~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Vietnam auto row a test of U.S. trade ties

HANOI - Vietnam's attempts to resolve a spat over proposals for a sudden boost in imported autoparts tariffs is a litmus test of trade relations between Hanoi and Washington, a U.S. official said on Monday.

"We put it pretty bluntly to our Vietnamese counterparts that this really is a test of our commercial relationship and we would very much like them to engage in a dialogue not with government representatives but with industry representatives," Jon Huntsman, deputy U.S. Trade Representative told reporters. Last December, Vietnam's Ministry of Finance -- without warning -- said it would increase the import duties, which in some cases will quadruple, effective January 1.

After vehement protests by 11 foreign automakers, including Ford and GM which have joint ventures in Vietnam, Hanoi agreed to reconsider. Last month, it proposed a graduated increase to bring the tax from 20 percent to 30 percent by April 1, 2003 and finally to a 50 percent ceiling by 2005. In addition it proposed a rise in consumption taxes from five percent to 50 percent next year.

Speaking before an American Chamber of Commerce reception, Huntsman said that he raised the issue at all of his meetings with Vietnam's ministers, including the powerful Ministry of Planning and Investment, which oversees all foreign investment. "We really drove the issue home this afternoon," said the point man for trade agreement negotiation for the Bush administration in East Asia, South Asia and Africa.

Huntsman said he received a "very encouraging" reaction from the Vietnamese government, who said they would review the decision and discuss it with the industry. Hanoi is using the duty hikes to force a greater use of locally-made parts. The trade official was in the Vietnamese capital for a review of the two countries' 15-month bilateral trade agreement. Vietnam exported about $2 billion to the United States last year. While saying he was "encouraged" by the progress, the former ambassador to Singapore said Vietnam needed to improve transparency and ensure certainty for investors.

On a potentially thorny issue, Huntsman said the governments were set to meet again in early April to hammer out a textile pact. Vietnam's second biggest export earner is expected to be put under quotas after a boom fed by no restrictions. Washington made a proposal on quotas last month at a meeting in Hanoi, and Huntsman said it was now up to Hanoi to come up with a counterproposal. Asked if the United States would impose unilateral quotas if the Vietnamese failed to respond with its own plan, Huntsman said: "We are keeping all options on the table."

Reuters - March 10, 2003.


Vietnam's auto industry unhappy about proposed tax

Car manufacturers in Vietnam say the government's plans to raise taxes on locally-assembled vehicles will harm the country's fledgling motor industry. The finance ministry proposes increasing the import tax on component kits for cars from 20 to 30 per cent on April 1, rising in annual increments to 50 per cent in 2005. In addition, the special consumption tax on cars assembled in Vietnam from kits could be increased from five to 50 per cent by 2004 and 100 per cent by 2005. The government says the measures will boost the domestic parts industry, by discouraging manufacturers from importing parts for assembly in Vietnam.

But the Vietnam Automobile Manufacturers Association says the proposals could lead to the country's emerging auto market contracting by as much as 70 per cent. The Association has submitted a formal request to the ministry urging a delay to allow more time for consultation.

ABC Radio Australia News - March 10, 2003.