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.
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