Vietnamese Silicon Valley Network

The U.S. and Vietnam late last week launched negotiations for a
bilateral trade and investment framework agreement (TIFA), and Vietnam
pressed the U.S. for eligibility for preferences under the U.S.
Generalized System of Preferences (GSP). Vietnam views a bilateral
TIFA and GSP as prerequisites for a free trade agreement, Vietnamese
officials said.

U.S. Trade Representative Susan Schwab and Vietnamese Deputy Prime
Minister Pham Gia Khiem in a March 16 meeting agreed to the TIFA
negotiations, according to a March 19 statement.

USTR views it as a goal to conclude the TIFA negotiations by the time
Vietnamese President Nguyen Minh Triet visits the U.S. for the first
time as president, according to a USTR spokesman who added this is not
a “hard deadline.” Triet is expected to visit Washington this year in
either June or July. Bhatia and Khiem, however, on March 16 each
simply remarked that this visit could take place some time this year,
and did not predict the TIFA would be completed by then.

The U.S. has a TIFA it negotiated in 2006 with the Association of
Southeast Asian Nations, of which Vietnam is a member. However, a
bilateral TIFA would provide a forum for monitoring implementation of
Vietnam’s commitments under its 2006 World Trade Organization
accession agreement and a 2001 bilateral trade agreement with the
United States, USTR said.

It would also provide a formal dialogue to “discuss new initiatives,”
according to the USTR statement. A USTR spokesman acknowledged these
initiatives could ultimately include an FTA, but said they are more
likely to focus first on securing additional intellectual property
rights and market access commitments.

The statement said a bilateral TIFA would be consistent with the Bush
Administration’s Enterprise for ASEAN Initiative, which was created in
October 2002 with the goal of strengthening commercial ties in the
strategically important Southeast Asian region.

Regarding an FTA, private-sector sources said Vietnam has already
committed through its bilateral WTO accession agreement to implement
much of the language that the U.S. seeks with its FTA negotiating
partners. As a result, it would be challenging for Vietnam to take on
many further commitments in the immediate future, one source
speculated.

However, if the two countries launch FTA talks, Vietnam will have
relatively fewer remaining commitments to make than some other
countries have, private-sector sources said.

On GSP, the most significant hurdle preventing Vietnam from
eligibility is its status as a country dominated or controlled by
communism, according to private-sector sources. It must also satisfy
other criteria laid out in GSP’s governing statute, after first
submitting to the U.S. government a formal petition for eligibility.
Vietnam’s January 2007 accession to the WTO satisfied one of these
requirements.

A USTR spokesman said Vietnam is “interested in [eligibility for] GSP
and made their interest known at the Friday meeting,” but stopped
short of saying Vietnam had made a formal request for GSP eligibility.
“The TIFA will provide a forum for explaining the [GSP] eligibility
criteria laid out in the statute,” the spokesman said.

He did not elaborate on USTR’s response to Vietnam’s request. However,
after a March 16 lunch before the Schwab-Khiem meeting, Deputy USTR
Karan Bhatia told Inside U.S. Trade that he anticipated a discussion
of GSP in the meeting, which he was also attending, because GSP is a
“subject of mutual interest.”

At the lunch, Khiem pledged that Vietnam has a “serious” commitment to
protecting IPR, and doing “whatever it can” to create a favorable
environment for increased foreign investment.

After the lunch, Microsoft Southeast Asia President Christopher
Atkinson and Vietnamese Vice Minister Vu Duc Dam signed a memorandum
of understanding indicating that the Vietnamese government would
install Microsoft Windows on all of its computers and that Microsoft
would invest in Vietnam.

Also during Khiem’s visit, Vietnam and the U.S. on March 15 signed a
bilateral maritime agreement that will allow U.S. shipping, carrier
and port operation companies to control 51 percent of certain joint
ventures in Vietnam. According to a March 15 U.S. Department of
Transportation statement, the commitment applies to Vietnam’s cargo
agency, cargo documentation, cargo management, freight forwarding,
warehousing and container station services sectors.

After five years of implementation, the maritime agreement requires
Vietnam to allow U.S. companies to create or purchase wholly owned
subsidiaries in Vietnam.

– Luke Engan