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No. 71  Friday April 12, 2002    Page A-2    
ISSN 1523-567X       
Regulation, Law & Economics       
Bureau of National Affairs International Trade Report

Vietnam Reaffirms WTO Commitment; Makes Offer on
Services, Goods Markets       

GENEVA--A senior Vietnamese government official April 10 affirmed his
country's commitment to accelerating its World Trade Organization membership
negotiations, as WTO members reviewed Vietnam's first offers on improving
access to its domestic market for foreign goods and services suppliers.
Speaking at a formal meeting of the WTO's working party on the accession of
Vietnam, deputy prime minister Nguyen Manh Cam said he wanted to "solemnly
reaffirm Vietnam's determination and aspiration to achieve its full
membership in the WTO at the earliest date possible."
"This [working party] session is an important event for Vietnam, as it
signifies that we have basically completed the review of our foreign trade
regime and now enter into a new phase," Cam declared, "namely the phase of
substantive negotiations on market access."
The deputy prime minister, the highest-ranking Vietnamese official to attend
a working party meeting, said that while Vietnam's economy "has recorded
remarkable positive developments and its trade regime is being continuously
adjusted to the principles and standards of the WTO," the "competitiveness
of the economy in general and that of goods and services in particular
remains poor."
Pleading for special treatment, Cam said that he hoped negotiators would
soon reach an agreement on accession terms "that suits Vietnam's particular
conditions...and conforms to the WTO preferential treatments accorded to a
developing country with a low level of development."

U.S. Cool to Plea for Special Treatment
But key trading partners such as the United States, the European Union,
Japan, and Australia showed little interest in addressing Vietnam's request
for additional time to conform to WTO agreements on the application of
sanitary and phytosanitary (SPS) measures, trade-related investment measures
(TRIMs), and technical barriers to trade, insisting that Vietnam should have
the necessary domestic legislation in place by the date of its WTO
accession.
The United States also called on Vietnam to sign on to the so-called
"plurilateral" agreements on trade in civil aircraft and, along with the EU
and Canada, transparency in government procurement. Only a minority of WTO
members have signed on to these agreements, although the United States
routinely asks acceding countries to accept them as part of the membership
negotiations.
Malaysia, Vietnam's partner in the Association of Southeast Asian Nations
(ASEAN), came to Vietnam's defense, urging WTO members to give Vietnam a
transition period to apply agreements in light of its status as a developing
country and reminding the working party that acceptance of the plurilateral
agreements was not obligatory.

Talks on Accession Premature
One Western trade diplomat involved in the working party report said that
Cam's comment that the accession talks were set to move into the negotiating
phase on accession terms were premature.
"It was a good meeting, but we're still very far from the moment where we
can begin the negotiating phase of the process," the diplomat said, speaking
on condition of anonymity. "The exchanges of views on this so far have been
very preliminary."
Ho Seung, the Korean chairman of the working party, suggested that the WTO
secretariat begin developing the initial elements of a working party report
spelling Vietnam's WTO rights and obligations, but countries such as the
United States and Australia said that it was still too early to engage in
such an effort.
The working party session was the fifth to be held since Vietnam applied for
WTO membership in Jan. 1995, with the most recent session taking place in
late 2000. In addition to the goods and services offers, WTO members are
reviewing notifications from Vietnam outlining its action plans for
implementing the WTO's intellectual property (TRIPS), SPS and customs
valuation agreements, its legislative reform program, answers to questions
from trading partners regarding its foreign trade regime, as well as subsidy
and TRIMs programs it currently has in place.
In addition, Vietnam is holding one-on-one negotiations with trading
partners throughout the week of April 8-12 as well as the week of April
15-19 to discuss outstanding issues and begin initial exchanges on the
bilateral trade agreements which must be completed before the membership
negotiations can be successfully completed. Vietnam must finalize agreements
with the nearly 40 WTO members who make up the working party; a bilateral
agreement concluded with the United States in July 2000 was formally
approved by Vietnam's National Assembly last November.

Goods Offer Disappointing
Trade diplomats said the initial market access offer from Vietnam on goods
was generally viewed by working party members as disappointing because of
the high tariffs Hanoi is proposing to maintain on industrial and
agricultural imports. Under the offer, the simplified average tariff rate on
industrial goods would stand at just over 28 percent, with more than half of
the goods listed subject to tariff peaks of 15, 25 and 35 percent.
Agricultural imports would also be subject to high rates, officials said,
with many of the tariff lines falling between 40 and 50 percent. For some
products such as milk, cream, flour and wine, the rates shoot up between 50
and 120 percent.
The initial offer on market access for services was viewed more positively.
The Western diplomat said the offer represented a good basis for further
work due to the fact that it mirrors the concessions offered by Vietnam in
its bilateral trade deal with the United States, although some trading
partners would be pushing Vietnam to further lift some of the establishment
restrictions in areas such as telecommunications and financial services as a
condition for WTO membership.
As in the bilateral agreement with the United States, the Vietnamese offer
on services would give companies in WTO member countries the right to
establish in Vietnam as business cooperatives, joint venture enterprises or
100 percent foreign-owned companies. Resident representative offices of
foreign companies, which many foreign companies have use in the past to
establish a toe-hold in Vietnam, would continue to be prevented from
engaging in any profit-making activities. Companies with invested capital in
Vietnam will also be allowed to lease land from the government for as long
as they continue carrying out business; land in Vietnam continues to remain
under state ownership, an issue that has caused headaches and insecurity for
many firms seeking to set up operations in the country.
In regards to sector limitations, providers of basic telecommunication
services (including private-leased, mobile and satellite) could only
establish in Vietnam through business cooperation contracts with Vietnamese
partners authorized to provide telecom services. Providers of value-added
services such as e-mail and Internet access will also be restricted to firms
partnering with authorized Vietnamese telecom firms, although joint ventures
with up to 49 percent foreign ownership will be allowed within 8 years of
Vietnam's WTO accession.

Financial Services
On financial services, foreign firms would be allowed to provide banking
services (acceptance of deposits and other repayable funds) through
branches, joint ventures (limited to 50 percent foreign equity), joint
financial leasing companies and 100 percent foreign-owned entities. However,
for banking services such as payment and money transmission--including
credit and debit cards, travelers checks, and bankers drafts these services
will be limited to joint venture banks for the first five years after
Vietnam's accession. Bank branches will be prohibited from taking savings
deposits and accepting Vietnamese and foreign currency deposits from
Vietnamese citizens and firms with whom the bank does not have a credit
relationship.
On distribution services, Vietnam is proposing to license a maximum of two
foreign-invested enterprises from the date of accession for wholesaling,
retailing and franchising services. 100 percent foreign-owned distributors
will be allowed to set up shop after accession, with joint ventures (maximum
49 percent ownership) allowed five years after accession.
On legal services, Vietnam would allow branches, joint ventures and 100
percent foreign owned legal offices but will prohibit foreign lawyers from
participating in Vietnamese legal proceedings as defenders or
representatives of their clients. Branch offices would be given five-year
licenses which may be extended. 

By Daniel Pruzin