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Cablegate: Pascal Lamy Blinks in Hanoi

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

UNCLAS SECTION 01 OF 02 HANOI 002798

SIPDIS

SENSITIVE

STATE FOR EB FOR BELLAR AND EAP/BCLTV
STATE ALSO PASS USTR DWOSKIN, BRYAN, and KLEIN
USDOC FOR LASHLEY AND 4431/MAC/AP/OPB/VLC/HPPHO
USDOC ALSO FOR ITA/TD/OTEA/JJANICKE AND ITA/TD/SIF/CMUIR
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ETRD ECON VM WTO BTA
SUBJECT: PASCAL LAMY BLINKS IN HANOI

1. (U) Summary: In Hanoi for the Fifth Asia-Europe Meeting
(ASEM-5), EU Trade Commissioner Lamy closed out the EU's
bilateral negotiations with Vietnam by accepting low levels
of commitments not seen in recent accessions, especially on
services. In a speech to the European Chamber of Commerce,
he previewed the deal, took a swipe the BTA and the U.S.
case on Airbus subsidies recently filed to the WTO. End
Summary.

2. (U) On October 7, EU Trade Commissioner Pascal Lamy came
to Hanoi to take part in the Fifth Asia-Europe Meeting (ASEM-
5). His WTO negotiating team had been involved in
negotiations lasting into the early morning hours with their
Vietnamese counterparts most of the week. Lamy took time out
of his October 8 meetings with other partners as well as the
GVN to give a luncheon speech to the European Chamber of
Commerce that ECON/C attended.

3. (SBU) Just before Lamy arrived to speak, the EC
Ambassador to Hanoi told ECON/C privately that negotiations
had been difficult because the Vietnamese were tough
negotiators. Lamy and Trade Minister Truong Dinh Tuyen had
concluded a deal on goods at 3 a.m. October 8, but services
talks were ongoing. Problematic sectors included telecom,
financial services and distribution. Noting that he did not
expect a deal absent a breakthrough, the EC Ambassador said
he was not sure how Lamy would characterize the situation in
his public remarks.

4. (U) Lamy said that as Vietnam's largest trading partner,
the EU was "sponsoring" Vietnam for accession. As part of
its sponsorship, the EU would seek to provide a "realistic
bilateral deal to protect Vietnam from the excessive demands
made by other partners." He said that it was too early to
tell whether there could be a deal with Vietnam, but there
had been progress on WTO market access negotiations.
Despite progress on goods, basic disagreements remain on
market access for services, which both sides recognize as
being most difficult. Lamy mentioned telecom, courier,
transport, distribution, environmental, tourism and "some"
financial services as being hard areas. With a precise idea
of Vietnam's "red lines," he would need to see whether these
might fall within the political parameters of a deal, Lamy
said. There might be room at the political level for a
deal, but Lamy acknowledged he would not know this until
later that day or, more likely, the following day.

5. (U) Lamy also noted his preference for multilateral trade
deals (i.e., WTO) over bilateral deals, which he
characterized as less open and transparent since all parts
were not published "as we know from the U.S. Bilateral
Investment Treaty." (Note: We believe that he meant the
BTA.)

6. (U) Lamy also took the opportunity to describe the Boeing
and Airbus "subsidies" as "apples and pears." Subsidies for
Airbus were completely transparent unlike those for Boeing,
he opined. He noted that he was certain that the timing of
the filing of the U.S. case to the WTO had nothing to do
with U.S. politics.

7. (U) On the following day, October 9, Lamy and Trade
Minister Tuyen announced a deal in their bilateral market
access negotiations. Lamy said that with this deal, the EU
wanted to set a benchmark to allow Vietnam, as a low income
developing country, to open its economy with the necessary
precautions and transitions and wanted other trade partners
to understand this. He said that Vietnam had committed to
an average 16 percent tariff level on goods, between
Cambodia's (22 percent) and China's (below 10 percent),
which is a good reflection of Vietnam's level of
development. The EU showed flexibility regarding some "red
lines" of Vietnam, which he attributed to the economic
transition process in Vietnam. He noted for example the 30
percent equity cap of investment in Vietnamese companies and
the limitation of foreign ownership in telecoms. This is
about comparable to the Chinese commitments five years ago,
he observed.

8. (SBU) Comment: In recent weeks, our EU colleagues had
been quite sober in assessing prospects for a bilateral EU-
Vietnam WTO deal during ASEM. Apparently more interested in
scoring points with the Vietnamese and others than in
improving market access for the firms he represents, Lamy
closed out the EU's bilateral negotiations. In doing so,
the EU settled for low levels of commitments not seen in
recent accessions especially on services. Minister Tuyen
confirmed to the Ambassador on October 12 that the EU had
left the hard issues for the United States and other
countries. If the GVN recognizes that the EU bar is
artificially low, perhaps they will remain realistic and
flexible when they come to Washington in late October. End
comment.
MARINE

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