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Cablegate: Vietnam's Prime Minister and Cabinet Endorse Further

VZCZCXRO8407
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #1027/01 2530929
ZNR UUUUU ZZH
P 090929Z SEP 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8414
INFO RUEHHM/AMCONSUL HO CHI MINH 5085
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 02 HANOI 001027

SENSITIVE
SIPDIS

USTR FOR DBISBEE

E.O. 12958: N/A
TAGS: ETRD ECON ECIN EINV VM

SUBJECT: VIETNAM'S PRIME MINISTER AND CABINET ENDORSE FURTHER
ECONOMIC LIBERALIZATION

REF: A) Hanoi 881 (GVN Has Tough Economic Choices Ahead");
B) Hanoi 349 ("Investment Minister Readies for U.S. Trip");
C) State 69664 (D's Meeting With DPM Khiem);
D) Hanoi 871 ("Vietnam not Rushing Trade Deals");
E) Hanoi 345 ("DNSA Price's Visit to Vietnam")

HANOI 00001027 001.2 OF 002


(U) This cable is Sensitive But Unclassified. For official use
only, not for dissemination outside USG channels or posting on the
internet.

1. (SBU) Summary: In meetings with visiting Deputy U.S. Trade
Representative John Veroneau, Prime Minister Nguyen Tan Dung and
members of his cabinet embraced further liberalization for Vietnam's
economy and expressed their desire to look for additional ways to
increase bilateral ties with the United States. The Vietnamese
leaders vowed to move ahead with Bilateral Investment Treaty (BIT)
negotiations, requested an update on their pending request for
eligibility for the U.S. GSP program, and agreed on the wisdom of
expediting U.S. investments in power generation projects and
facilitating full market access for U.S. beef. DUSTR Veroneau told
Dung and his cabinet members that the United States shared their
interest in continuing to pursue expanded trade and investment
opportunities bilaterally, such as with the BIT. He also provided
the Vietnamese with an update on current thinking regarding possible
U.S. participation in the Trans-Pacific Strategic Economic
Partnership Agreement (P4). End summary.

2. (SBU) During his August 25-26 visit to Hanoi, DUSTR Veroneau met
with Prime Minister Dung, Planning and Investment Minister Vo Hong
Phuc, Office of the Government (OOG) Minister Nguyen Xuan Phuc, and
of Trade and Industry Vice Minister Bui Xuan Khu. Veroneau noted
that the Prime Minister's U.S. visit in June had showcased the
potential for taking the U.S. - Vietnam relationship to new levels.
The Vietnamese officials noted the significant macroeconomic
challenges currently facing Vietnam and provided updates on the
government's efforts to manage the impact of rapid growth in trade
and foreign direct investment on the Vietnamese economy (REF A).
Despite the significant challenges facing Vietnam's economic team,
all interlocutors reiterated their focus on continuing to build on
the rapid growth of bilateral relations and in particular referenced
the June Bush-Dung Joint Statement as a roadmap for continued
cooperation.

"ALWAYS READY FOR FURTHER TRADE LIBERALIZATION"
---------------------------------------------

3. (SBU) Prime Minister Dung told DUSTR Veroneau that he credited
Vietnam's economic success to "the WTO and all the other agreements"
that Vietnam has concluded to liberalize its economy. Dung noted
that despite the current macroeconomic challenges, Vietnam would
continue to pursue its policy goal of integrating with the global
economy. "We are always ready for further trade liberalization," he
added. In a separate meeting, OOG Minister Phuc concurred that
there is broad national consensus for moving ahead: "the people are
all in support of further economic development."

MOVING ON THE BIT
-----------------

4. (SBU) DUSTR Veroneau cited the BIT as one way to move the
bilateral relationship forward. His Government of Vietnam (GVN)
counterparts agreed. Trade and Industry Vice Minister Khu said that
"while the Ministry of Planning and Investment has the lead, we are
pushing the BIT because we know that it will increase trade and
investment."

OTHER WAYS TO KEEP MOMENTUM
--------------------------

5. (SBU) DUSTR Veroneau also proposed other ways to keep up the
momentum, such as expediting large energy investment projects on
power generation and gas exploitation projects (REF B), and granting
greater access to U.S. beef exports (currently limited to meat from
animals under 30 months) (REF C), among others. In response to
Vietnamese queries about their pending application for GSP, he urged
them to view the process as an opportunity to tackle long-term
obstacles to expanding the relationship, such as on labor and IPR
protection. "We are working on IPR and labor issues already," OOG
Minister Phuc, "you will see that we do what we say."

U.S. PLANS ON P4
----------------

6. (SBU) DUSTR Veroneau also briefed the Vietnamese about U.S. plans
on P4. He said that the United States would be meeting with the P4
countries, Brunei, New Zealand, Singapore and Chile, in San

HANOI 00001027 002.2 OF 002


Francisco in mid-September. "Soon after that, the Administration
would be in a position to decide" on next steps for the P4,
including expanding the scope of the chapters under negotiation
(investment and financial services) or the composition of the
participants. "The United States sees the P4 agreement as the
potential building block for a broader trading arrangement,"
Veroneau said. Prime Minister Dung and the other members of the
cabinet noted that Singapore and other P4 countries have discussed
the agreement with Vietnam. Prime Minister Dung explained that he
has tasked relevant ministries to provide their views on the
agreement in the near future. Dung expressed interest in knowing
more about the agreement and the intentions of the United States.
"We are all for further integration, regionally and with the United
States," the Prime Minister stated.

COMMENT: VIETNAM READY TO MOVE ON
---------------------------------

7. (SBU) Comment: The eagerness of Prime Minister Dung and his
ministers to engage with DUSTR Veroneau on further economic
cooperation seems to show that the GVN is regaining its footing
after being caught off-balance earlier this year by serious
macroeconomic challenges (REF A, D). The Prime Minister's U.S.
visit seems to have helped, and his staff told us how pleased he was
to hear from DUSTR Veroneau that his trip was seen as successful in
the United States. Nonetheless, recent back and forth over the
timing of BIT negotiations may indicate that the progressive and
pro-market camp still has work to do to allay opposition within the
GVN bureaucracy (REF E). End Comment

8. (U) This telegram was coordinated with USTR.

MICHALAK


1

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