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

Reuters, Mar 10 2003

HANOI, March 10 (Reuters) - 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 <F.N> and GM <GM.N> 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."

My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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