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Cablegate: Vietnam Working On U.S. Mfn Duty Issue

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

UNCLAS HANOI 000889

SIPDIS

SENSITIVE

STATE PLEASE PASS TO USTR EBRYAN
STATE ALSO FOR E, EB AND EAP/BCLTV
USDOC FOR 6500 AND 4431/MAC/AP/OPB/VLC/HPPHO
USDA FOR FAS/ITP/SHEIKH
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ETRD EAGR ECON VM WTO
SUBJECT: Vietnam Working on U.S. MFN Duty Issue

Sensitive but Unclassified -- Please protect accordingly.

REF: (A) HANOI 696 (B) HANOI 821

1. (SBU) SUMMARY: Econcouns met MOT DG for Multilateral
Affairs Khanh to discuss the MFN duty issue on March 26.
Khanh said he was working to solve this issue, but that some
in the GVN believed that since textiles were excluded from
the BTA, anything in a textile deal with the EU was not
subject to MFN. Econcouns stressed that the textile
exclusion applied to quotas only and urged Khanh to get it
right to avoid losing GVN credibility on WTO accession.
Khanh asked for another week to work on this before the USG
took further action. Khanh agreed to seek to address other
examples of GVN violation of WTO principles. He confirmed
that the GVN was still sticking to the target set in Geneva
for WTO accession, though the Minister was no longer going
to say this publicly for domestic political reasons. END
SUMMARY.

2. (SBU) On March 26, Econcouns met with MOT Director
General for Multilateral Affairs Tran Quoc Khanh to discuss
the GVN's refusal to grant lower tariffs on wine and
motorcycles to the USG despite the fact that the BTA gave
MFN to the U.S. Khanh is the deputy head of the GVN WTO
negotiating team and the de facto chief negotiator.
Econcouns began by expressing concern about the GVN's
refusal to honor its MFN commitment to the U.S. in the BTA
in the case of lower tariffs on wine and motorcycles granted
to the EU. Khanh replied by citing a Vietnamese proverb to
the effect that he was being blamed for what others had
done. He explained that some in Vietnam interpreted the
exclusion of textiles from the BTA to refer to both textile
quotas and tariffs. They believed that this would also
apply to the GVN's other bilateral commitments to MFN.

3. (SBU) Econcouns stressed that this exclusion applied
only to quotas, not to tariffs. MFN was simply not
negotiable, he added. Khanh claimed that the EU also had at
least two other textile agreements that covered more than
quotas (Brazil and Sri Lanka). Econcouns stressed the need
for GVN to get the MFN issue straight and get it right to
avoid losing the credibility gained during the December
Working Party Talks in Geneva. Should the GVN fail to do
so, it was very hard to see them making progress on a WTO
accession, he said.

4. (SBU) Khanh asked for another week to try to work on this
issue before the U.S. took further action. He expressed
concern that the Ambassador was raising the issue during his
trip to Washington. Econcouns did not comment on this
remark, but expressed hope Khanh would achieve a positive
result in the coming week.

5. (SBU) Econcouns went on to raise another example of non-
compliance with WTO principles: the GVN requirement that
rice for export to Iraq be sold only to state trading
companies. Professing ignorance, Khanh asked for greater
detail on this and any other issue in this category so that
he could work to correct them. Econcouns agreed to provide
more detailed information.

6. (SBU) Khanh said that he was working hard on the WTO
accession and he hoped the USG and GVN would be able to have
a bilateral in the near future, perhaps around the time of
the BTA joint committee meeting. Econcouns agreed to convey
this to Washington.

7. (SBU) Noting that Trade Minister Tuyen had referred to a
target of 2005 or perhaps 2006 in his meeting the previous
week with the Ambassador and visiting textile negotiators,
Econcouns asked whether the GVN had changed its target date.
Khanh replied that the target was still the one the GVN had
set in December in Geneva, namely completing paperwork by
late 2004 or early 2005 and acceding by spring or summer of
2005. Tuyen's statement had merely been an attempt to be
realistic publicly for domestic political reasons while
still striving for the timing set in Geneva, he said.
PORTER

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