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Cablegate: Mca Trade Indicator for Vietnam

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

UNCLAS HANOI 001056

SIPDIS

STATE FOR E, EB, and EAP
STATE PASS USTR FOR EBRYAN
STATE ALSO PASS USAID ANE AFERRARA and LBRADY
TREASURY FOR OASIA
USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
BANGKOK FOR USAID

SENSITIVE

E.O. 12958: N/A
TAGS: EAID EFIN ETRD ECON VM
SUBJECT: MCA Trade Indicator For Vietnam


SENSITIVE BUT UNCLASSIFIED - PLEASE HANDLE ACCORDINGLY.

1. (SBU) In clearing the two-page Millenium Challenge
Account Summary on Vietnam, we noted a problem with the data
on Vietnam. On the Economic Freedom Indicator on Trade
Policy, we note that Vietnam's indicator has not changed
since 1999 despite significant changes in trade policy, e.g.
signing, ratification and implementation of the Bilateral
Trade Agreement. We found that this indicator is based on
the Heritage Foundation's Index of Economic Freedom, which
measures trade policy by using the World Bank's weighted
average tariff rate for Vietnam. The Heritage foundation
website contains data as of 2001.

2. (SBU) We have two concerns with this measure. First, the
measure itself is static, not dynamic. It does not capture
the significant shift from non-tariff barriers and quotas to
tariffs in recent years. Such a shift shows clearly that
the GVN is greatly improving the transparency of its trade
regime. The publication last year of a tariff schedule is
another major step forward for Vietnam. Although the
Heritage Foundation Quick Study describes progress for
Vietnam, this is not reflected in the index. Despite these
significant changes, no progress is reflected in the
quantitative data on the website or in what is presented as
the objective criteria for Vietnam in the MCA brief which
remains constant at a level of 5.0 (the lowest score
possible on this indicator's scale).

3. (SBU) Tangible proof that Vietnam's trade policy under
the BTA and other bilateral agreements as well as the ASEAN
trade commitments is changing can be shown by the increase
in trade. To cite the US example: Two-way trade between
Vietnam and the U.S. has risen from about $1.5 billion for
2001 (the BTA took effect in December 2001) to $6 billion at
the end of 2003. Vietnam imported $2 billion from the U.S.
last year. As for overall trade, Vietnam imported about $25
billion and exported about $20 billion. Vietnam's trade
regime may not yet be perfect, but it certainly merits a
better score than others who receive 5.0 in this indicator
such as North Korea, Libya and Burma.

4. (SBU) COMMENT: If we are to achieve the MCA's goal of
convincing governments to change to fair, equitable and
objective rule of law systems, we need strive to insure that
our criteria are objective. END COMMENT.
BURGHARDT

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