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Viewing cable 07HANOI1616, CORRECTED COPY: SOME COMMITMENTS ARE HARDER THAN OTHERS --

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Reference ID Created Released Classification Origin
07HANOI1616 2007-09-11 13:38 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Hanoi
VZCZCXRO3544
RR RUEHHM
DE RUEHHI #1616/01 2541338
ZNR UUUUU ZZH
R 111338Z SEP 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 6308
INFO RUEHHM/AMCONSUL HO CHI MINH 3659
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 HANOI 001616 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS and EEB/OIPE 
STATE PASS TO USTR DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR VM
SUBJECT: CORRECTED COPY: SOME COMMITMENTS ARE HARDER THAN OTHERS -- 
PRODDING VIETNAM ON WTO IMPLEMENTATION 
 
REF: A) HANOI 1212 
 
 B) HANOI 310 
 C) 06 HANOI 2602 
 
(U) This cable is sensitive but unclassified.  Not for Internet. 
This cable is a retransmission of Hanoi 1583, please disregard that 
copy. 
 
1. (SBU) SUMMARY.  Vietnam, widely praised for its progressive and 
aggressive approach toward opening its markets, is finding that 
fulfilling some of its WTO commitments may be harder than it 
thought.  Recently published regulations impose new restrictions on 
foreign importers, potentially forcing them to disband their 
distribution networks and choose a single nationwide distributor. 
An eight month-overdue IPR criminal regulation is nowhere in sight, 
and the GVN now tells us that it will come next year at the 
earliest.  State-sponsored piracy of U.S. broadcast content 
continues unchecked, despite Vietnam's trade commitments in its 
Working Party Report.  Mission Vietnam continues to take every 
opportunity to press all levels of the GVN to its WTO obligations, 
warning that these lapses could erode the country's hard-won 
reputation as a reliable trading partner. END SUMMARY. 
 
BLINDSIDING IMPORTERS WITH A MARKET BARRIER 
------------------------------------------- 
 
2. (U) There was an audible groan from the business and diplomatic 
communities when Vietnam finally issued long-awaited regulations in 
pursuance of its WTO trading rights commitments on July 17 of this 
year.  Among other things, the Trade Ministry's "Circular 9" (akin 
to an Executive Order) forces foreign importers to reduce their 
distribution networks and rely instead on a single local 
distributor.  Foreign importers are concerned that their market 
penetration will be limited if they are forced to rely on a single 
nationwide distributor.  Some sectors, like chemicals, do not even 
have a reliable local distribution network, let alone a distributor 
capable of nation-wide business activities. Foreign-owned 
distributors are not allowed to operate in Vietnam until 1/2009. 
 
3. (U) The restriction on distributorships could be inconsistent 
with Vietnam's WTO commitments since in the Working Party Report 
Vietnam pledged that importers "would be free to select a 
distributor or distributors of their choice" and that Vietnam "would 
not apply any restrictions on the choice of the distributor or 
distributors".  (Note: The hierarchies of legal instruments in 
Vietnam are as follows: laws, which must be enacted by the National 
Assembly; Decrees, which are issued by the Prime Minister; and 
Circulars, which are issued by the relevant ministries to provide 
detailed guidance to implement the higher-level documents.  End 
note.) 
 
4. (SBU) Embassy Hanoi and Congen HCMC have met with U.S. importers, 
local AmCham representatives and the diplomatic community to discuss 
a strategy to urge Vietnam to clarify the meaning and intent of this 
restriction as well as its scope.  Emboffs also met with the 
drafters of Circular 9 at the Ministry of Industry and Trade (MOIT) 
on August 12 and again on August 30 to raise our concerns.  Working 
together with USTR, Mission submitted a list of 13 questions to the 
MOIT asking it to clearly explain how the existing implementing 
guidance fulfills Vietnam's WTO obligations, in preparations for an 
exhaustive review of Vietnam's recent trading right regulations 
during the third week of September. 
 
FROM A BAD CIRCULAR TO A MISSING CIRCULAR 
----------------------------------------- 
 
5. (U) During bilateral WTO accession talks, the GVN promised that 
it would issue a circular criminalizing commercial-scale copyright 
infringement prior to WTO accession and then follow up later with a 
change in its criminal code to bring it into alignment with its WTO 
Trade Related Aspects of Intellectual Property (TRIPS) obligations. 
Eight months after WTO accession, the circular has yet to be issued 
despite repeated and extensive USG lobbying that even included USTR 
providing suggested language on multiple occasions (Refs A and B). 
 
6. (U) Officials from the GVN organ responsible for preparing the 
circular, the Supreme Court (SPC), has informed the Embassy that 
they may not be able to take action until next year.  SPC officials 
claim that they are unable to reconcile the TRIPS language with 
current domestic laws, and that they would prefer to enact the 
criminalization of large-scale IPR infringements once the criminal 
code can be redrafted -- a process that SPC will not begin until 
2008. 
 
7. (SBU) Coordination on WTO compliance issues are clearly a 
challenge for the GVN, as evidenced by the SPC's recent position 
which differs from its discussions with USTR's intellectual property 
 
HANOI 00001616  002 OF 002 
 
 
expert during the Annual BTA Review in June (REF A).  Mission 
continues to stress to the MOIT negotiators who made the commitment 
that they need to remain engaged with the SPC's drafters to reach an 
outcome that meets the obligations undertaken by Vietnam in its 
accession to the WTO. 
 
UNCHECKED SIGNAL PIRACY 
------------------------ 
 
8. (SBU) In another, even clearer example of the GVN's unwillingness 
(or inability) to stop local enterprises from violating Vietnam's 
international IPR commitments, the Television Technology Investment 
and Development Company (VTC) continues to pirate international 
broadcast content, including one U.S.-owned channel, and illegally 
distribute pirated content to an estimated 1.5 million customers. 
VTC's actions are all the more egregious because it is a state-owned 
company, under the control of the Ministry of Information and 
Communications. 
 
9. (SBU) The Embassy, USTR and the broadcast industry have mounted a 
multi-year campaign to compel the GVN to stop VTC from pirating 
content.  While these efforts have at times yielded temporary 
results (VTC removed most U.S.-owned content from its lineup shortly 
following the June BTA Review), VTC has resumed its illicit 
activities.  Ambassador Marine raised this with numerous ministers 
and other GVN authorities over the past several years, as have 
industry leaders.  In recent months, cease and desist letters issued 
by several U.S. companies have led to VTC removing those channels 
from its broadcast package.  Although at the latest check, VTC was 
still illegally distributing foreign channels, including the last 
remaining U.S. channel, MTV.  GVN officials told us on September 7 
that had been removed from VTC's lineup, but industry contacts could 
not immediately confirm this report. 
 
NEXT STEPS 
---------- 
 
10. (SBU) Trade agreement compliance issues have featured 
prominently in Ambassador Michalak's initial consultations with 
Vietnam's leaders.  The annual BTA review and the newly-formed TIFA 
Joint Council will both present additional opportunities to focus 
attention on these issues.  Post will also continue to raise the 
criminal circular and signal piracy in our input into the annual 
Special 301 Review, a tool which has provided some traction with GVN 
authorities over the past several years. 
 
COMMENT: IS A PATTERN EMERGING? 
------------------------------- 
 
11. (SBU) Although there is little evidence of a concerted agenda to 
skirt WTO obligations, it is clear that these cases are not the 
result of carelessness or failure to anticipate the implications of 
Vietnam's trading commitments.  The MOIT drafters told Emboffs that 
there was much interagency discussion on the distributor 
restrictions and that former Minister Tuyen himself agreed to them. 
Although many of our contacts suspect protectionism, ironically the 
biggest losers of the new restrictions are the Vietnamese 
distributors. In the case of cable piracy, the reasons are clearer. 
GVN officials themselves have admitted that "powerful interests" are 
behind VTC -- hinting not-so-subtly at influential corrupt 
officials. 
 
12. (SBU) The failure to criminalize commercial-scale IPR violations 
appears more to be a case of the negotiators and drafters being 
unable to get the necessary inter-ministerial "buy-in," although it 
does not seem to be for lack of effort.  Moreover, the GVN remains 
willing to engage with the USG, and in many cases, U.S. industry 
members on these issues.  Continued and persistent dialogue with 
appropriate GVN authorities should help us move closer to resolution 
on these cases and prevent the development of a more widespread 
pattern of Vietnam failing to meet its international obligations. 
 
13. (U) This cable was coordinated with Congen HCMC and USTR. 
 
MICHALAK