for 
BIT negotiations with the Canadians.  On October 2, the number two 
BIT negotiator told Econoff that he hoped to be able to offer 
concrete dates "soon" after the group returns from Canada. 
 
GSP: MOVING ON LABOR 
-------------------- 
 
¶8. (SBU) GVN contacts continue to ask post for the latest updates on 
GSP.  In addition to reviewing the public comments, we have told 
them to pay special attention to the upcoming Labor Dialogue in 
Washington on October 17.  The Vietnamese said they are looking 
 
HANOI 00001139  002.2 OF 003 
 
 
forward to addressing labor and IPR areas of concern in order to be 
able to get GSP approval by the end of the year. 
 
IMPORT LICENSING "MESS" 
---------------------- 
 
¶9. (SBU) Our MOIT counterparts acknowledged that the "automatic" 
import license system that the GVN has put in place (REF B) was "a 
mess."  Despite having removed a significant number of imported 
goods from those subject to licensing (most significantly to U.S. 
business concerns, those on auto assembly parts were removed in 
September), they told Econoff that import licensing was giving 
Vietnam "a bad image."  There have been significant industry 
complaints, they told us, and suggested that we concentrate our fire 
in ensuring that the scheme is not extended beyond its sunset date 
of December 2008.  We shared with the MOIT a list of questions that 
USTR is considering raising in Geneva at the WTO Import Licensing 
Committee. 
 
DISTRIBUTION: CENTRAL-PROVINCIAL GOVERNMENT DISCONNECT 
------------------------------------- 
 
¶10. (SBU) At a meeting with MOIT officials on October 1, Econoff and 
Post Commercial Officer raised business complaints about disparate 
regulatory interpretations between the central government and the 
provinces. (Septel)  The MOIT officials advised any U.S. business to 
"go directly to the MOIT" or other central government ministries if 
they ever find themselves in this quandary.  We cited the example of 
Ho Chi Minh City authorities, whom a U.S. law firm complains are 
citing difficulties in issuing distribution sector licenses because 
they lack guiding regulations from the central government.  "They 
have all the guidance that they need, if they [HCMC licensing 
authorities] are timid, come directly to us," the MOIT official told 
us. 
 
¶11. (SBU) Responding to post concerns, the MOIT officials also 
assured us once again that there would be no problems with the 
so-called "Economic Needs Test" (ENT) that applies to large 
retailers, when the distribution sector opens to fully foreign-owned 
businesses in 2009.  The only firms that have been subject to 
something akin to an ENT have been European or Asian, but they do 
not appear to be facing significant problems with its application, 
and the EU trade counselor told us on September 26 that this was not 
among his mission's top concerns.  Although this is of no immediate 
impact to prospective U.S. businesses in Vietnam, Mission Vietnam 
continues to follow the application of this regulation closely. 
 
VISITS TO THE U.S. AND VIETNAM 
------------------------------ 
 
¶12. (SBU) Deputy Prime Minister Hoang Trung Hai, who oversees the 
GVN's trade and investment ministries, is mulling a visit to the 
United States in early November, post has been told.  The visit 
would be built around his participation in a Harvard University 
Kennedy School event, but will include a visit to Washington.  MOIT 
officials told us that, if the trip takes place, DPM Hai would want 
to meet with counterparts at State, the NSC, USTR and Commerce. 
 
¶13. (SBU) The MOIT officials also told us that MOIT Minister Hoang 
will officially invite USTR Schwab to visit Vietnam before the end 
of the year.  "She could bring GSP," they said, half jestingly. 
Indeed, on October 3, Embassy Hanoi received a letter from Minister 
Hoang to USTR Schwab inviting her to visit and discuss "trade and 
economic cooperation issues of mutual conern". (Septel) 
 
¶14. (U) Finally, MOIT informed us of a trade promotion visit to 
Houston, Florida and Washington, DC from October 10 to 22.  The 
mission would apparently be headed by MOIT Americas Department 
Deputy Director General Nguyen Hong Duong and officers from Vietnam 
Trade Promotion Agency (VietTrade), the GVN trade promotion body. 
The group will focus on improving trade promotion, and liaise with 
the Department of Commerce, pursuant to the June 24 Memorandum of 
Cooperation between Commerce and VietTrade 
 
COMMENT 
------- 
 
¶15. (SBU) Comment: Despite continuing macroeconomic difficulties, 
the GVN continues to push its trade agenda.  On September 26, the 
MOIT announced that Vietnam and Japan had finally breached the 
 
HANOI 00001139  003.2 OF 003 
 
 
impasse in their FTA negotiations and would sign one shortly (REF C, 
Septel), coming weeks after sealing pacts with New Zealand and 
Australia.  With the United States, GSP remains at the top of the 
list, but Transpac is moving up fast.  Embassy will continue to push 
for scheduling the first round of BIT talks.  GVN visits to the U.S. 
and the Labor Dialogue present excellent opportunities for us to 
encourage the Vietnamese to keep it up, but also to guide the 
direction of our future engagement.  End Comment. 
 
MICHALAK