Cablegate: Vietnam: Ambassador's Call On Mof Vm Tam

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





E.O. 12958: N/A


1 (SBU) Summary: In a meeting September 16, Vice Minister
of Finance Le Thi Bang Tam informed the Ambassador that
Vietnam had concluded its WTO bilateral market access
negotiations with Cuba and Chile, reiterated the GVN's
desire to issue insurance licenses "gradually," and defended
the GVN's auto tax and tariff policy. Besides her planned
meetings with Treasury and State, the Ambassador also
encouraged the Vice Minister to meet with USTR during her
upcoming trip to Washington. She agreed to meet EB PDAS
Donnelly here in Hanoi. End Summary.

Progress on WTO Bilateral Negotiations

2. (SBU) VM Tam told the Ambassador that Vietnam has
completed its bilateral market access negotiations with
Chile and Cuba and expects to finish negotiations soon with
the EU. Additionally, she said the GVN is currently
preparing for ongoing negotiations with South Korea, Japan,
Australia and the United States. VM Tam noted that the GVN
has sent an offer for the 9th Round of Negotiations to the
Embassy addressing tariff reductions, participation in
sectoral initiatives and liberalization of financial
services, and is looking forward to the U.S. response.
(Note: Econ Section received the documents on September 15
and 16 and subsequently sent them via email to EAP/BCLTV,
EB/ EB/TPP/BTA/ANA and USTR. End Note.) VM Tam reiterated
the GVN's longstanding request that the United States
consider Vietnam as a less developed country and agree on
"appropriate" approaches to reaching stated goals. She also
expressed the desire for continuing support and technical
assistance from the United States to help fulfill
requirements necessary for WTO accession.

Investment Issues

3. (SBU) When asked about the status of American companies
pending insurance license applications, VM Tam was not
forthcoming on a schedule for issuance. Echoing the now
standard GVN line, she noted Vietnam's "small" insurance
market and explained the GVN desire to issue licenses
"gradually" for fully foreign-invested companies. (Note:
AIG, which currently has a license for life insurance has
applied for a non-life license. New York Life and ACE-INA
have both applied for life insurance licenses. End note.)
She added that the MOF had recently indicated to these two
firms that the GVN could accelerate license issuance, but
this would be closely associated with whether upcoming
negotiations on WTO accession with the United States were
positive. She also mentioned two other U.S. insurance
brokerage firms in Vietnam, Aon Corporation, which already
has a license, and Marsh and McLennan, which has been
awaiting a license to set up a 100% owned subsidiary since
December 2003. (Note: Neither firm has approached the
Embassy for advocacy End Note.)

4. (SBU) In her efforts to defend the GVN's policy on auto
taxes and tariffs, VM Tam ignored the tariff issue, but
highlighted the National Assembly's 2003 amendment of the
Special Consumption Tax (SCT) law (effective from 1 January
2004,) noting this legislation reduced the SCT on completely
built units (CBU) from one hundred to eighty percent and
harmonized the SCT rates for imported and locally
manufactured or assembled vehicles by the end of 2006.
(Note: She did not, however, explain that this law also
increased the SCT rate for auto kits, which all of the
foreign invested companies use, progressively from five to
eighty percent. According to press reports, MOF has
finished a draft tariff schedule for automobile kits and
spare parts to reduce gradually protection for the
automobile industry. MOF is reportedly consulting with the
auto industry on the draft before submitting the schedule
for PM's approval. End Note.)

5. (SBU) Noting that VM Tam was seeking to meet with
Treasury and State officials in Washington during the Annual
World Bank IMF meetings, the Ambassador suggested that she
might also wish to consider a meeting at USTR and offered
the Embassy's assistance in arranging it. She said that
such a meeting would be very useful if it could be arranged.
She also said that she would be in town for a meeting with
EB PDAS Donnelly during his visit later this month.

6. (SBU) Comment: Vice Minister Tam's remarks showed no
movement in GVN positions and appeared to introduce an added
linkage on the insurance license issue, namely progress on
WTO negotiations. Post suggests that her upcoming USG
interlocutors both here and in Washington stress the need to
move forward on insurance license issuance independently of
and in advance of the WTO negotiations. We also recommend
that they stress the need for the GVN to solve the tariff
increase aspect of the auto issue, a stance clearly
inconsistent with WTO accession. End Comment.

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