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Cablegate: Vietnam Labelling: Made in Wherever -- Response

This record is a partial extract of the original cable. The full text of the original cable is not available.

111027Z Oct 01

2001HANOI02634 - UNCLASSIFIED

UNCLASSIFIED PTQ7953

PAGE 01 HANOI 02634 01 OF 02 121223Z
ACTION EAP-00

INFO LOG-00 AID-00 CEA-01 CIAE-00 CTME-00 DODE-00 ITCE-00
SRPP-00 EB-00 EXME-00 E-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 ITC-01 LAB-01 MOFM-05 MOF-03
AC-01 NSAE-00 NSCE-00 OES-01 OMB-01 OPIC-01 PM-00
ACE-00 SP-00 IRM-00 STR-00 TEST-00 USIE-00 PMB-00
DRL-02 G-00 NFAT-00 SAS-00 /018W
------------------2E11B5 121433Z /38
FM AMEMBASSY HANOI
TO SECSTATE WASHDC PRIORITY 4347
INFO AMCONSUL HO CHI MINH CITY
ASEAN COLLECTIVE
USDOC WASHDC
USDA WASHDC
DEPTTREAS WASHDC

UNCLAS SECTION 01 OF 02 HANOI 002634

SIPDIS

STATE ALSO PASS USTR

E.O. 12958: N/A

TAGS: ETRD KTEX VM
SUBJECT: VIETNAM LABELLING: MADE IN WHEREVER -- RESPONSE

REF: A) STATE 163735

UNCLASSIFIED

PAGE 02 HANOI 02634 01 OF 02 121223Z
B) HO CHI MINH CITY 833

1. WE RAISED OUR CONCERNS OVER RECENT REPORTS THAT VIETNAM
HAD SUSPENDED THE APPLICATION OF COUNTRY OF ORIGIN LABELING
REQUIREMENTS IN ITS NEW LABELING LAW WITH MINISTRY OF TRADE
(MOT) VICE MINISTER LUONG VAN TU IN LATE SEPTEMBER; MOT
INDICATED THEY WOULD REVIEW OUR REQUEST. WE STRESSED THAT
THE ORIGINAL REGULATION WAS A POSITIVE STEP FOR VIETNAM AND
HELPED ASSURE THAT DOMESTIC REGULATIONS PREVENTED ABUSES BY
ILLEGAL TRANSSHIPPERS OR OTHER TYPES OF FRAUD. PER REF A,
WE URGED VIETNAM TO RESCIND THE SUSPENSION AND RESTORE THE
REGULATION TO ITS ORIGINAL EFFECTIVENESS.

2. WE WERE ABLE TO FOLLOW UP WITH VICE MINISTER TU DURING
THE RECENT VISIT OF EAP/BCLTV DIRECTOR JUDITH STROTZ
(SEPTEL). TU SAID THIS WAS AN ISSUE WITH WHICH HE WAS VERY
FAMILIAR AS IT WAS UNDER HIS DIRECT SUPERVISION. THE
REQUIREMENT THAT ALL EXPORTED GOODS BE LABELED "MADE IN
VIETNAM" HAD BEEN SUSPENDED ONLY FOR A LIMITED NUMBER OF
COMPANIES PRODUCING GOODS IN EXPORT-PROCESSING ZONES UNDER
SPECIFIC CONTRACTS THAT PREDATED THE NEW LAW. HE NOTED THAT
THE SUSPENSION OF THE REQUIREMENT HAD BEEN APPROVED BECAUSE
THESE COMPANIES HAD COMPLAINED THAT THEIR EXISTING PRE-
LABELING LAW CONTRACTS REQUIRED THEM TO DELIVER PRODUCTS
WITHOUT THE LABELS, AND THUS REQUESTED THE CONTRACTS BE
GRANDFATHERED. HOWEVER, TU STRESSED THIS SUSPENSION OF THE
REQUIREMENTS WOULD ONLY APPLY TO PRODUCTS DELIVERED UNDER
THESE CONTRACTS AND ONLY UNTIL THE CONTRACTS WERE FULFILLED.
ANY NEW CONTRACTS THESE COMPANIES CONCLUDED WITH FOREIGN
BUYERS WOULD NEED TO COMPANY WITH THE NEW LABELING
REQUIREMENTS. TU EMPHASIZED THAT VIETNAM, AND HE
UNCLASSIFIED

PAGE 03 HANOI 02634 01 OF 02 121223Z
PERSONALLY, IS VERY SERIOUS ABOUT FIGHTING COMMERCIAL FRAUD.

3. ECON/C SOUGHT CLARIFICATION AND ASSURANCES FROM TU THAT
SUSPENSION APPLIED ONLY TO THOSE FEW CASES AND THAT ONCE
SUSPENSION RAN OUT, VIETNAM WOULD NOT EXTEND IT OR APPROVE
ANY MORE SHIPMENTS OF PRODUCTS WITHOUT PROPER LABELING. TU
CONFIRMED THAT THIS WAS THE CASE.

4. IN SEPARATE CONVERSATIONS, HOWEVER, WITH THE DIRECTOR OF
MOT'S QUALITY MANAGEMENT AND MEASUREMENT DEPARTMENT, MR. LE
MINH TAM, WE WERE PROVIDED A DIFFERENT DESCRIPTION OF THE
POLICY CHANGE. (NOTE: MOT'S QUALITY MANAGEMENT AND
MEASUREMENT DEPARTMENT, WHICH REPORTS TO VICE MINISTER TU,
HAS DIRECT REGULATORY JURISDICTION OVER THE COUNTRY-OF-
ORIGIN LABELING ISSUE. END NOTE). ACCORDING TO TAM, THE
ORDER ISSUED BY THE PRIME MINISTER SUSPENDING THE LABELING
REQUIREMENT ALLOWS VIETNAM CUSTOMS TO WAIVE THE COUNTRY-OF-
ORIGIN LABELING REQUIREMENT ON EXPORTED GOODS FROM ANY
COMPANY THAT REQUESTS SUCH A WAIVER. THE PM'S ORDER,
ACCORDING TO TAM, DOES NOT LIMIT APPLICATION OF THE WAIVER
TO ANY SPECIFIC COMPANIES, PRODUCTS OR CONTRACTS. HE DID
CONFIRM THAT THE PM'S ORDER EXTENDED THE AUTHORITY TO WAIVE
THE RULES ONLY THROUGH DECEMBER 31, 2002. TAM DECLINED TO
PROVIDE EMBASSY A COPY OF THE PM'S ORDER, ASSERTING IT WAS
NOT A PUBLIC DOCUMENT, BUT ONLY AN INTERAGENCY
COMMUNICATION.

5. WHEN WE POINTED OUT THE INCONSISTENCIES BETWEEN WHAT TAM
AND VICE MINISTER TU HAD TOLD US, TAM ACKNOWLEDGED THERE WAS
CONFUSION OVER HOW THE WAIVERS SHOULD BE APPLIED. HE NOTED
MOT HAD NOT FORESEEN MANY OF THE ISSUES THE WAIVER HAD
UNCLASSIFIED

PAGE 04 HANOI 02634 01 OF 02 121223Z
RAISED AND WAS TAKING ANOTHER LOOK AT THE ISSUE. WHEN WE
FURTHER NOTED THAT THE LACK OF TRANSPARENCY AND CONSISTENCY
IN THE APPLICATION OF THE RULES WAS IN CONTRADICTION WITH
VIETNAM'S BTA OBLIGATIONS, TAM ADMITTED THE RULE WOULD NOT
WITHSTAND SCRUTINY ONCE THE BTA WAS IMPLEMENTED AND IT WOULD
LIKELY NEED TO BE WITHDRAWN AT THAT TIME.

6. SEPARATELY, ON A RECENT VISIT TO HAIPHONG'S EXPORT
PRODUCTION ZONES, ECON/C HAD AN OPPORTUNITY TO RAISE THIS
ISSUE WITH A NUMBER OF FIRMS PRODUCING FOOTWEAR AND TEXTILES
AND THEIR STATEMENTS ECHOED WHAT WE HEARD FROM TU. THEY
WERE CLEARLY AWARE OF THE LAW AND THE TEMPORARY SUSPENSION
IN SOME LIMITED CASES. SOME FIRMS' PRODUCTS WERE LABELED,
SOME WEREN'T, ALTHOUGH ALL THE FIRMS STATED THAT PER LOCAL
LAW, THE CERTIFICATES OF ORIGIN CLEARLY INDICATED VIETNAM AS
THE SOURCE OF THE PRODUCTS.

7. THE EXPORT FIRM MANAGERS WERE VERY OPEN AND UP FRONT
ABOUT THE LABELING REQUIREMENTS OF THEIR FOREIGN
CONTRACTORS. ONE PRIVATE VIETNAMESE-TAIWANESE JOINT VENTURE
WAS PRODUCING FOOTWEAR FOR DEBENHAM'S DEPARTMENT STORE IN
THE UK AND ALL SHOES AND BOXES WERE CLEARLY LABELED "MADE IN
VIETNAM". THE MANAGER CONFIRMED THAT THE LABELS WERE A
SPECIFIC REQUIREMENT BY THE IMPORTER AND WERE SUPPLIED BY
THE FOREIGN PRODUCTION PARTNER. A SECOND SOE-TAIWAN JOINT
VENTURE WAS EXPORTING TO SHOES TO THE TAIWANESE MARKET -
SANS LABELS PER THE CONTRACTOR'S REQUIREMENT. ANOTHER JOINT
UNCLASSIFIED

PAGE 02 HANOI 02634 02 OF 02 121224Z
VENTURE TEXTILE FIRM WAS PRODUCING HIGH-QUALITY KNITWEAR
UNDER THE BRAND NAME "BETTY BARCLAY" WHICH WAS APPARENTLY
INTENDED FOR THE GERMAN MARKET (ACCORDING TO THE ATTACHED
BRAND LABELS) BUT NO WHERE WAS LABELED "MADE IN VIETNAM",
NOT EVEN ON THE SHIPPING BOXES WHICH WERE ADDRESSED TO THE
CONTRACTOR IN TAIWAN.

8. COMMENT: TU'S ASSURANCES THAT THE SUSPENSION OF THE
RULE APPLIED ONLY TO GRANDFATHERING SEVERAL EXISTING
CONTRACTS FOR A STRICTLY LIMITED PERIOD WERE WELCOME IF
ACCURATE, BUT OUR CONVERSATIONS WITH MOT STAFF RAISE SERIOUS
QUESTIONS ABOUT HOW THE RULES ARE ACTUALLY BEING APPLIED.
WE WILL CONTINUE TO PRESS MOT FOR A CLEAR EXPLANATION AND
ASSURANCES THAT THE WAIVER OF THE COUNTRY-OF-ORIGIN
REQUIREMENT WILL BE TERMINATED ASAP.

PORTER

UNCLASSIFIED

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