RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/VNM/6
20 April 1999
(99-1577)
Working Party on the
Accession of VietnamOriginal:  English
ACCESSION OF VIETNAM
Additional Questions and Replies
The Government of the Socialist Republic of Vietnam has submitted replies to additional
questions raised concerning the Memorandum on the Foreign Trade Regime of Vietnam, with the
request that they be circulated to the members of the Working Party.  The questions and replies are
reproduced hereunder.  The Annexes referred to in this document are reproduced in document
WT/ACC/VNM/6/Add.1.  The laws and legal texts referred to in this document are listed in document
WT/ACC/VNM/6/Add.2 and are available in the Secretariat (Accessions Division, Room 1126) forconsultation.
_______________WT/ACC/VNM/6
Page i
TABLE OF CONTENTS
Page No. Question No.
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN
TRADE
2. Economic Policies
(a) Main directions 1 1-21
(b) Monetary and fiscal policies
Pricing system 10 22-35
Tax policy 15 36-41
Profit Tax 17 42Import-Export Tax 18 43
Income Tax 18 44
Value-Added Tax 19 45-46
(c) Foreign exchange and payments system, relations with the
International Monetary Fund19 47
(d) Foreign and domestic investment policies 22 53-66
(e) Competition policies 27 67-69
III. FRAMEWORK FOR MAKING AND ENFORCING
POLICIES AFFECTING FOREIGN TRADE IN GOODSAND TRADE IN SERVICES
1. Powers of Executive, Legislative and Juridical Branches of
Government
(a) The State President 28 70
(b) Power of the local government 29 71-72
3. Division of Authority Between Central and Sub-Central
Governments29 73
6. Description of Judicial, Arbitral or Administrative
Tribunals or Procedures29 74-78
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration requirements for engaging in importing 33 79-85
(b) Characteristics of the national tariff 36 86-104
(d) Other duties and charges 41 105-112
(e) Quantitative import restrictions, including prohibitions,
quotas and licensing systems44 113-122
Import Prohibitions 47 123-146
(f) Import licensing procedures 55 147-169
(g) Other border measures 63 170-171
(h) Customs valuation 63 172-185(j) Pre-shipment inspection 70 186
(k) Application of internal taxes on imports 70 187-190
Excise Tax 72 191-196
VAT 73 197-198
Natural Resource Tax 74 199Special Sales Tax 74 200-204
(l) Rules of origin 76 205-206
(m-o) Anti-dumping, countervailing duty and safeguards regimes 76 207-209WT/ACC/VNM/6
Page ii
Page No. Question No.
2. Export Regulation
(b) Customs tariff nomenclature, types of duties, duty rates,
weighted averages of rates, etc.78 210-211
(c) Quantitative export restrictions 78 212-215
(f) Export financing, subsidy and promotion policies 79 216-218
(g) Export performance requirements 81 219
(h) Import duty drawback schemes 81 220
(e) Other measures 81 221
3. Internal Policies Affecting Trade in Goods
(a) Industrial policies and subsidies 82 222-226
(b) Technical specifications and standards 84 227-244
(c) Sanitary and phytosanitary measures 92 245-257
(d) Trade-related investment measures (TRIMs) 98 258-277
(e) State-owned enterprises 104 278-299(f-g) Free zones and free economic zones 112 300-302
(h) Trade-related environmental policies 113 303-304
(l) Government procurement 114 305-315
4. Policies Affecting Foreign Trade in Agricultural Products
(a) Imports 119 316-322
(b) Exports 122 323-326
(c) Export prohibitions and restrictions 123 327-328
(d) Export credits, export credit guarantees and export
insurance programmes123 329-333
(e) Internal programmes 125 334-341
V. TRADE-RELATED INTELLECTUAL PROPERTY
PROTECTION REGIME
1. General
(b) Responsible agencies for policy formulation and
implementation128 342
(c) Membership of international intellectual property
conventions and of regional or bilateral agreements129 343
2. Substantive Standards of Protection
(a) Copyright and related rights 129 344-363(b) Trademarks, including service marks 136 364-393
(c) Geographical indications, including appellations of origin 151 394-395
(d) Industrial designs 156 396-397
(e) Patents/inventions 158 398-405
(g) Layout designs of integrated circuits 162 406-407
3. Measures to Control Abuse of Intellectual Property Rights 162 408-411
4. Enforcement 165 412-416
5. Laws, Decrees, Regulations and other Legal Acts Related to
Intellectual Property Rights167 417WT/ACC/VNM/6
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VI. TRADE-RELATED SERVICES REGIME
1. General 168
Specific Service Sectors
1. Business Services
(a) Professional Services
(i) Legal services 169 420-424
(ii-iii) Accounting, auditing and
bookkeeping services;  taxation
services171 425-427
(iv-vii) Architectural services;  Engineering
services;  Integrated engineeringservices;  Urban planning171 428-429
(f) Other Business Services
(viii) Mineral exploration services 172 430
2. Communication Services 172 431-433
3. Construction and Related Engineering Services 173 434-435
4. Distribution Services 174 436-437
7. Financial Services
(a) All Insurance and Insurance-Related
Services175 438-444
(b) Banking and Other Financial Services 177 445-467
8. Health-Related and Social Services 187 468-469
9. Tourism and Trade-Related Services 188 470
2. Policies Affecting Trade in Services 188 417-488
3. Market Access and National Treatment 196 489
4. Most-Favoured-Nation Treatment 196 490-492
VII. INSTITUTIONAL BASE FOR TRADE AND
ECONOMIC RELATIONS WITH THIRD COUNTRIES
2. Economic Integration, Custom s Union and Free Trade Area
Agreements197 493WT/ACC/VNM/6
Page 1
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
2. Economic Policies(a) Main directionsQuestion 1.Re. Question 2. (WT/ACC/VNM/3)  Vietnam has noted that it is reviewing its trade regime’s
conformance with the national treatment require ments of Article III of the GATT.  Has this
review been completed and could Vietnam provide the Working Party with the findings and any
planned changes as a result of this review?  Will Vietnam be able to commit that it will notintroduce any new measures inconsistent with Article III?
Answer:
- Vietnam is still reviewing and compiling the measures inconsistent with the National
Treatment obligation stipulated in Article III of GATT 1994.  In this process, some
inconsistent regulations have been amended, for example:
- the Law on Amendment and Supplement to some provisions of the Law on Turnover
Taxation, enacted by the National Assembly on 28 October 1995, has abolished the
discriminatory application of Turnover Tax between the wholesale of imported anddomestically produced products;
- provisions on exemption, reduction of turnover taxes applicable to domestically
produced products will expire as of 1 January 1999 when the Law on Value Added
Tax comes into force;
- the Law on Excise Tax adopted by the National Assembly on 20 May 1998, will be
effective as of 1 January 1999 providing the same tax rates applicable to domestically
produced and imported automobiles.
These are Vietnam's efforts to narrow the discriminatory treatment.Vietnam is a country in transition.  Therefore, the review and adaptation of its economic
policies to meet WTO requirements will take some time.  The process is still on-going and Vietnamwill consult with the WTO Working Party and Members where and when it is convenient and
practical.
Question 2.
Re. Question 7. (WT/ACC/VNM/3)  Vietnam has noted that, in the course of its economic
reforms, it is in the process of creating an  economic environment that is universal to all
enterprises.  Could Vietnam provide a status report on the revisions to its relevant laws on
taxation, banking and financing?  Has the Co mmercial Law taken effect?  Have the Law on
Companies, the Law on Private Enterprise, the Law on Encouragement of Domestic Investmentand the Law on Land been amended and/or supplemented?
Answer:
The Law on the State Bank of Vietnam and th e Law on Credit Institutions promulgated on
12 December 1997 have replaced the Ordinance on State Bank dated 24 May 1990.  These laws will
be refined and extended to address implementation procedures and requirements - a process that will
be coordinated by the State Bank. New regulations will modify, supplement or replace the previous
regulations.WT/ACC/VNM/6
Page 2
The Law on State Bank came into force on 1 October 1998.  Pursuant to the Law, the State
Bank is at the same time the central bank and a government agency assuming the functions of
Vietnamese State management of banking and credit activities.
The Law on Credit Institutions set forth the concept of banking activities and credit
institutions.  Banking activities form the basic and essential part of the coverage of the law; it
specifies that all institutions conducting banking ac tivities in Vietnam, of which most are credit
institutions, are governed by the law regardless their legal form.
The Law on Credit Institutions paves the way for the creation of new forms of credit
institution, in particular those conducting specialised non-banking activities.
Unlike the preceding Ordinance, the Law on Credit Institutions contains detailed procedural
provisions.
The new Law on Credit Institutions was formulated with a specific objective of improving
transparency. It ensures the principle of operational autonomy and self-responsibility of the creditinstitutions before the law.
The Law on Companies, the Law on Private Enterprise and the Law on Land are being
reviewed and expected to be radically amended. It is expected that these draft-Laws will be submitted
to Vietnam's National Assembly in October 1998 (for the Law on Land) and in April 1999 (for theLaw on Private Enterprises and the Law on Companies).  They are intended to replace currently
effective laws and regulations.
The Law on Encouragement of Domestic Inve stment was amended and supplemented in
May 1998.
The Commercial Law came into force as from 1 January 1998.  The Government has since
promulgated Decree No. 57/1998/ND-CP specifica lly regulating the implementation of the
Commercial Law on export, import, processing and consignment.
Question 3.
Re. Question 12. (WT/ACC/VNM/3)  This delegation is pleased that Vietnam will observe its
obligations and commitments upon accession to the WTO.  However, we seek clarification of
one of  the targets underlying economic policies for 1996-2000, namely “securing proper
protection to domestic production”.  Could Vietnam identify the domestic sectors and/or
specific goods that would be protected?
Answer:
Vietnam is an agriculture-based developing country at a low level of development.  Almost
80 per cent of the population depend on agriculture for their livelihood, and industry is just at aninitial stage of development.  Vietnam is presently restructuring its economy and wishes to provide
proper protection to secure continued development while coping with increasing international
competition.
The term "proper protection" is elaborated in the answer to question 4.WT/ACC/VNM/6
Page 3
Question 4.
Re. Question 13. (WT/ACC/VNM/3)  Could Vietnam provide details and examples as to how the
various types of protection would operate, e.g. proper protection of domestic production,
selective protection, conditional protection and protection in the time-limited fashion.
Please elaborate on the quantitative restrictions that would protect potential and infant
domestic industries.  How would these quantitative restrictions be administered?
Answer:
Vietnam's industries in general are infants and not competitive.  Excessive protection would
result in inefficiency.  Without some protection, however, Vietnamese enterprises would go bankrupt
on a large scale, causing extensive social and economic disruption Vietnam's trade policies, therefore,
will be formulated to ensure gradual introduction of competition.
The term "proper protection to domestic production", "selective protection", "conditional
protection", "protection in the time-limited fashion" are not different types of protection, but the
reflect a general approach to implementing development policy.
"Proper protection" refers to non-excessive protection that gradually leads to a competitive
environment.
"Selective protection" indicates that protection, if applied, should be limited to industries such
as: labour-intensive industries, industries using significant quantities of agricultural materials, or
industries with development potential but which face some initial difficulties.
"Conditional protection" is protection linked to requirements for protected enterprises to
improve technology or management and increase business efficiency.
"Protection in the time-limited fashion" requires that protection is not long-lasting, but will be
for a limited time to ensure that enterprises step by step accept and face competition in conjunction
with Vietnam's commitments in multilateral and regional trade organisations.
Question 5.
Re. Question 16. (WT/ACC/VNM/3)  Vietnam notes that the Commercial Law provides that:
“The State has the exclusive right to conduct commercial activities in certain fields and regions
with respect to certain types of goods and services as stipulated in lists to be published by theGovernment.”
When will these lists be dist ributed to the Working Party?
Answer:
The Commercial Law's provisions are governing principles.  The Government is assigned to
elaborate from time to time the above mentioned lists which should serve to safeguard the national
interests while not menace the business rights of enterprises in all economic sectors.  The effective
lists are so far not available.
Question 6.
Re. Question 19. (WT/ACC/VNM/3)  When will a full and detailed list of “important lines of
activities” be distributed to the Working Party?WT/ACC/VNM/6
Page 4
Answer:
The term "important lines of activities" is indicative, and does not imply a specific or fixed
list.  Some examples of important lines of activities have been described in the answer to question 6 inWT/ACC/VNM/3.
Question 7.
We think that the excessive government's intervention is unnecessary with the respect to general
trade activities.
What is the response to this statement?
Answer:
We share the idea that excessive government intervention is unnecessary in trade activities.
However, Vietnam is making the transition to a market economy and is seriously considering its
policies including the re-definition of Government's role in price control and other areas.
Question 8.
Re. Question 4(b) (WT/ACC/VNM/3):  How many  enterprises have been assisted by the
Government since the promulgation of the Law on Business Bankruptcy?  How many of these
are State-owned?  Please list.
Answer:
Since the promulgation of the Law on Business Bankruptcy (June 1994), the Government has
not provided financial assistance to any bankrupt enterprises.
Question 9.
Is State support only granted to enterprises engaged in the activities listed in the reply to
question 4(b) (WT/ACC/VNM/3), which are also labour intensive, or may labour intensive
businesses be supported independently of the activities carried out?  Please specify.
Answer:
In addition to those listed in 4(b), labour intensive enterprises might be considered for
assistance if necessary.
Question 10.
Re. Question 7 (WT/ACC/VNM/3):  In the second paragraph of its answer, Vietnam lists a
number of laws that have to be abolished, amended, supplemented and formulated before all
enterprises could benefit from the same treatment.  Please submit a clear timeframe for the
accomplishment of such activities, specify ing the problems tackled by each action.
Answer:
Law on Private Enterprise:WT/ACC/VNM/6
Page 5
The amended Law on Private Enterprise has gone through several drafts and is planned to be
submitted to the National Assembly for approval by April 1999. The newly promulgated law will
replace the effective Law on Company and the Law on Private Enterprise. The amendment is aimed
to:
- supplement the rules which are not contained in the effective laws;
- simplify the procedures for establishment of an enterprise;
- protect the interests of minority shareholders; and
- improve the flexibility in business activities of enterprises, namely:
- flexibility with respect to the selection of forms of corporation;
- flexibility with respect to the change in the corporate forms;
- flexibility with respect to the business administration;
Law on State-owned Enterprise:
The Law on Amendments and Additions to the provisions of the Law on State-Owned
Enterprise is being drafted and to be submitted to the National Assembly for approval by December
1999.
The promulgation of the Law on Enterprise and other legislative efforts are initial steps to
strengthen the legal framework for an equal treatm ent between all forms of enterprises operating in
Vietnam. The legal framework is updated to be comprehensive early after the year 2000.
Question 11.
Re. Question 9 (WT/ACC/VNM/3):  According to the answer to this question, the new features
of the equatization of SOEs includes the selling of shares to outsiders.  What does the term
outsider mean?
Please clarify the allocation of competencies  among the different authorities listed for the
equitization of enterprises with a capi tal value of less than 10 billion Dong
How long do the incentives granted to equitized enterprises and their employees last?
Answer:
The term "outsider" means individuals and organisations who are not employees of the
equitised enterprises. The Decree No.44/1998/ND- CP dated 29/6/1998 on transforming of State-
owned enterprises into share-holding companies provides that foreign residents in Vietnam and
Vietnamese residing abroad are also entitled to buy equities in the equitized State-owned enterprises.
The Decree No.44/1998/ND-CP provides for the rights of institutions while transforming into
share-holding companies as follows:
Article 15: "Authority to select and decide to equitise companies:- Heads of Ministerial and Governmental agencies (hereinunder referred to as
'Ministers'), heads of provinces, cities under the central administration (hereinafter
referred to as 'Chairmen') are entitled to select and decide to equitise companies.
- Management Boards of State Corporations established by the Prime Minister
(hereinafter referred to as '91 category Corporations') will make a list of member
enterprises to be equitised and submit to the Prime Minister for his approval before
implementation.
- Management Boards of State Corporations established by Ministers,  under the
authorisation of Prime Minister (hereinafter referred to as '90 category Corporations')WT/ACC/VNM/6
Page 6
will make a list of member enterprises to be equitised and submit to Chairmen for
approval".
Article 16(b) provides for the authority of guiding and deciding an enterprise's assets
appraisal as follows: "Pursuant to instruction of Finance Minister, Ministers, Chairmen, managementboards of 91-category Corporations shall decide the valuation of enterprises with book assets of less
than VND 10 billion at the time of equitising".
Article 17(2) provides for the authority of ap proving an equitisation plan as follows: "In
respect of enterprises with State owned capital of  under VND10 billion, Ministers, Chairmen shall
decide and instruct the equitisation".
Article 20 provides for the nomination of a representative of State holding in an equitised
company as follows:
- In case of transformation of an independent enterprise into an equitised company:
Ministers, Chairmen, and Presidents of the Management Board of 91 categoryCorporations in coordination with Finance Ministry to nominate a representative who
will look after State equities in the equitised company.
- In case of transformation of a constituent business of an independent enterprise (state
corporations, independent enterprises with management board) into an equitised
company:
Management Boards of State enterprises or Directors of State independent enterprises will
select  a representative who will look after State equities in the equitised company.
Article 13 and Article 14 of the Decree No.44/ 1998/ND-CP stipulates the incentives granted
to equitised enterprises and their employees as follows:
In respect of an equitised company: (i) the eq uitised enterprise is subject to 50% reduction of
corporate tax in the first two years after the transformation under the Law on Company and exempted
from registered charges for assets transferred from the State-owned enterprise to the equitised
company; (ii) welfare and rewarding (bonus) funds in the form of cash are distributed to the
employees; (iii) fees associated with the transformation are deducted from the State capital.
In respect of employees in the enterprise:  (a) Employees are entitled to buy a certain amount
of shares corresponding to their seniority (number of working years) at preferential prices. For each
working year, the employee is entitled to buy up to 10 shares at a 30% discount. (b) With respect to
payment for shares, poor employees are entitled to a 3 years grace period and payments can be paid in10 years instalments without any interests being charged. However, total preferential shares value
must not exceed 20% of State's capital in the enterprise or 30% of State capital in enterprises where at
least 40% of capital is self-accumulated. (c) Employees' job is secured for 12 months following the
transformation.
Question 12.
Re. Question 14 (WT/ACC/VNM/3):  Please list the economic sectors where the State wishes to
retain 100 per cent ownership.  How gradually does Vietnam intend to create a competitive
environment in these sectors?  Please explain how the introduction of the distinction between
capital owners and users will reform State control.WT/ACC/VNM/6
Page 7
Answer:
According to the Decision No. 20/1998/CT/TTg dated 21/4/1998 of the Prime Minister, the
following enterprises are excluded from equitisation until the year 2000:
- State-owned public interest enterprises; and
- Enterprises producing and providing goods and services monopolised by the State.
In respect of mechanism: to create a level playing field for all economic sectors and
industries. The Law on Enterprise which consolidates the Law on Company and the Law on Private
Enterprise is being drafted and to be submitted to the National Assembly by April 1999. Bill(s) of the
Law on Encouragement of Competition and the Anti -trust Law will be presented to the National
Assembly between 2002 and 2003.
The bill of the Law on State-Owned Enterprise, which is aimed to clearly identify the user
and the owner of capital, is being reviewed for submission to the coming sessions of the National
Assembly.
A distinction between capital owners and users will help separate day-to-day business
decision making from the investment decisions of the owners. The users are allowed to do business
within the assigned amount of capital. In the near future, the amended Law on State Enterprise and the
Law on Company will move toward unifying into a single law.
Question 13.
Re. Question 16 (WT/ACC/VNM/3):  Has the list of fields, regions, goods and services where
commercial activities are the exclusive right of th e State being formulated?  If so, please provide
a copy.
Answer:
The list of  fields, regions, goods and services under the State monopoly are subject to
changes from time to time. The current list will be provided in G/STR/N/4/VNM which will follow
the submission of this document.
Question 14.
What are the essential goods for which the State retains an import/export monopoly?
Answer:
The list of goods which the State retains import/export monopoly are subject to changes from
time to time. The current list will be provided in G/STR/N/4/VNM which will follow the submission
of this document.
Question 15.
Which are the import/export items subject to quotas mainly allocated to SOEs.  When does
Vietnam intend to bring this system in consistency with WTO rules?
Answer:
The list of items subject to quota control has been provided in Appendix 2 of the
Memorandum (WT/ACC/VNM/2), the HS codes are attached wherever possible in Appendix 7 (ListWT/ACC/VNM/6
Page 8
2) WT/ACC/VNM/Add.1. Procedures for granting quota licences are described in Annex 3 of
WT/ACC/VNM/3/Add.1.
Pursuant to current regulations, the State enterprises are not given preferences in granting
licences. In respect of some items subject to qu otas (e.g. rice), quotas are mainly allocated to
enterprises meeting the requirements as desc ribed in Annex 3 of WT/ACC/VNM/3/Add.1. Some
private enterprises have met the above requirements. Both private and State-owned enterprises have to
make every effort to respond the higher criteria and to face competition.
Further information on enterprises entitled to preferences will be elaborated in
G/STR/N/4/VNM which will follow th e submission of this document.
Question 16.
Why are SOEs considered more capable then a nd therefore preferred over other enterprises?
Answer:
Please see the Answer to Question 15 herein.
Question 17.
Could Vietnam specify the difference in costs for utilities between foreign and national
enterprises?
Answer:
By the end of 1998, electricity prices charged on foreign invested capital enterprises are from
22% to 54% higher than the electricity tariff applicable to domestic enterprises. Vietnam is
considering increasing electricity prices applied to domestic enterprises in an effort to apply a uniform
tariff between 2003 and 2005.
By laws, there is no explicit discrimination with respect to water prices. However, in some
provinces such as Hai duong, Hai phong, Lam dong, Ho Chi Minh City, water supply prices are 50% -
100% higher than those applied to local people since the prices charged on the Vietnamese are
stipulated so low that it could not cover costs. This problem is being taken into consideration.
Question 18.
Re. Question 68. (WT/ACC/VNM/3)  There are two Large National Corporations (LNC)
identified as being involved in the food sector.  Could Vietnam elaborate on the role of these
LNCs in the food sector? For example, are the LNCs involved with import? export? distribution
of food products? processing? Are LNCs, in general, subject to the same rules and regulations
as private companies?  As Vietnam reorganises its State-owned enterprises, does it anticipate
that there will be fewer LNCs involved with food  or agriculture?  Has Vietnam completed a full
list of important lines of activities that the LNCs will operate?
Answer:
The two LNCs in the food sector are the Nort hern Food Corporation and the Southern Food
Corporation.WT/ACC/VNM/6
Page 9
These LNCs play an important role in the food sector by carrying out the functions of sale and
purchase of rice, rice processing and exporting. They are also allowed to import materials for the food
industry.
These LNCs, which were established by the Decision of the Government, have member
companies. LNCs and private companies subject to the same laws and regulations.  In addition, LNCs
must carry out certain duties mandated by the Government such as balancing food supplies between
different regions (in particular regions which have difficulties to accede to food), ensuring food
security.
Vietnam is under the process of re-structuring its SOEs and decreasing the number of SOEs in
the agricultural sector to improve efficiency.
Vietnam does not have a list of important lines of activities in which LNCs are involved. The
list of LNCs was included in the Memorandum (document WT/ACC/VNM/2).
Question 19.
Re. Question 69 (WT/ACC/VNM/3).  Vietnam answers that large national corporations (LNCs)
receive subsidies from the Government.  Is the am ount of such subsidies fixed annually?  How is
decided the allocation of the subsidy to each LNC?
Answer:
The amount of subsidies given to Large National Corporations is not fixed annually.  The
actual amount is determined on a case-by-case basis.  The subsidies enable these enterprises to
maintain the national equilibrium of the economy.  They usually take the form of interest rate supportfor maintaining reserves of specific products.  For example, when there is a good crop harvest, the
Food Corporation is entitled to a loan from banks at a preferential interest rate attributable to
Government support, with a view to promoting th e purchase of rice for maintaining a reserve and
supporting "floor prices" set out by the Government.  This measure is aimed at stabilizing prices and
maintaining the balance between supply and demand in different regions in the country.
The subsidies are not extended to LNCs on an enterprise-by-enterprise basis.  It depends on
the significance and the need for support of the activities concerned.
Question 20.
Could Vietnam update the Working Party on meas ures recently taken (if any) in the field of
equitization of State owned industries, including large national corporations?
Answer:
The following measures have been adopted by the Government:
- Decision No.20/1998/CT/-TTg dated 21/4/ 1998 requires the Ministries, provinces,
cities and State Corporations to select 20% of the State enterprises to be equitised in
1998 and 1999. Decision No. 140/TTg dated 1/8/1998 approved 178 State enterprises
to be equitised in 1998.
- Decree No.44/1998/ND-CP dated 29/6/1998 of the Government on Transforming
State-owned Enterprises into Share-holding Companies has formulated policies to
facilitate equitisation as follows:
- Ministries, provinces and State corporations are given additional rights to select,
organize and decide to transform State enterprises into share-holding companies.WT/ACC/VNM/6
Page 10
- Individuals and legal entities are given more rights to buy shares; workers,
especially poor workers, are granted more incentives.
- Detail regulations on valuation are issued in order to have a realistic valuation
that can be accepted by both the State and share buyers.
- 
Line ministries and provinces are authorized, in negotiations with share buyers, to adjust the
valuation of an enterprise with book value of less than VND 10 billion.
 More favourable and feasible equitisation process is stipulated. Operation of the central and local Boards of Enterprise Management Renovation is
strengthened; a regular and irregular report system is set up – assuring prompt resolution of emergedissues.
 Foreigners are allowed to buy shares on pilot basis at 02 equitised enterprises and 01 share-
holding company.
 Share-holding companies are selected for participation in Stock Exchange to facilitate stock
transactions and therefore effectively accelerate the equitisation of State enterprises.
Question 21.
Re. Question 62 (WT/ACC/VNM/3):  How are State-owned industries selected for equitization?
Has the pilot regulation on the sale of shares in equitized enterprises to foreign parties been
issued?  If yes, could Vietnam submit a copy?
Answer:
Decision No.20/1998/CT/TTg dated 21/4/1998 of the Prime Minister on allowance of
Ministries, provinces, cities and State corporations to select State enterprises to be equitised in 1998
and 1999; Decision No.140/1998/QD-TTg dated 1/8/ 1998 of the Prime Minister on approval of
equitising State enterprises in 1998, are all the main sources for selecting enterprises to be equitised.
The following conditions must be met by the selected enterprises:
- having a feasible equitisation plan;
- currently making profits;
- not facing financial difficulties; and
- not subject to any moving plan.
Article 2(3) of the Decree No .44/1998/ND-CP dated 29/6/1998 of the Government stipulates:
buying shares of foreigners must be complied with Prime Minister's regulations which are under
consideration by the Government.
(b) Monetary and fiscal policies
Pricing system
Question 22.
We appreciate Vietnam’s commitment to apply price controls in accordance with WTO rules
upon accession.WT/ACC/VNM/6
Page 11
In order to meet WTO requirements, price controls  applied to trade should be transparent, and
should conform to other WTO provisions, e.g., national treatment and the avoidance of
prejudicial effects on imports in Article III of the GATT.
In its current form, the price control system does not meet this requirement.  We need
information on how Vietnam plans to reform its system.
Answer:
The price control mechanism is subject to annual review that determines, inter alia,
elimination of items from the list of goods and services under control and phasing out of the dual-
price mechanism.
From the year 2000, Vietnam intends to limit price control to urea fertilizer, cement, iron,
steel and printing papers.
Please refer to the answers to questions 23 and 24 herein.
Question 23.
In WT/ACC/VNM/3 reply 27, Vietnam states that prices of products and services for which
foreign customers are charged higher prices than domestic customers are:  electricity, airwaysand railways, water supply, and sea-port charges.
To the extent that such discrimination directly affects the internal distribution costs, conditions
of sale, and transportation of imports, these hi gher charges could violate the national treatment
provisions of Article III:4 of the GATT.
Answer:
Due to the historical legacy and the low income level of Vietnamese people, dual pricing is
still applied to a number of services where foreign consumer/user pay higher prices. This practice
means that enterprises are treated unequally.
Vietnam has been reforming its pricing regime toward a uniform pricing system.
Question 24.
In WT/ACC/VNM/3 reply 29, Vietnam confirmed that after accession to the WTO, price
controls will be applied consistently with Vietnam’s WTO obligations.”  However, the
information supplied in WT/ACC/VNM/3 reply 36, Vietnam indicates that these discriminatory
charges for foreign customers will be graduall y reduced and eliminated” after the year 2000.
We would appreciate a more detailed description of the steps Vietnam plans to take to eliminate
these dual prices, including on timing.
Answer:
Vietnam has been gradually moving toward a uniform pricing system applicable to
Vietnamese and foreigners.  The plan is as follows:
1999: to consider eliminating the current differences in prices charged for sight-seeing
entrance ticket, commercial water use and telephone installation;WT/ACC/VNM/6
Page 12
2000: to consider narrowing the margin of diff erence in air-passenger tariffs, commercial
electricity charges, sea-port charges and introducing a schedule for eliminating dual
prices for the remaining services during the market access negotiations with
interested members of the Working Party.
Question 25.
In reply 36 of WT/ACC/VNM/3, Vietnam states that while reducing the number of items subject
to price controls, the price supervision shall be  strengthened.”  The strengthening of the prince
control mechanism appears to contradict the aim of relaxing price controls.
Could Vietnam please explain this apparent contradiction?
Answer:
The Vietnam's price supervision is aimed at verifying the prices so as to ensure efficiency of
budget expenditure transactions (or government procurement transactions).  It is not intended to affectenterprises' autonomy with respect to pricing.
Question 26.
In reply 30 of WT/ACC/VNM/3 Vietnam states that there is no set schedule for review of price
controls and that controlled prices are not published in the official gazette.   The criteria are
very general - goods must be of prime importance to the Vietnamese economy or of large
import-export turnover within a certain period (reply 39).
This information does not provide a clear picture of how the system operates.
Answer:
The answer to question 30 in WT/ACC/VNM/3 reflects the reality of Vietnamese policy as of
November 1997.  Please refer to the answer to question 24 herein for our schedule for reviewing price
control measures.
Pursuant to Vietnamese laws, only legal documents are published in the Official Gazette.  As
the controlled prices are not classified as legal documents, they are not published in the Official
Gazette.  However, they are published in the "Market and Price Bulletin" - a publicly available
periodical with wide circulation.
Question 27.
The aim of question 41 (WT/ACC/VNM/3) is to get a more precise idea of how the system
operates.  A large portion of question 41 went unanswered:  Please identify all import products
that have been subjected to maximum import pricing in the past five years.  For each item,please describe the circumstances that precipitated the use of maximum import pricing and the
period of time that the products were subject to maximum import pricing.”
Please provide a full response to this question.
Answer:
Import prices are no longer subject to maximum price control.WT/ACC/VNM/6
Page 13
At present, price controls on imports by enterprises are no longer applicable.  With respect to
imports of machines and equipment financed by the State budget, fair import prices are ensured by
competitive tendering and bidder selection.
Government controls on minimum expor t price have also been removed.
Question 28.
In Vietnam’s response to question 314 (WT/ACC/VNM/3) concerning “inter-company” prices,
Vietnam states that the tax authority regularly inspects an enterprise ’s reports to identify
unjustifiable prices or profit levels.
What standards and criteria does the tax authority use to determine that prices or profits are at
unjustifiable levels?  What remedy is applied if  the prices are judged to be “unjustifiable”?
Answer:
Circular No. 74 TC/TCT dated 20 October 1997 is the single legislation providing rules on
price arrangements between related persons.  It sets out three methods of control as follows:
- Comparable Uncontrolled Price Method;
- Resale Price Method;
- Cost-Plus Method.
The above mentioned methods are compatible w ith the general guidelines of the OECD on
this issue.
Question 29.
Re. Question 24. (WT/ACC/VNM/3)  Could Vietnam elaborate on how prices are determined
for those products subject to price intervention?  Which agency or government department has
responsibility for setting prices?  How is the set price determined?  At what level is the price set
- producer, wholesale, and/or retail?
Answer:
Prices are determined on the basis of production and distribution costs, supply and demand,
domestic and international prices.
Control is mainly applicable to the maximum retail prices of a strictly limited number of
products.
Enterprises formulate their estimates that are checked and approved by the Government
Pricing Committee and transmitted to the Government for final approval.
Goods subject to retail prices determined by the Government are: petroleum, urea fertilizer,
iron, steel, cement, and newsprint.  Except for the a bove items, enterprises have autonomy in setting
prices.
Question 30.
Many Members have pointed out that the Vietnamese Government hinders a free market
transaction through price control.WT/ACC/VNM/6
Page 14
Do you have a plan to liberalize price control policies in order for market to determine prices of
items that are under price control?
Answer:
At present, the State does not intervene by any means in business autonomy with respect to
pricing of either domestic or foreign invested enterprises.
The State only sets prices for services which are provided by State-owned monopolies (e.g.,
electricity, telecommunications, etc.).  Ceiling (i.e., maximum) prices may be set for goods (i.e.,
petroleum, cement, iron, steel, newsprint and fertilizer) which have significant impact on the prices of
a large number of other products.
The price control mechanism is subject to annual review that determines the phased
elimination of items from the list of goods and services under control.  After the year 2000, Vietnam
intends to limit its price control to urea fertilizer, cement, iron, steel and newsprint.
Question 31.
Is there any possibility to eliminate double pricing applied to domestic enterprises and joint
corporations?
Answer:
With a small number of services to which the dual priced system is still applicable, in the
annual review Vietnam has been considering narrowing the margin of price difference and moving
towards a uniform price mechanism.  The first candidates for elimination would be water supplies,telephone subscription and installation and commercial electricity consumption.
Please refer to the answer to question 24 herein.
Question 32.
What is the reason behind fixing the trade price according to price list?
Answer:
The State determines ceiling retail prices or fixed prices of monopolised services such as:
electricity, telecommunications, etc. with a view to protecting the consumers.
A number of goods of prime importance to the economy (petroleum, iron, steel, cement,
fertilizer), which have a significant impact on the prices of a large number of other products are
administered by the State for the purpose of stabilizing prices in a transitional economy.
Question 33.
Re. Questions 29 and 36 (WT/ACC/VNM/3):  We commend Vietnam for committing to apply
after accession price controls in a WTO consistent manner.  Could Vietnam specify the actions
that it intends to take to this end with a clear timeframe for their implementation?
Answer:
After acceding to WTO, price controls will be ap plied in consistence with the obligations that
Vietnam will commit upon accession to the WTO.WT/ACC/VNM/6
Page 15
The list of goods and services under the State's price controls which are described in
WT/ACC/VNM/3/Add.1 (Price Control Mechanism) w ill be maintained to the year 2000. From the
year 2000 onwards, the list of goods and services under the State's price determination will be reduced
to limited items such as urea fertilizer, cement, iron, steel, and paper.
Question 34.
In Annex 9 of WT/ACC/VNM/3/Add.1 (Regime for Price Management), last paragraph, it is
stated that "From the year 2000 onwards, the Price Stabilization Fund will be transformed step-
by-step into a set of price stabilization funds on an item-by-item basis in order to lessen the
impact of market price shocks on production and consumption".  Could Vietnam clarify whichchanges will be introduced and how these chan ges would lessen the impact of market price
shocks?
Answer:
The Price Stabilization Fund's surcharge will be maintained to the year 2000. After the year
2000, the Price Stabilization Fund is to be gradually adjusted into the Production Protection Fund for
each item. The mechanism will help reducing adverse effect of market fluctuations.
Question 35.
Re. Question 44 (WT/ACC/VNM/3):  Does Vietnam intend to eliminate upon accession to WTO
the practice of levying charges on export/import prices for price stabilization funds?
Answer:
Please see answer 9 about the price control system in WT/ACC/VNM/3Add.1.
Tax policy
Question 36.
Could Vietnam confirm that VAT would be in troduced on I January 1999?  Could Vietnam
provide a copy of the Law on VAT?  Could it describe what level of VAT taxes is levied on
which goods?  Is there any inconsistency in the new law with the provisions of Article III
GATT?  Will goods that are subject to VAT also be subject to excise taxes?
Answer:
The Law on VAT came into force on 1 January 1999 as scheduled.
In respect of description of VAT taxes, please see Article 4 and Article 8 of the VAT Law
which is available at the Secretariat.
In our own view, there are no existing provisions of the VAT Law that are inconsistent with
Article III of GATT.
Goods that are subject to VAT are not subject to excise taxes.WT/ACC/VNM/6
Page 16
Question 37.
Re. Question 94 (WT/ACC/VNM/3): The exemption made on the application of excise taxes for
domestically manufactured cars is contrary to Article III GATT.  Could Vietnam specify the
different rates applied to cars according to thei r origin?  Could Vietnam also specify when it
expects its excise tax system to be brou ght into full conformity with WTO rules?
Answer:
According to the excise tax promulgated in May 1998, the rates of excise tax applied from
30% to 100%, rates are only differentiated between automobiles with less than 24 seats and less 5
seats. There are no different rates according to origins.
Question 38.
Re. Question 96 (WT/ACC/VNM/3):  What are the criteria for granting excise tax exemptions
and reductions to enterprises with foreign-invested capital?
Answer:
Production entities subject to the excise tax, whether foreign invested or domestic enterprises,
are eligible for tax exemption in the following cases:
- Production entities which are faced with difficulties due to natural disasters, enemies,
unforeseeable accidents.
- Small-scale beer breweries that are faced with losses after paying all taxes are subject
to consideration of tax reduction equal to the annual losses provided that the period oftax reduction does not exceed 5 years starting from 1999.
- Automobile manufacturing and assembling enterprises are subject to excise tax
reduction from 60% to 100% for 5 years starting from 1999, if they still suffer losses
the period of tax reduction can be extended from 1 to 5 years.
- Golf business entities are subject to excise tax reduction of  30% for 3 years starting
from 1999.
Question 39.
Re. Question 98 (WT/ACC/VNM/3):  Please specify in a table format, which excise tax applies to
which tobacco and alcoholic product.
Answer:
No Commodities Tax rates
1
a)
b)
c)Cigarette, cigar
Filter cigarette mainly made of imported material, cigar
Filter cigarette mainly made of domestic produced materials
Non-filter cigarette65
45
25
2
a)b)
c)
d)
e)Alcohol drinks:
Alcohol drinks above 40 °
Alcohol drinks from 30 ° to 40 °
Alcohol drinks from 20 ° to 30 °
Alcohol drinks less 20 ° including those made of fruits
Medicine alcohol drinks70
55
25
20
15WT/ACC/VNM/6
Page 17
No Commodities Tax rates
3
a)b)
c)Beer
Bottled beer, draught beerCanned beer
Fresh beer75
65
50
Question 40.
Re. Question 103 (WT/ACC/VNM/3):  Please confirm that upon accession excise taxes will be
applied with the exclusion of the duty paid from the taxable base.
Answer:
In our view, calculating internal indirect tax based on the price of imported goods that
includes the import tax is consistent with international practices and does not violate WTO rules.
Question 41.
We understand that in May 1998 the National Assembly passed a law to impose a Special
Consumption Tax on certain motor vehicles ranging from 30 to 100 per cent.  Although the taxrate is the same for domestically manufactured and imported vehicles, tax reductions of
between 60 and 90 per cent of these rates are available to local joint ventures for vehicle
assembly during the first five years of operation .  How is this consistent with the national
treatment requirements of GATT Article III?  How does Vietnam plan to ensure that this tax is
fully consistent with WTO requirements prior to accession?
Answer:
Excise tax is applied to some kinds of automobiles but not to motor vehicles in general. In the
process of refining policies, the excise tax has been adjusted to conform to the national treatmentprinciple of the GATT. It applies equally to imported and domestically produced automobiles (before,
the excise tax have been applied only to imported automobiles). Tax reduction for domestic
automobile production and assembling entities is applie d only in the case of loss in order to ensure the
implementation of the law in the process of policies transition for the purpose of maintaining stability
in the investment environment of Vietnam (since all automobile manufacturers and assemblers areforeign invested enterprises). The system will finally be in conformity with WTO rules after this
transition period.
Profit Tax
Question 42.
Re. Question 107 (WT/ACC/VNM/3):  The preferential tax rates described here and the general
tax exemptions foreseen for those foreign enterprises that invest in export processing zones and
industrial areas described in response to question 143 seem inconsistent with the TRIMs
Agreement provisions.  This is as they are conditional on the use of domestic content and/or on
export performance.  Does Vietnam intend to modify these requirements to assure theirconsistency with WTO rules upon accession?
Answer:
In our view, export requirements and/or preferential tax rate applied to those enterprises
investing in industrial zones (IZs) or export processing zones (EPZs) are not contrary with TRIMsWT/ACC/VNM/6
Page 18
Agreement due to the fact that they are not incl uded in the illustrative list of this Agreement.
Furthermore, EPZs in the world are established just for the purpose of export production. In respect of
local content requirement, Vietnam only applies this requirement to encourage domestic production
and FDI in automobile, motorcycle and electronic industries which belong to the Vietnamese
industrial development programs. Vietnam is in the process of replacing the local contentrequirements by local manufacturing requirements.
Import-Export Tax
Question 43.
We understand that the export tariff nomenclature is under consideration for adjustment and
that some items will be eliminated.  When does  Vietnam intend to conclude this process?  When
completed, could Vietnam provide a list of the products subject to export duties and the rates
applied.
Answer:
The export tariff nomenclature was  promulgated on 11/12/1998 and came into effect on
1/1/1999. A translated copy of the nomenclature will be made available as soon as possible.
Income Tax
Question 44.
Re. Question 120 (WT/ACC/VNM/3):  What steps have recently been taken by Vietnam in
order to adopt Article VIII, IMF?  When will Vi etnam be in a position to adopt Article VIII
IMF?
Answer:
To liberalise in current account transactions, the Government introduced the Decree
No.63/1998/ND-CP dated 17/8/2998 on foreign exchange management. The Decree provided that
residents or non-residents are entitled to buy and transfer foreign currencies abroad for the followingpurposes:
- Non-residents (organisations of individuals) having foreign originated Vietnam Dong
and other legitimate incomes in Vietnam Dong are entitled to open and maintain
Vietnam Dong accounts, to buy foreign curren cies to transfer abroad, to transfer to
residents' or non-residents' Vietnam Dong accounts and are allowed to offer or be
inherited in accordance with the legal regulations.
- Residents (Vietnamese economic entities, foreign branches, foreign contractors, joint-
venture contractors are entitled to buy foreign currencies at authorised banks for
current transactions or other authorised transactions on the presentation of legaldocuments and due procedures.
- Residents (foreign invested capital enterprises, and foreign parties to business
cooperation contracts) are entitled to buy foreign currencies at foreign exchange
banks for current transactions or other authorised transactions as provided in the legal
regulations on foreign exchange management related to the FDI in Vietnam.
- Non-residents (Diplomatic representatives, consulates, representatives of
international, intergovernmental, non-governmental organisations, other political,
social institutions, foreign economic representatives operating in Vietnam) are
entitled to buy foreign currencies and transfer abroad via banks.WT/ACC/VNM/6
Page 19
- Residents (Vietnamese citizens) request to buy foreign currencies to transfer  to
relatives abroad, or spend on tourism, education, visiting, healthcare and other fees
are entitled to buy, transfer foreign currencies abroad. Foreign residents or non-
residents with legitimate incomes in foreign currencies are entitled to transfer abroad;
or to convert legitimate income in VND into foreign currencies at registeredcommercial banks.
The approval of Article VIII of IMF Regulations will be taken into consideration in the
medium-term.
Value-Added Tax
Question 45.
Re. Question 151 (WT/ACC/VNM/3):  Does Vietnam intend to use VAT for the same purpose of
promoting the production of import substitution goods as is currently the case for the sales tax?
Answer:
According to current Law on VAT, there is no special provision on the production of import
substitution goods.
Question 46.
Would Vietnam please provide a summary of the main elements of the VAT system which was
to be introduced on 1 January 1999?  Is the ne w regime fully consistent with the requirements
of GATT Article III?
Answer:
The Law on VAT stipulates four rates: 0%, 5%, 10% and 20%. There are 26 products and
services which are not subject to VAT as follows: sales of unprocessed or semi-processed agricultural
products by organisations or individual producing those products; salt; products, services which are
subject to excise tax; credit services; life insurance; health, education services; public sanitaryservices etc. VAT shall be collected monthly and settled at the end of every calendar year.
VAT is applied generally to all products and services which are in the covered categories and
are used in production and consumption in Vietnam irrespective of their origin.
(c) Foreign exchange and payments system, re lations with the International Monetary Fund
Question 47.Re. Question 120 (WT/ACC/VNM/3) Vietnam answers that it intends to obtain the IMF
Article 8 status.
Please explain how Vietnam plans to move towards that direction, including the termination of
restrictions on bank account transactions by foreign companies.
Answer:
On 17 August 1998 the Government of Vietnam promulgated a new, comprehensive and clear
Regulation on foreign exchange management, in which provisions are based on the concept ofWT/ACC/VNM/6
Page 20
resident and non-resident.  This Regulations contains provisions on current transactions and
payments, in particular for foreign invested enterprises, as follows:
- residents, who are foreign invested enterprises and foreign partners to business
cooperation contracts who are assured of Vietnamese Government's support inmeeting their foreign exchange need, br anches of foreign companies, foreign
contractors, contractors working in joint-venture with foreign partners shall have to
sell foreign currencies received from current transactions to authorized foreign
exchange bank at a percentage set periodically by decision of the Prime Minister;
- residents, who are branches of foreign companies, foreign contractors, contractors
working in joint-venture with foreign partners, shall be allowed to buy foreigncurrencies at authorized foreign exchange banks to meet the needs of their current
transactions and other permitted transactions upon the presentation of appropriate
documents;
- residents, who are foreign invested enterprises and foreign partners participating in
business cooperation contracts, shall be allowed to buy foreign currencies at
authorized foreign exchange banks to meet the needs of their current transactions and
other permitted transactions pursuant to the laws, regulations on the control of foreign
exchange in the field of foreign direct investment in Vietnam.
Question 48.
What is the role of Vietnamese foreign exch ange market and the extent of the government
intervention with respect to th e foreign exchange rate policy?
We know that the foreign exchange rate in Vietnam has currently depreciated against the
United States' Dollar.
What is the exchange rate recommended by  the international financial institutions?
Answer:
The State Bank is responsible for the organization and the functioning of the inter-bank
monetary market.  The market constitutes the official exchange market handling operational
transactions between credit institutions registered for foreign currencies operations.  It is a place
where supply and demand interact and foreign exchange needs are balanced.  The inter-bank market
serves as first step in establishing a complete Vietnam Foreign Exchange Market in Vietnam.
The State Bank may, when necessary, intervene in the market in the capacity of seller or
buyer for effective implementation of Vietnam's monetary and exchange rate policy.
The exchange rate between the Vietnamese Dong and other currencies is determined on the
basis of market supply and demand, but may be subject to intervention by the State Bank.
The official rates are published on daily basis by the State BankInternational financial institutions advise Vietnam to follow a flexible exchange rate policy
that is compatible with the policy which Vietnam is applying.  No institution recommends a specific
rate.WT/ACC/VNM/6
Page 21
Question 49.
We request that like domestic firms, foreign invested companies can pay wages in Vietnamese
currency.
Answer:
Minimum wages applicable to Vietnamese employees working in foreign invested enterprises
are calculated in United States' dollars and effectively paid in Vietnamese Dong based on the average
inter-bank exchange rate at the time of payment.
Recently, the exchange rate between United States' dollar and Vietnamese Dong has been
fluctuating.  Responding to requests from many foreign investors, the Ministry of Labour, Invalid and
Social Affairs in coordination with other agencies has been studying the possibility of specifying
minimum wages in Vietnamese Dong.  However, before any official decision is made, the said
provisions are still effective.
Question 50.
What is the reason behind the government insi stence of balance requirement of the foreign
exchange rate only to the foreign invested firms?
What is the government's standpoint on this discrimination?
Answer:
The requirement for foreign investors to meet their foreign currency needs themselves are due
to the following reasons:
- like many developing countries, Vietnam has limited foreign exchange reserves.
Thus, when the first Law on Foreign Investment in Vietnam was issued in 1987, the
Vietnamese Government required enterprises with foreign owned capital to be
responsible for their own foreign currency needs;
- this regulation is applied not only to enterprises with foreign owned capital but also
domestic enterprises.
- however, the Vietnamese Government also has policies to encourage and grant
incentives to domestic companies and foreign invested enterprises producing exportsso as to increase earnings in foreign currencies.
- the Government of Vietnam is only in position to commit to meeting the foreign
currency needs of projects in the field of construction of infrastructure or the
production of some essential import substitutes, and certain projects qualified asimportant to the economy.
- depending on the availability of foreign exchange reserves, the Government may
provide additional support to meeting enterprises' foreign exchange needs.
Question 51.
Re. Question 78 (WT/ACC/VNM/3): We commend Vietnam's plan to eliminate the requirement
of self-sufficiency in foreign currencies for en terprises with foreign invested capital. Could
Vietnam detail the method and time scale for this elimination?WT/ACC/VNM/6
Page 22
Answer:
Article 33 of Law on Foreign Investment in Vietnam passed by the National Assembly on
12/11/1996 stipulates that enterprises with foreign-owned capital, foreign parties to business
cooperation contracts shall have to assure of their demands for foreign currencies. The Government ofVietnam shall assure the balance of foreign currencies to projects in respect of construction of
infrastructure or production of essential import substitutes and some other specially important
projects". In fact, the Vietnamese Government has satisfied most of applications to buy foreign
exchange of the foreign invested capital enterprises and foreign parties to business cooperation
contracts.
Provisions that require self-balance of foreign currencies of foreign invested capital
enterprises and foreign parties to business coopera tion contracts will be reviewed following the
amendment of the Law on Foreign Investment in Vietnam.
Question 52.
Does Vietnam plan to introduce full convertibility for the Dong?
Answer:
The introduction of the full convertibility of the Dong is an objective of Vietnam's foreign
exchange management policy as provided in Decree No.63/1998/ND-CP dated 17/8/1998 of the
Government which reads: "to promote economic growth, improve balance of payment and gradually
making the Vietnam Dong convertible in foreign exchange transactions".
(d) Foreign and domestic investment policies
Question 53.Re. Question 121 (WT/ACC/VNM/3).  In its response, Vietnam includes “industrial dynamic
production” as a prohibited or limited sector for foreign investment.  Could Vietnam please
clarify what specific sectors are covered by this term?
Answer:
The term "industrial dynamic production" was a printing error and should be corrected as
"industrial dynamite industry".
Question 54.
Re. Question 152 (WT/ACC/VNM/3)  The Government of Vietnam announced in 29 April 1998
"Decision of the Minister of Planning and Investment" that 24 new projects, such as
automobiles, motorcycles and electric appliances is required to export at least 80 per cent oftheir products.
How can Vietnam justify the export perf ormance requirement under the WTO rules?
Answer:
Pursuant to the Decision No. 229/1998/BKH- QD dated 29 April 1998 of the Minister of
Planning and Investment, investment projects in the field of production of 24 industrial products
which are sufficiently supplied in the domestic market in terms of both quantity and quality, as
specified in this Decision, are subject to 80 per cent export performance requirement.WT/ACC/VNM/6
Page 23
The Decision is only applicable to investment projects licensed from the date that Decision
came into force (i.e., having no retroactive effect).
Export requirements are understood not to be contrary to the TRIMs Agreement as they are
primarily not covered by the illustrative list to the TRIMs Agreement.
Question 55.
The Vietnamese Government excludes the foreign investors from participating in the process of
Vietnamese privatization.
Do you have any plan for allowing foreign investors to take a more active role in this process?
Answer:
The Vietnamese Government does not exclude foreign investors from participating in the
equitization process in Vietnam.  Under Vietnamese laws, foreign investors are not only permitted but
also encouraged to enter into joint ventures, or to be a partner in a business cooperation contract
(BCC), with State-owned enterprises (SOEs).  On the other hand, the Law on Encouragement of
Domestic Investment permits foreign organisations and individuals to contribute capital to or
purchase shares of local enterprises (including SOEs) which are being equitized or in thoseenterprises' projects calling for investment under the Law on Encouragement of Domestic Investment.
A ceiling level of participation/holding may be set.
Vietnam has been elaborating regulations on terms and conditions governing the participation
of foreign investors.
Question 56.
What is actual amount of foreign direct investme nt (FDI) in Vietnam?  Do you have any plan to
permit foreign direct investment?
Answer:
After 10 years of attracting foreign investment, the Vietnamese Government has licensed to
over 2,400 projects with the total of registered capital of United States' Dollars 37.2 billion.
Disbursement of foreign investment amounted to United States' Dollars 14.1 billion.
The following policies and measures are planned to be promulgated in the near future:
- introducing a list of key projects calling for foreign investment to the year 2000 and
beyond with project profiles specifying size, capacity, potential market, suggested
Vietnamese counterparts, location, execution plan.  This is expected to help foreigninvestors to identify opportunities and investment counterparts;
- expanding the fields of where foreign investment is called for including life and non-
life insurance, entertainment and recreational activities (including prize-giving sports
or games such as horse racing) and tourist tours;
- diversifying the forms of investment: foreign share-holdings of up to 30 per cent of
the equity of domestic enterprises is foreshadowed; issuance of bonds by foreign
investors and establishment of foreign holding companies will be allowed;WT/ACC/VNM/6
Page 24
- encouraging and facilitating non-SOEs partnership with foreign investors;
- elaborating a mechanism for renting the land  to foreigners for real estate business
purpose.
Question 57.
What is the reason behind the government's exclusion of the import substitution industry from
the third round of revision of the law on the foreign capital when providing incentive measures?
Answer:
Vietnam does not exclude import-substitution from the list of projects enjoying incentive
measures.  The third amendment of the Law on Foreign Investment in Vietnam has stipulated in more
detail these incentives (i.e., applicability, eligible products and regions).  Projects which manufacture
essential and necessary import substitutes are entitled to incentives related to foreign exchange,
taxation, etc.
Question 58.
Re. Question 107 (WT/ACC/VNM/3) What is the standard tax rate that can distinguish the
project benefited from preferential tax rate 20  per cent, 15 per cent, 10 per cent as mentioned in
Question 107?
Answer:
The normal profit tax rate applicable to enterprises with foreign owned capital to foreign
parties to a Business Co-operation Contract is 25 per cent in accordance with Article 38 of the Law on
Foreign Investment in Vietnam.
Question 59.
What is the reason for applying the different standard of assessment between domestic firms
and joint ventures (corporations)?
This is to be a violation of the national treatment.  What is the standpoint of the Vietnamese
Government?
Answer:
At present, different systems are applied to domestic and foreign enterprises.  Under the
provisions of the laws, the systems sometimes favour foreign enterprises and sometimes favour
domestic enterprises.  The Vietnamese Government is trying to phase out these differences so that
equal treatment will be provided in the future.
Question 60.
In case of foreign investment policy, it is said  that its process and regulations are complex and
often fickle.
Do you have any plan to streamline some of complex regulations in order to improve the
environment for inducing foreign capital?WT/ACC/VNM/6
Page 25
Answer:
Basically, the law and policies on foreign investment are being amended to make them more
transparent, supportive and attractive to foreign in vestors.  Decree No. 10/1998/NDD-CP stipulates
that:
- any amendment of and addition to the foreign direct investment regime shall be made
on the principle of creating more favourable conditions for investors;
- new regulations shall not be applied to existing enterprises if they provide for less
favourable terms than those contained in the investment licence.  However, new
regulations which provide for more favourable terms are still applicable to theexisting enterprises.
Question 61.
What is the Vietnamese standpoint about permitting independent FDI?
Answer:
The question is not understandable.
Question 62.
Re. Question 11 (WT/ACC/VNM/3):  Are investments that will adversely affect the ecological
environment restricted for both nationals and foreigners?
Answer:
Yes.
Question 63.
Re. Question 81 (WT/ACC/VNM/3):  What are the conditions for the approval of the transfer of
the initial invested and re-invested  capital of foreign enterprises?
Answer:
Article 73 of the Decree No.12-CP dated 18/2/1997 of the Government on the
Implementation of the Law on Foreign Investment in Vietnam states that:
After taxation, foreign investors invested in Vietnam have the rights to transfer abroad:- Profits earned from business transactions;
- Income earned from provision of  services and technology transfer;
- Principal and interest earned from loans to foreign source;
- Initial capital;
- Other funds and assets of the legitimate ownership of the foreign investors.
After the end of an enterprise's operation, foreign economic organisations and individuals are
entitled to transfer abroad the initial and reinvested capital after debt-payments.
On the basis of the above terms and conditions, foreign invested capital are allowed to
transfer abroad the initial and re-invested capital in  foreign currencies via banks entitled to trade inWT/ACC/VNM/6
Page 26
foreign currencies without any approval formalities of the State Bank or the licence issuing
authorities. In cases where the transferred amounts are much higher than the initial and re-invested
capital, the excess amount would be transferred once it has been accepted by the licence issuing
authority.
Please refer to answer 551 (WT/ACC/VNM/3/Add.1).
Question 64.
Re. Question 82 (WT/ACC/VNM/3):  Does Vietnam intend to allow portfolio investments by
foreigners?
Answer:
Vietnam is in experimental process of allowing foreigners to invest in forms of buying shares
or capital contribution to Vietnamese enterprises.
Question 65.
Re. Question 121 (WT/ACC/VNM/3):  Which of the activities listed in answer to question 121
are prohibited and which are limited for foreign in vestors?  What does the limitation consist of?
What is an "industrial dynamic production"?
Answer:
In accordance with the provisions of the Decree 10/1998/ND-CP dated 23 January 1998 on
measures for encouragement and guarantee of foreign direct investment in Vietnam, the activitieslisted in the answer to question 121 are not prohibited for foreign investors. However, investment
projects in these sectors are only allowed in the forms of a joint venture enterprise or a business co-
operation contract. In other words, 100% foreign equity ownership is not allowed in these sectors,
specifically as follows:
- Construction and operation of international telecommunications networks and local
telecommunications networks (only business co-operation contract is allowed);
- Exploitation and processing of oil, gas, and precious and rare natural resources;
- Construction and operation of infrastructure facilities of industrial zones, export
processing zones and high-tech zones;
- Construction business;
- Air, railway and sea transportation; public passenger transportation; construction of
sea-ports and air ports (BOT, BTO and BT projects are subject to separate
regulations);
- Production of cement, steel and iron;
- Production of industrial explosives;
- Afforestation and planting of perennial industrial crops;
- Travel tourism; and
- Culture, sport and entertainment.
Question 66.
Re. Question 143 (WT/ACC/VNM/3):  Are the exemptions on import duties foreseen for foreign
enterprises that invest in economic processing zones and in industrial zones equally applicable
to domestic investors?WT/ACC/VNM/6
Page 27
Answer:
According to the current tax policies, foreign in vestors investing into Vietnam (irrespective of
investing into IZs or EPZs or other locations) always enjoy tax exemption or reduction equally to or in
a greater extent than domestic investors.
(e) Competition policies
Question 67.Re. Question 160 (WT/ACC/VNM/3) Please explain more specifically "certain indirect
measures" and "the legal framework".
Answer:
The term "certain indirect measures" is understood to mean measures which do not
specifically regulate competition, but still impact indirectly on competition.
The term "the legal framework" is to be understood as a set of rules of effective legal system.
Question 68.
Re. Question 160 (WT/ACC/VNM/3):  We understand that Vietnam is currently considering the
possibility of adopting a law on competition.  Could Vietnam inform the Working Party
whether a decision on this matter has been taken?  What criteria does Vietnam apply in the use
of the indirect measures described here?
Answer:
On 2 December 1998 the National Assembly of  Socialist Republic of Vietnam adopted the
legislation programme for laws and ordinances up to 2000, which has a plan to formulate a law on
competition.
Question 69.
Re. Question 161 (WT/ACC/VNM/3):  How is the sectoral development policy managed by
government agencies?
Answer:
Pursuant to current regulations, sectoral development policies are managed by the
Government agencies as follows:
Sectoral development policies included in economic-social development strategy are prepared
and approved via the following different levels:
Government's duties and responsibilities:- Unified management of building and developing national economy (Article 112.4,
Constitution 1992)
- Building and submitting of one-year, five-year, or long-term economic development
plans to the National Assembly (Article 19.3,4, Law on Government organization).WT/ACC/VNM/6
Page 28
One-year, five-year and long-term economic development plans and other social-economic
development policies will be approved by majority voting (Article 19.3,4, Law on Government
organization).
Ministries and Ministerial agencies under the auspices of the Government are authorized to
carry out State management, and instruction of implementing sectoral economic development plans
and strategies (Article 6.1, Decree No.15/CP dated 2/3/1993 of Prime Minister on managerial duties
and responsibilities of Ministries and other Governmental agencies).
III. FRAMEWORK FOR MAKI NG AND ENFORCING POLICIES AFFECTING
FOREIGN TRADE IN GOODS AND TRADE IN SERVICES
1. Powers of Executive, Legislative and Judicial Branches of Government(a) The State President
Question 70.
Re. Question 166 (WT/ACC/VNM/3):  We understand that the President of Vietnam retains the
power to decide whether or not to submit intern ational treaties to the National Assembly for
ratification.  Could Vietnam confirm or correct this interpretation?  What process will Vietnamfollow for the ratification of the WTO Agreement ?  What is the average time required for the
ratification of an international treaty in Vietnam?
Answer:
Under item 10, Article 103 of 1992 Constitution of the Socialist Republic of Vietnam the
State President has the right to “make the decisions on the ratification of or participation in the
international treaties, except for cases where the submission to the National Assembly for its decision
is necessary.
Item 2, Article 10 of the Ordinance on the Conclusion and Implementation of International
Treaties dated 20/8/1998 reaffirms that 'the State President makes the decisions on ratification ofinternational treaties, except for cases where the submission to the National Assembly for its decision
is necessary.
Therefore, the above interpretation is correct.
The ratification of WTO agreement shall conform to the provisions of the 20/8/1998
Ordinance on the Conclusion and Implementation of International Treaties of the Socialist Republic
of Vietnam. This ordinance clearly stipulates the process of ratification. Regarding the average time
needed for the ratification of international treaties in Vietnam, depending on the complexity and the
extent of commitments contained in the treaty, according to the Ordinance on the Conclusion andImplementation of International Treaties of the Socialist Republic of Vietnam, in case the State
President chooses to ratify the international treaty:
- Within 30 days from the date of receipt of the Government’s proposal of ratification,
the State President shall give written document of his/her opinion on the ratification;
- Within 15 days from the date of the ratification by the State President, the Ministry of
Foreign Affairs shall proceed with external works concerning the ratification of the
international treaty and inform the concerned entities of the effect of the treaty.’WT/ACC/VNM/6
Page 29
For the international treaty that the State President submits to the National Assembly for
ratification, the time limit is longer depending on the agenda of the National Assembly, the legislation
does not stipulate the time limit.
(b) Power of the local government
Question 71.We are seeking confirmation that  local governments will follow, in the limits of their powers,
WTO consistent policies and that the cent ral government will assure this conformity.
Answer:
Under the Articles 112,120, 124 of the 1992 Constitution, Articles 23, 24 of the Ordinance on
the Conclusion and Implementation of International Treaties, the Government and local authorities of
all levels shall implement the policies, measures necessary to fulfill the rights and responsibilities
under the international treaties that Vietnam has signed or participated in.
Question 72.
In answer to question 176 (WT/ACC/VNM/3), Vietnam states that local authorities can charge
some kind of fees on goods.  Is this also the case for agricultural goods?  If so, could Vietnamdescribe in more detail the sort and the amount of the fees?  Do the fees apply equally to locally
produced goods and imported goods?  Does Vietnam intend to maintain this system of fees?
Answer:
The local authorities have no right to promulgate any kind of fees on imported goods in
general and on agricultural products in particular.
3. Division of Authority Between Central and Sub-Central Governments
Question 73.
Please clarify the types of fees that can be charge d on imports by local authorities.  What is the
status of the new legal regulations on fees being drafted by Vietnam?
Answer:
The current regulations of Vietnam do not provide localities with authority to set fees and
charges on imports.
At present, the Vietnamese Government is drafting a decree on fees and charges which
contains regulations on the principles and authority to charge fees.
6. Description of Judicial, Arbitral or Administrative Tribunals or Procedures
Question 74.
Please confirm if importers and exporters have recourse to independent judicial tribunals to
appeal administrative rulings on trade matters, e.g., in the areas of customs valuation,
classification, application of quotas, licences, taxes and fees, etc.WT/ACC/VNM/6
Page 30
Answer:
Article 1 of the Ordinance on Procedures for Se ttlement of Administrative Disputes, adopted
on 21 May 1996, stipulates that every individual, entity and governmental body has the right to
initiate a case before the Administrative Court to protect their legitimate rights and interests.  Thus,importers and exporters have the right to appeal administrative rulings on trade matters referred to in
the question (as stipulated in detail in Articles 4, 6, 7 and 11 of the above-mentioned Ordinance) to an
Administrative Court.  The Administrative Court is a judicial tribunal in the system of People's Courts
(normal courts) and is independent from the executive branch.
Question 75.
Please outline the process an importer would undertake to appeal an administrative ruling by
customs authorities to such tribunals.  What is the court of last appeal for such cases?
If such recourse is not provided for, could Vietnam indicate how it intends to proceed to
establish it?
Answer:
Article 2 of the Ordinance on Procedures for Settlement of Administrative Disputes stipulates
that infringed parties first have to file a petition to the administrative agency which has made theadministrative ruling.  If the decision made by the administrative agency is not satisfactory to the
infringed parties, they have choice between two opti ons:  either to lodge another petition to the higher
administrative agency directly in charge of the initial decision-making agency or to initiate a legal
case at a responsible Administrative Court.
A complainant that wishes to initiate the administrative legal proceedings must file its request
to the Administrative Court within 30 days counting from the date of receipt of the decision of the
administrative agency on the complainant's petition.  Within the following 7 days, the complainant
has to pay the litigation fees.  The court officially initiates the case when an invoice certifying
advance payment of the litigation fees is presented by the complainant.
Within 60 days, the judge has to make either one of the following decisions:- try the case;
- suspend the legal proceedings; or
- terminate the case.
Appeal for an administrative case has to be made to the linear court higher than the
administrative court where the case was first tried.  The first administrative court where petition has to
be lodged is the district People's court.  In case the complainant is an importer, a foreign entity, a
foreign-invested enterprise or an enterprise located in industrial zone, export processing zone, high-
tech park run by a foreign-invested enterprise, the court where the case is first tried is theAdministrative People's Court at provincial level.
Question 76.
The collection of uncollected amount is vital to stabilize the trade relationship between two
nations.  In order to addressing the problem of the collections of uncollected amount, what are
the measures taken by the Vietnamese Government?  In particular, the verdict made by the
Supreme Court is neither in agreement with international custom nor with decree made by
Vietnamese Prime Minister.  What is the government standpoint on this issue?WT/ACC/VNM/6
Page 31
Answer:
It is the Vietnamese Government's stance that all credit organisations must operate in
accordance with the Law of Vietnam and the international practices which Vietnam has adopted.
The Vietnamese Government does not intend to address individual disputes arising from
business transactions in the multilateral trade nego tiations.  The particular case referred to in the
question is subject to the proceedings set up for disputes arising from business transactions.
The comments in the question have also been forwarded to the concerned juridical branch.
Question 77.
Please describe the competencies of the administrative court.  How are judges appointed?
Please describe how an appeal can be brought against a decision of the administrative court.
Answer:
Competencies of the Administrative Court
Under the provisions of Article 11 of the Ordinance on Procedures for the Settlement of
Administrative Disputes of 1996, as amended in 1998, the court has the competence to judge on the
following administrative cases:
- Appeal to decisions on penalties of administrative violation;
- Appeal to administrative decisions, administrative acts in the imposing  such
measures as  forced demolition of living house, constructions, solid architecturalobjects.
- Appeal to decisions on penalties of administrative violations, to administrative acts in
imposing or implementing administrative measures in the forms of: education in the
locality of residence; compulsory education in centres; administrative surveillance;
- Appeal to penalty decisions on the dismissal of employees, public servants holding
the position of head of department and under;
- Appeal to administrative decisions, administrative acts in the field of land
management;
- Appeal to administrative decisions, administrative acts in the licensing, withdrawing
permits of capital construction, production business;
- Appeal to administrative decisions, administrative acts in requisitions, compulsory
purchases, property confiscation;
- Appeal to administrative decisions, administrative acts in tax collection, tax arrears
collection;
- Appeal to administrative decisions, administrative acts in fee collection;
- Other appeals stipulated by the legislation.
Judges appointment
Standards: According to the provisions of the 1992 Law on People Court Organization and
the 1993 Ordinance on Judges and Jury of the People’s Court, Vietnam’s citizens loyal to the
Fatherland, having good moral quality, honest and incorruptible, strictly observing the law, havingfirm spirit of socialist legislation protection, having good health to ensure the implementation of
assigned tasks, can be selected and appointed as judge  in order to judge the cases under the
competence of the court.WT/ACC/VNM/6
Page 32
Besides the above general stipulation, in order to be appointed as judge for the  court of
particular level (Supreme Court, Provincial Court, District Court) the candidate has to meet specific
standards of capability relevant to each level of court.
Competencies and procedures for the appointment: All judges (except Presiding Judge of the
Supreme People’s Court who is elected by the National Assembly) are appointed by the State
President and dismissed or recommendation of the Judge Appointment Committee set up in the
central, provincial and district levels.
The term of office as judge of courts of all levels is 5 years, starting from the date of
appointment.
The order of appeal to and claim against the decisions of administrative courts:
Chapter IX (from Article 55 to Article 66) of the 1996/98 Ordinance on the procedures for
settlement of administrative disputes stipulates the procedures for appeal to the sentences or decisions
of the Administrative Court. The time limit of the appeal by the people concerned is 10 days, the timelimit of claim by the Prosecution at the same level is 10 days, by the Prosecution of higher level is 20
days from the date the Court passing  sentence or decision.
The appeal, claim are made in written document s as provided by the stipulation and submitted
to the Inferior Court that judged the case. Within 7 days from the date of receipt of appeal, claim, theInferior Court shall submit the written documents of appeal, claim to the Court of Appeal.
Within 60 days from the date of receipt of the documents, the Court of Appeal shall open the
trial of appeal. If the case has many complicated circumstances, the time limit may be extended but
not exceeds 90 days in aggregate. However, when judging the decision made by the Inferior Court theCourt of Appeal does not have to open the trial and summons the concerned peoples, except for cases
when the opinions of the peoples are needed to be heard before making decisions.  The Court of
Appeal has to make the decision on the settlement of  the appeal, claim within 15 days from the date of
receipt of the appeal, and claim.
Question 78.
Re. Question 191 (WT/ACC/VNM/3):  Vietnam affirms that the reform of the courts' structure
is intended to improve the implementation of ba sic judicial principles, such as the independence
of judges, the openness of court proceedings, etc.  Could Vietnam elaborate on the specific steps
it intends to take to introduce these improvements?  Please list the non-governmental
arbitration institutions that have been established in Vietnam.
Answer:
The reform of courts' structure to improve the independence of judges and the openness of
proceedings is a permanent task of the juridical branch. Therefore, it is continuously reformed to meetthe requirements of each period.
At present, there are four non-governmental arbitration institutions that have been established
in Vietnam, namely:
- The International Arbitration Centre besides the Vietnam Chamber of Commerce and
Industry;
- The Hanoi Arbitration Centre;
- The Ho Chi Minh city Arbitration Centre;
- The Bac Giang Arbitration Centre;WT/ACC/VNM/6
Page 33
Among them, only the International Arbitration Centre is dealing with disputes arising from
international trade.
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation(a) Registration requirements for engaging in importing
Question 79.In Annex III of WT/ACC/VNM/3/Add.1, in the section on Eligible Importers, Vietnam indicates
that, after meeting the necessary criteria, trad ing enterprises are limited in their scope of
business to that registered when the business was established.
- Does the Government of Vietnam determine or limit the scope of business of such
enterprises when they are established?  If not, why would any business voluntarily limit
its business scope when applying for an export-import business licence?
- Why are foreign production enterprises limited  in the scope of their business, for import
and export purposes, to their areas of production?
Answer:
In the past, enterprises could only import or export goods if an Import-Export Business
Licence had been successfully obtained from the Ministry of Trade.  By virtue of Government Decree
No. 57/1998/ND-CP dated 31 July 1998, which was effective as of 1 September 1998, this licensing
requirement was officially abolished.  As from 1 September 1998, all wholly (100 per cent)
Vietnamese-owned enterprises, irrespective of their ownership structure, nature (i.e., trading or
manufacturing) and size of capital, are allowed to import and export goods.
The Vietnamese Government does not limit or otherwise intervene in the scope of business as
opted by Vietnamese enterprises.  The Government only provides for the fields in which business
activities are prohibited (such as arms, narcotics, etc.) or conditional (the conditions are mainly set up
for safety, human health and environmental purposes).  Other than the prohibited fields, the founders
of the enterprise are free to define the scope of business.  However, upon establishment, the enterprise
is required to register its scope of business at a responsible administrative agency and their businessactivities are subsequently confined to the registered scope of business.  In addition, the enterprise
which wishes to operate in the conditional fields of business has to meet all the requirements set by
the State.  The scope of business of an enterprise may be supplemented or modified later if they so
wish.
Except for the fields which foreign investments are prohibited or conditional, the Government
of Vietnam does not impose restrictions on the scope of business of foreign invested enterprises -
therefore, foreign investors can invest in almost all sectors of the economy.  With regard to the fields
which foreign investments are conditional, the investor has to meet certain criteria as defined by the
State.  Once the investment licence has been awarded, these enterprises can import, export goodswhich serve their investment objectives as specified in the investment licence.
On 23 January 1998, as a step toward levellin g the playing-field between Vietnamese-owned
and foreign-invested enterprises, the Government of Vietnam promulgated Decree No. 10/1998/ND-WT/ACC/VNM/6
Page 34
CP which allows foreign invested enterprises to purchase for export and export goods they do not
produce, except the goods in the list of export-prohibited goods and the following:
- Rice (HS 1006.10 ~ 1006.40);
- Explosives and inflammables (HS 3601 ~ 3604 and 3606);
- Books, magazines (HS 4901, 4902);
- Pearls, precious stones and metals, jewellery (HS 7101 ~ 7116 and 7118);
- Fine-art items, collectibles, antiques (HS 9701 ~ 9706);
- Garments and textiles exports to the European Communities, Canada, Norway and
Turkey;
- Processed items made from wood;
- Coffee beans;
- Wild animals;
- Forestry plants for seeds;
- Aquatic products; and
- Minerals.
Foreign invested enterprises can only export goods falling into the 12 above categories if the
investment licence specifies these goods in their scope of business.
With regard to importation of foreign invested enterprises, the past regulations are still in
force (i.e., they are only allowed to import goods which serve their investment objectives).
Question 80.
In response to questions 201 and 202 (WT/ACC/VNM/3),Vietnam lists types of business
enterprises but does not include a category of foreign trading enterprises in the list.
Does Vietnam allow for or provide for the establ ishment of foreign trading companies that can
import goods and services that are not production companies?  If so, are there minimum
investment requirement associated with the esta blishment of a non-production foreign trading
company?
Answer:
Vietnam does not encourage foreign investment in pure trading without a local production or
manufacturing base.  However, as of present, some enterprises in different forms of investment have
been licensed to provide duty free shopping services and to operate trade centres.
As provided for in Article 13.3, Decree No. 10/1998/ND-CP, foreign invested enterprises are
allowed to purchase goods locally for direct exportation or exportation after processing - provided that
these goods are not subject to prohibition or restrictions.  For further details, please refer to the answer
to question 79 herein.
Question 81.
In response to question 202 (WT/ACC/VNM/3) Viet nam states that the classification of
enterprises into production enterprises and non-production trading enterprises is not applied to
foreign-owned enterprises.
Is this because there are no foreign non-production trading enterprises?WT/ACC/VNM/6
Page 35
Answer:
Please refer to the answer to question 80 above.
Question 82.
In response to question 204 (WT/ACC/VNM/3) Vietnam states that a non-production trading
enterprise must have, at its disposal, the equi valent of United States' dollars 200,000 in “owned
capital.”
Does that amount include the value of a business establishment or must that amount be
available on a liquid basis?  Does the same requirement apply to both foreign-owned and
domestic trading enterprises?
Answer:
This requirement on working capital is no longer effective.  Please see the answer to
question 79 for further details.
At present, foreign-invested enterprises are subject to the Law on Foreign Investment and
domestic enterprises are subject to a different set of regulations.
Question 83.
In the response to question 208 (WT/ACC/VNM/3), Vietnam states that the lines of business
activities covered by the business licence are based on the enterprise’s application.
Is it required for a firm applying for an import-export business licence to list specific lines of
business activity?
Answer:
The Import-Export Business Licence is no longer required.  Please refer to the answer to
question 79 herein for details.
Question 84.
Re. Question 201 (WT/ACC/VNM/3).  In its response, Vietnam states that “foreign-owned
enterprises are permitted to import products wh ich meet the needs of their own production and
export their own products.”  Are foreign-owned enterprises allowed to import products (not for
re-export) that are not used for production?
Answer:
Please see the answer to question 80 herein.
Question 85.
When does Vietnam intend to implement the pla nned relaxation of the regulations on import-
export business licensing?WT/ACC/VNM/6
Page 36
Answer:
The Government's Decree 57/1998/ND-CP on 31 July 1998, which has been effective from
01 September 1998, has abolished the import-export licensing requirements. As from 1 September
1998, all wholly (100%) Vietnamese-owned enterprises, irrespective of their ownership structurenature (i.e., trading or manufacturing) and size of capital, are allowed to import and export goods.
(b) Characteristics of the national tariff
Question 86.In reply 213 of WT/ACC/VNM/3, Vietnam states th at their tariff schedule was issued in 1993,
based on 1992 HS, and has since undergone many amendments.  Vietnam further states that
their nomenclature of import and export commodities, which is not used for tariff purposes, is
based on HS 96.  In WT/ACC/VNM/3 reply 214, Vietnam states that to meet immediate needs
they have developed a tariff schedule in parallel with their nomenclature but that evolution has
lead to subsequent discrepancies between the nomenclature and the tariff schedule.
This ad hoc system lacks transparency and therefore a tariff schedule based on 1996 HS is
essential.
- In the mean time, can Vietnam please elaborate on the current system?  What
amendments has their 1993 tariff schedule gone through?
- Please supply the Working Party with an electronic version of your current tariff
schedule.
Answer:
The Vietnam's current tariff schedule encompasses changes made to the 1993 import-export
tariffs with respect to both nomenclature (i.e., some codes have been split or merged) and rate of duty
reflecting the development needs of Vietnam.
Vietnam is in the process of elaborating a modified tariff schedule which will be consistent
with HS 1996 at the 6-digit level.  Some sub-headin gs would be further elaborated at the 8-digit level
for tariff and statistical purposes.
Vietnam's current tariff schedule was legalized by Decree of the Prime Minister in 1994 and
subsequently amended and supplemented by decisions  of the Minister of Finance.  At present, a
consolidated tariff schedule is not available in electronic format for provision to the Working Party.
This tariff schedule will be provided in due course.
Question 87.
In WT/ACC/VNM/3 reply 213, Vietnam states that  they are planning to apply a new tariff
nomenclature based on HS 96.
Please provide a time frame in which a tariff schedule based on HS 96 nomenclature will be
implemented.
Answer:
Please see the answer to question 86 herein.WT/ACC/VNM/6
Page 37
Question 88.
In WT/ACC/VNM/3 reply 221 and 222, Vietnam a ddresses the quota levels, tariff rates and
local content requirements on automobiles and automobile parts.  Currently, Vietnam has a
quota level on passenger vehicles “for the purpose of maintaining a number of carscorresponding to the infrastructure conditions”, has minimum local content ratio of 5 per cent
in the first year of unassembled kits, and applied tariff rates as high as 60 per cent on
automobiles and automobile parts.
Vietnam mentions in reply 221 in WT/ACC/VNM/3 that they are in the process of tariff reform.
How will this reform affect autos and what new ta riff rates would we expect on automobiles and
automobile parts?
Answer:
Vietnam is elaborating a modified tariff schedule.  As the new tariff schedule is only in draft
form, we are not in a position to provide information on changes to tariffs on automobiles andautomobile parts.
Question 89.
When does Vietnam expect to implement the 1996 version of the Harmonized Tariff
Classification System and how ar e its preparations progressing?
Answer:
It is planned that the HS Convention will come into force in Vietnam on 1 January 2000.
Please see also the answer to question 86 herein.
Question 90.
Is an up to date consolidated national tariff availa ble?  If so could an electronic and/or a hard
copy be provided to the Secretariat?
Answer:
Please see also the answer to question 86 herein.
Question 91.
Re. Question 215 (WT/ACC/VNM/3).  When does Vietnam expect to provide the Working Party
with a consolidated tariff schedule?
Answer:
Please see also the answer to question 86 herein.
Question 92.
Re. Question 220 (WT/ACC/VNM/3).  Vietnam has noted that it accords different degrees of
preferential treatment for various products under ASEAN’s Common Effective Preferential
Tariff (CEPT) depending on which category they are in.  Are Vietnam’s Inclusion List,
Temporary Exclusion List, General Exclusion List, List of Sensitive Agricultural Products and
List of Highly Sensitive Products available to the Working Party?WT/ACC/VNM/6
Page 38
Answer:
Vietnam became member of ASEAN as from July 1995 and, as part of its membership
commitments, submitted 4 lists:  the Inclusion List, the Temporary Exclusion List, the GeneralExclusion List and the Sensitive List of Unproce ssed Agricultural Products.  ASEAN is a regional
arrangement which is justified by Article XXIV of GATT 1994.
These above-mentioned lists are part of ASEAN's documentation possibly subject to on-going
negotiations among ASEAN Members.  The ASEAN Secretariat will duly provide to the WTO
Secretariat all documents which can be notified.
Question 93.
Re. Question 224 (WT/ACC/VNM/3).  We note that Vietnam’s export and import tariffs are
publicly available.  Could Vietnam please identify the agency or government department
responsible for publishing this information?
Answer:
All legal documents relating to Vietnam's export and import tariffs are publicly available in
the Official Gazette and other economic publications.  At present, Vietnam is solving some technicalissues before it can publish the consolidated tariff schedule.
Question 94.
Do you have any plan to lower the high tariff  rate in conformity with the international
standard?
Answer:
Please refer to the answer to question 109 herein.
Question 95.
The minimum local content requirement for the establishment of automobile assembly factories
is clearly a measure contrary to the TRIMs Agre ement.  What steps does Vietnam envisage in
order to eliminate this infringement?
Answer:
Vietnam is currently pursuing a localization plan for automobiles and development of
automobile parts production. In the process of  liberalization, the Government of Vietnam is
considering to apply more liberal regime in which enterprises may voluntarily register theirlocalization ratio instead of being required administratively as currently applied.
Question 96.
How and by whom are special cases determined which allow a reduction of the import duty for
enterprises with foreign owned capital accordin g to Article 11 of the Law on Import-Export
Duty?WT/ACC/VNM/6
Page 39
Answer:
For imports which are eligible for duty reduction or exemption, the importer (who may be
both a domestic enterprise or a foreign-owned enterprise) are required to file an application to the
General Department of Taxation, the Ministry of Finance for approval on case by case basis. Thedocumentation requirement of the application is specified in the legal documents guiding the
implementation of the Law on Export and Import duties. For equipment, machinery, specialised
means of transport imported for use in the capital construction establishing a foreign-invested project,
the above procedures are not required if the Ministry of Trade has approved the import.
Question 97.
Re. Question 224 (WT/ACC/VNM/3):  Has Vietnam concluded the study on the implementation
of fees and charges compatible with WTO regulatio ns?  If yes, could Vietnam give a copy of the
results to the members of the Working Party?
Answer:
The study has not been completed. Vietnam w ill provide the information to the Working
Party as soon as the process is finished.
Question 98.
Vietnam has said it was planning to apply a new import tariff nomenclature based on HS 1996.
We are looking forward to receiving informat ion about Vietnam's presently applied import
duties based on the HS nomenclature.  Are there any new developments on this issue?
Answer:
The import tariff nomenclature of Vietnam is basically based on HS 96 up to 6-digit level.
Vietnam is working with other ASEAN countries on an ASEAN-harmonized tariff nomenclature
which is planned to be adopted by ASEAN countries in the year 2000.
Question 99.
Vietnam has stated that since February 1996 the General Customs Office is responsible for
collection and dissemination of foreign trade data.  Does Vietnam now have available import
statistics by product (and if possible by tariff line) for the year 1997?
Answer:
The Government's Decree 89/CP on 15 December 1995 stipulates that the General Customs
Office is responsible for collection of foreign trade data from the customs declaration forms and
dissemination of these data to the Ministry of Trade, Ministry of Planning and Investment, Office ofthe Government and General Statistical Office. The Government's Decree 23/CP on 23 March 1994
stipulates that the General Statistical Office the focal point which is responsible for collecting,
analyzing and making public all national statistical data for use by other individuals and organisations.
Import statistics by product and by tariff line for the year 1997 is not yet available in
Vietnam.WT/ACC/VNM/6
Page 40
Question 100.
Exporters have brought to the attention of ou r authorities the increase in the import duty on
wheat flour from 10 per cent to 20 per cent which came into effect in October 1998.  Such an
increase is not consistent with the standstill expectation on new trade distorting measures.Would Vietnam advise the reasons for the in creased tariff?  Will Vietnam reconsider its
decision to increase the im port duty on wheat flour?
Answer:
The past tariff nomenclature of Vietnam was promulgated at the beginning of 1992 when the
economy was very weak, there was almost no meaningful industry in the country. In the developmentof domestic economy the tariff nomenclature is being duly adjusted. At present, the Vietnam economy
is being restructured. Therefore, the tariff nomenclature is also being adjusted to keep up with the
economic changes, helping the domestic infant industries to develop. Vietnam will make tariff
binding commitments in order to stabilize envir onment regulating the international trade flows.
Question 101.
Have import duties been increased on other products for similar reasons?  If so, would Vietnam
please provide details of tariff item numbers, product descriptions and the "old" and "new"
import duty levels for the affected goods?  Ha s Vietnam introduced any other import restricting
measures since the first Working Party meeting?
Answer:
Please refer to the answer to question 100 herein.
From the first meeting of the working party up to now (31/12/1998), Vietnam has not applied
any new import restrictions.
Question 102.
A new Export-Import Tariff Law was to be implemented on 1 January 1999.  Would Vietnam
please provide the Working Party with a summary of the types of changes resulting from the
new law?  Will tariff levels be affected by the changes?  If so, we would appreciate information
on items where tariffs have been reduced and increased.
Answer:
Presently, Vietnam applies the Export-Import Tariff Law, which was promulgated in 1991, as
amended in 1993 and 1998. From 1/1/1999, the 1998 Amendment was implemented with the main
changes of tariff as follows:
- Normal tariffs applied to goods originating from the countries which have no MFN
trade agreements with Vietnam;
- MFN tariffs applied to goods originating from the countries which have MFN trade
agreements with Vietnam;
-  Preferential tariffs applied to goods originating from the countries which have
special preferential import tariff agreements with Vietnam;
- Besides, the Law stipulates that the goods are subject to additional import duties in
the following cases: the goods imported in Vietnam with lower prices as compared to
normal prices as a result of dumping, export subsidies which hamper the production
of similar goods in Vietnam; the goods originating from the countries whichWT/ACC/VNM/6
Page 41
discriminate goods originating from Vietnam in terms of import tariff or other
measures.
Question 103.
What are the procedures which must be followed under the amended legislation before tariff
levels can be adjusted?
Answer:
Based on the tariff frame for each group of goods which is stipulated by the Standing
Committee of the National Assembly, the Government determines the tariff rates of the nomenclaturein details.
Question 104.
Under the new Export-Import Tariff Law countries w ill fall into one of three categories – MFN,
non-MFN and Special.  Will Vietnam please advise the difference in treatment accorded to
products originating from MFN and Special category countries?  What are the law's criteria for
allocating countries between the categories?
Answer:
Please refer to the answer to question 102 herein.
(d) Other duties and charges
Question 105.
The price stabilization surcharges of 5-10 per cent on imports of petroleum, iron and steel, and
fertilizer described in this section appear to act as a sort of variable levy applied to raise import
prices.  It is non transparent and appears to be used in lieu of WTO-consistent legislation on
antidumping.
These surcharge rates appear to be applied at different levels on petroleum and petroleum
products in the north and the south.  This seems to conflict with the requirement that WTO
provisions be uniformly applied throughout the customs territory.
We would appreciate information on the level of the fees listed in response to questions 230 and
235 (WT/ACC/VNM/3).  Are these fees at specific levels, or are they ad valorem ?
Answer:
The maximum selling price for petroleum is set differently for different regions (e.g., the
price set for the North is higher than the South) to  reflect the different transportation costs to these
regions.  At present, whenever invoked, price stabilization surcharges on petroleum are set at a single
rate uniformly applied to all regions.
The stabilization surcharge is applied on c.i.f. price on ad valorem  basis.  The surcharge is
only invoked when there exists significant price differentiation and is set at varied rates which must in
no case exceed 70 per cent of the price differentiation margin.  The purpose of the surcharge is to
stabilize domestic price in the face of international price fluctuations.  The surcharge is invoked when
international prices fall significantly below the regulated maximum selling prices.  Alternatively, if
international prices rise, resulting in losses to the enterprises which are bound by the regulatedWT/ACC/VNM/6
Page 42
maximum selling prices, then the funds obtained fr om the stabilization surcharge would be disbursed
to stabilize domestic prices.
Question 106.
Import surcharges are applied to certain petroleum products, iron and steel, and fertilisers
(reply to question 228, WT/ACC/VNM/3).
- Could Vietnam advise the reason for the surcharges and the legislation under which they
are levied?
- How is the "reasonable domestic selling price" of each good determined?- What plans does Vietnam have to eliminate these surcharges?
Answer:
The Price Stabilization Fund was inaugurated in May 1993 by Prime Minister's Decision
No. 151/TTg on 12 April 1993.
The stabilization surcharge is applied for the purpose of mitigating the effects of international
price fluctuations on the domestic price -- and thus protecting the interests of consumers and industrialusers.
The Fund is only applied to the commodities of which the State regulates maximum price on
the basis of production and distribution costs, supply and demand, domestic and international price.
The purpose of application is to protect the interests of consumers and industrial users.
Vietnam does not yet have plans to eliminate these surcharges in the immediate future.
Question 107.
Re. Questions 216, 227, 230 and 234 (WT/ACC/VNM/3)  Vietnam answers that the imposition of
additional charges on imported products is based on the price control policy and that they are"charges other than duties".  However, as provided in paragraph 1(a) of Article VIII of the
GATT 1994, "charges other than import duties" shall be "limited in an amount to the
approximate cost of service" and shall not be justified by price control reasons.  Furthermore,
regarding "charges other than import duties", Vietnam answers in question 216 that such
"additional charges" are imposed by no means other than for price control reasons.  At the
same time, in its answers to questions 230 and 234, Vietnam replies that it imposes customs
clearance fees, warfare charges, customs warehousing fees and fees for storage and port space
rent.
Are there any other types of char ges in relation to importation?
Please provide a comprehensive list of produc ts with HS numbers, on which charges are
imposed, together with the amount.
Answer:
At present, besides the price stabilization surcharge, Vietnam also levies "Customs Fees" on
imported goods as follows:WT/ACC/VNM/6
Page 43
- customs warehousing fee;
- customs clearance fee (at places other than officially designated places for customs
clearance) at the request of goods owners;
- accompanying (escort) fee and sealing fee;
- goods fee (including postal packages and parcels, luggage and means of transport in
transit or hiring passage through Vietnam, consigned import, export goods for
foreigners);
- customs' document certification fee.
For List of "Customs fees" and the corresponding rates, please see Annex 1 of document
WT/ACC/VNM/6/Add.1.
Vietnam does not set fees according to HS classification.  Fees are set for type of service
rendered.
Question 108.
Re. Question 231 (WT/ACC/VNM/3).  Vietnam answers that that the items on which customs
clearance fees are imposed and the amount of fees applicable change from time to time.  For the
purpose of predictability in trade transactio n, customs clearance fees should be regulated
through legislation, and the items and amount of fees should not be changed with unreasonable
frequency.
Answer:
Rate of "Customs fees" will be adjusted when market prices fluctuate over 20 per cent.  Based
on the practical situation, the Ministry of Finance in coordination with the General Department ofCustoms prepares guidelines for adjustment of the fees.
Question 109.
Tariff rates of Vietnam range from 0 to 60 per cent (highest in alcohol (60%), petroleum (55%)
and automobiles (55%).  About 52 per cent of the tariff lines are at 0-5 per cent.  The average
import tariff rate was estimated at 15-16 per cent in 1996.
We would like to know if there has been any changes since 1996, and whether Vietnam has
plans to further reduce its tariff rates and bind its tariff rates at existing level?
Answer:
Since 1996, Vietnam's tariff schedule has been modified (i.e., reduced or increased tariff
rates) on a number of occasions in response to the country's development needs.  Vietnam has no
intention of binding its tariff rates at existing levels.
Question 110.
In addition to import duties, Vietnam also applies a surcharge of about 5-10 per cent over the
c.i.f. price value of selective import and export items to support the Price Stabilization Fund.
How many tariff lines are subject to the arrang ement (for import and export respectively) in
1997?
What criteria are adopted for selecting import/export items for imposition of surcharge?WT/ACC/VNM/6
Page 44
Answer:
The stabilization surcharge is only applied to a very limited number of import commodities
which are regulated by the State and is only invoked when there exists significant price differentiation
between domestic and international prices.  The surcharge rate is not set definitely but is flexibledepending on international price fluctuation.
Please see the answer to question 228 of document WT/ACC/VNM/3.
Question 111.
Re. Question 230 (WT/ACC/VNM/3):  Could Vietnam specify the level of each fee and the
services rendered for each of the customs fees listed in reply to question 230?
Answer:
Please refer to Annex 1 and 2 of WT/ACC/V NM/6 which provides the information on
customs fees and charges in detail.
Question 112.
In answer to question 230 (WT/ACC/VNM/3), point 4, Vietnam refers to a list of sensitive
agricultural products, which have 23 tariff lines (a t 6 digit level) which "will be totally phased in
the inclusion list by the year 2013 with final bound rate of 5 per cent".
- Could Vietnam provide a copy of this list to members of the Working Party?
- Are there any overlapping of products on this list with products on the different lists
Vietnam has already provided (in WT/ACC/VNM/3/Add.1), like the lists in Appendix 7
(list 1:  Products Subject to Line-Management and list 2: Products Subject to Import
Restriction)?
- Can Vietnam confirm that it intends to bind sensitive agricultural products at 5 per cent
by the year 2013?
Answer:
The question refers to Vietnam's commitments in the Agreement on Common Effective
Preferential Tariff (CEPT) implementing the ASEAN Free Trade Area (AFTA). This is an regional
trade arrangement which has been notified by ASEAN Secretariat to the WTO Secretariat in
accordance with the Article XXIV of the GATT 1994.
(e) Quantitative import restrictions, including prohibitions, quotas and licensing systems
Question 113.
In reply to question 242 (WT/ACC/VNM/3), Vietnam indicates that it has abolished its system
of restricting the value of consumer goods imports overall to no more that 20 per cent of total
export revenue, and uses import licensing to control consumer goods imports.  Vietnam also
states that it will replace this system with import tariffs.
Vietnam will need a normal tariff schedule to negotiate its goods market access schedule in the
context of accession to the WTO.
- Please outline the steps Vietnam has taken to date to implement a tariff schedule and
convert to a tariff-based import regulatory system.WT/ACC/VNM/6
Page 45
Answer:
As outlined in the Memorandum and relevant answers in document WT/ACC/VNM/3, in its
policy restructuring efforts, Vietnam has unilaterally phased out quantitative restrictions on importsand now tariffs are used as the primary tool to regulate imports.  For example, quotas and licensing
requirements on hundreds of tariff items of consumer goods were abolished at the beginning of 1998.
Likewise, quantitative restrictions and licensing requirements on clinker, 12-seat-plus passengers'
cars, trucks, logs, timbers were terminated in the beginning of 1998.
Question 114.
In WT/ACC/VNM/3, in response to question 448, Vietnam provided a list of products that were
limited, prohibited or under strict controls, including of autos, used equipment, used clothes and
“sub-materials of inferior quality”.  This policy appears to violate the principle of national
treatment.
- How are the restrictions on used items ap plied to similar goods produced in Vietnam?
- Does Vietnam prohibit the domestic sale of used clothing produced in Vietnam?- Does Vietnam prohibit the internal sale of sub-materials of “inferior quality” that have
been produced in Vietnam?
- After equipment has been used in Vietnam, is it’s internal sale prohibited?  If so, how is
this policy implemented?
Answer:
Restrictions on automobiles are partly used for environmental protection (if environment is
interpreted in its broadest meaning).  However, it is only one of the deciding factors.  For example,
Vietnam restricts imports of both new and used automobiles while new automobiles do not have
harmful environmental effects.  The underlying purpose of restrictions on automobiles, as given in the
relevant answers in document WT/ACC/VNM/3, is  to ease the serious imbalance between road
infrastructure conditions and the number of vehicles, in particular in the big cities.
Environmental considerations are also one, but not the deciding factor in the application of
restrictions on used equipment.  The main purpose of the restriction is to ensure labour safety and to
improve technology and competitiveness.  The prohibition of used equipment in industries whichrequire strict safety standards is applied uniformly for both imported and locally produced equipment.
The term "sub-materials of inferior quality" was improperly translated from the Vietnamese
term and should be corrected as "industrial waste".  It is Vietnam's view that every country has rights
to apply strict control measures, including prohibitions, on industrial wastes.
Vietnam's environment policies are applied uniformly.  Vietnam does not allow the
establishment of enterprises to do trading in used clothing or industrial wastes which may be harmful
to the environment.  Trade in used clothing only exists in flea markets in insignificant quantities.
Question 115.
The term “sub-materials of inferior quality” is vague and could lead to uncertainty for traders.WT/ACC/VNM/6
Page 46
Please provide a definition of this term incl uding the HS numbers for all goods covered by this
policy.
Answer: .
The term "sub-materials of inferior quality" is a translation error.  The term should be
correctly translated as "industrial wastes".
Question 116.
We appreciate Vietnam's readiness to address import restrictions that are inconsistent with
WTO rules.  Please identify each of these re strictions and specify the type of action that
Vietnam intends to take and time of implementation in order to eliminate the inconsistencies.
Answer:
The existing import restrictions are provided in Annex 2, WT/ACC/VNM/2. Vietnam is
reviewing these measures for an appropriate phasing-out in consistence with the WTO rules and its
level of development.
Question 117.
Re. Question 238 (WT/ACC/VNM/3):  What are the means of appeal against a decision that
certifies a toy as "morally pernicious" and/or a product as "depraved culturally and
reactionary"?  Is the national production of these products and toys also forbidden?
Answer:
As stipulated in Government's Decree 02/CP on 5 January 1995, toys which are morally
pernicious or harmful to the children's health, security or public order (such as fire crackers, guns,
etc.) and illegal cultural products are prohibited from domestic production, importation or circulation
in the Vietnamese territories. However, individuals and entities can make an appeal against such
decisions in accordance with the Law on Complaints and Accusation of 2 December 1998 or the
Ordinance on Settlement of Admi nistrative Disputes of 1996/1998.
Question 118.
Re. Questions 242, 246 and 250 (WT/ACC/VNM/3):  Vietnam still maintains a limitation on the
import of several goods.  We are interested in being informed of the steps that Vietnam is taking
to remove these restrictions.
Answer:
The steps that Vietnam will take to remove these restrictions will be identified at a latter point
in the future.
Please see also answer to question 116 herein.
Question 119.
Re. Question 272 (WT/ACC/VNM/3):  Are any of the anti-smoking measures described in the
answer to question 272 applied in a discriminatory manner?  Given the fact that domestic
production of cigarettes is allowed, the prohibition to import them seems clearly to be in breach
of WTO rules.  What steps is Vietnam taking to remove this inconsistency?WT/ACC/VNM/6
Page 47
Answer:
The anti-smoking measures described in the answer to question 272 are applied uniformly in
the territories of Vietnam in a non-discriminatory manner.
In addition to the plans that have been notified, Vietnam does not yet have any other plans for
elimination.
Question 120.
In the answer to question 272 (WT/ACC/VNM/3), Vi etnam lists products subject to quantitative
import restrictions in 1995 - 1997.  Anot her list (list 2) in Appendix 7 (in
WT/ACC/VNM/3/Add.1) refers to "Products Subject to Import Restrictions".  Is the difference
in the number of products on the two lists due to the time of application, or is there another
explanation?
Answer:
Please refer to answer 123 herein.
Question 121.
In answer to question 272 (WT/ACC/VNM/3), Vietnam says it is applying some import quotas
that are not tariff quotas.  In order to be in conformity with the Agreement on Agriculture, we
expect Vietnam to eliminate such quotas for agri cultural products, no later than when Vietnam
accedes to the WTO.
Answer:
A comprehensive schedule for phasing-out of WTO-inconsistent import restrictions will be
addressed in the market access negotiations.
Question 122.
In relation to the answers 273 and 274 (WT/ACC/VNM/3) that Vietnam provided, we would be
interested to know how import restrictions for milk powder and condensed milk can be based
on "environmental reasons"?
Answer:
The imports of milk powder and condensed milk are regulated by a general mechanism
applicable to all imports of consumer goods. In a ddition, they are subject to Ministry of Health's
inspection for the purpose of food hygiene and safety standards. They are not subject to any other
import restriction measure.
Import Prohibitions
Question 123.
Vietnam has provided three different lists of prohibited goods (WT/ACC/VNM/2 Appendix 2,
WT/ACC/VNM/3/Add.1 Annex 3, and WT/ACC/VNM/3/Add.1 Appendix 7 List 2).  These lists
are not identical, however, e.g., bicycles appear in Annex 3 but not in Appendix 7.WT/ACC/VNM/6
Page 48
- Please provide a single, comprehensive, co nsolidated list of Vietnam’s current
quantitative restrictions, including bans, quotas, and restrictive licensing requirements.
Please provide the HS number, description, the type of restriction, and the agency or
ministry responsible for control of these goods.
- Vietnam should also provide, for each me asure currently in place, a timetable for
elimination or appropriate WTO justification.
Answer:
The most comprehensive list of prohibited imports is Appendix 2 in WT/ACC/VNM/2.
Products listed in Section A of Annex 3 in WT/A CC/VNM/3/Add.1 are only some of the items on the
import prohibition list.  Please see the answer to question 124 herein for the reasons why they are
given in Annex 3.  WT/ACC/VNM/3 /Add1 Appendix 7 list 2 includes prohibited items to which an
HS code can be attached.  Other items which have no HS code (e.g., depraved and reactionary cultural
products, morally pernicious toys, some used consumer goods, right-hand drive vehicles, etc.) are not
included in this list.
Vietnam will provide a complete list with HS 96 code when such list is completed.
Question 124.
In section A of the table in WT/ACC/VNM/3/Add.1 Annex 3, Vietnam lists four product groups
for which imports are prohibited.
- Does Vietnam have any domestic producers of these products?
- Are domestic producers subject to the same prohibitions as foreign producers?
- Once a new consumer good or part of motor vehicle has been used in Vietnam is the
domestic re-sale of this item prohibited?  If so, how does Vietnam enforce this policy?
- If not, this appears to be a violation of GATT Article III on national treatment.  How
does Vietnam plan to bring this poli cy into conformity with WTO rules?
Answer:
Concerning Section A, Appendix 3 in WT/ACC/VNM/3/Add.1, we would like to make some
clarifications:
This section does not provide a complete list of Vietnam's import prohibitions.  The 4 product
groups listed are part of the import prohibition list where importation is subject to prior approval from
the Prime Minister on case-by-case basis.  This measure is applied uniformly.  For example, local
manufacturers are not allowed to produce arms a nd toxic chemicals if approval from the Prime
Minister is not obtained - and the production must serve the objectives as mentioned in the "Note"
column of Section A of Table on "List of Items Subject to Import Licence".
While appropriate technical measures are not yet in place for regulating purpose, the
restrictions referred to in the question are only applied to imports.  At the same time, trading in theseitems is not encouraged in the domestic market.  When Vietnam is ready to apply effective sanitary,
traffic safety and industrial waste control measures, these import restrictions will be replaced by more
consistent measures.WT/ACC/VNM/6
Page 49
Question 125.
Appendix 2 in WT/ACC/VNM/2, Vietnam states that it prohibits imports of “morally
pernicious” toys and “depraved cultural and reactionary products”.  In reply 238 in
WT/ACC/VNM/3 Vietnam states that there are “... no legal documents stipulating thosecriteria” and that this practice is limited to toys and cultural products”.  Although there is no
formal definition for these categories, it is helpful for traders to have some idea of what type of
goods are covered.  The examples of toys  provided in reply 238 were helpful.
- Could Vietnam provide any more examples of the types of toys covered by this policy?- Could Vietnam provide specific examples of  the types of cultural products that are
covered by this policy?
- Could Vietnam provide HS numbers for th e products covered by these policies?
Answer:
Toys which are shaped like guns, knives, swords, grenades, police officer's clubs, etc. and
games (including electronic games) which advocate war, violence, etc. are considered as harmful to
children's character development.  Being a country which has undergone 30 years of war, Vietnam
seeks WTO Members' understanding for Vietnam's rationale in applying this measure.
Depraved cultural and reactionary products include, inter alia , books, newspapers, magazines,
publications, audio and visual products which prop agate and advocate war, violence, sex or which
distort Vietnam's history, degrade the nation or national heroes of Vietnam, disgrace Vietnam's
national moral values, etc.
HS codes for these products are not available.
Question 126.
The response to question 270 (WT/ACC/VNM/3) appears to indicate that while Vietnam has
unilaterally removed some quantitative restrictions, it intends to unilaterally retain others.
The provisions of Article XI of the GATT and other WTO provisions require that Vietnam
eliminate quantitative restrictions not provided fo r in the WTO Agreements in the context of its
accession.
Answer:
Vietnam's position concerning quantitative restrictions is given in the answer to question 138
herein.
Question 127.
Vietnam applies quantitative import restrictions to products such as petroleum, steel, cement,
sugar, automobiles, consumer goods which will need to be brought into conformity with GATT
Article XI prior to or by accession.  Vietnam will also need to abandon its policy of imposingimport bans/restrictions (such as the bans imposed on imports of motor vehicles in 1997 and on
confectionery, beer and beverages).  We also note that imports of unmanufactured tobacco,
cigarettes, etc. are prohibited (Appendix 7, List 1 of WT/ACC/VNM/3/Add.1).WT/ACC/VNM/6
Page 50
- Can Vietnam advise how these prohibitions and restrictions are consistent with GATT
Article XI?
- What plans does Vietnam have to open th e market for these products to external
competition?
Answer:
Vietnam is aware that its trade regime is not yet fully consistent with WTO's requirements
and will do its utmost to reduce inconsistencies.  However, this process will require time and other
factors as mentioned in the answer to question 138 herein will also be taken into consideration.
With regard to automobiles, Vietnam will maintain some restrictive measures, in particular on
less-than-12-seat automobiles for environmenta l purposes (with respect to used cars) and
infrastructure maintenance purposes.  For more detailed information, please see the answers to
questions 221 and 246 in WT/ACC/VNM/3.
For prohibition of cigarette imports, please see the answer to question 272 in document
WT/ACC/VNM/3.  Vietnam does not plan to lift re strictions on imports of cigars, tobacco and
cigarettes.
Question 128.
During 1995 and 1996 Vietnam restricted consumer goods imports in line with the policy of
limiting imports of finished consumer goods to 20 pe r cent of the value of total exports.  In reply
to question 266 (WT/ACC/VNM/3), Vietnam advised that it was now planning to replace this
quantitative restriction by tariff measures.
- Can Vietnam confirm that this restriction has been eliminated?
- Are consumer goods subject to any other forms of restriction, such as import licensing?
Answer:
Please see the answers to questions 113 and 158 herein.
Question 129.
Annex 3 to WT/ACC/VNM/3/Add.1 lists goods subject to import licences.  Items B2 to B13 and
C1 on the list are subject to import licens ing for the stated purpose of "quantitative
management".
- Could Vietnam please advise the volume or va lue of import licence issued for each of the
above groups in 1997 and 1998?
- What was the value of imports in 1997 for each of the groups?
Answer:
Please see Annex 5 to document WT/ACC/VNM/6/Add.1.WT/ACC/VNM/6
Page 51
Question 130.
Re. Question 241 (WT/ACC/VNM/3).  Vietnam notes that sugar is no longer on the list of
products that are “...considered relevant to the general equilibrium of the national economy”
and therefore subject to additional import rest rictions.  Could Vietnam confirm that there are
no other agriculture or agri-food products that  would be subject to these additional import
restrictions?
Answer:
Vietnam reserves the right to apply time-limited re strictions in agriculture.  However, in the
process of production re-structuring, Vietnam will make good efforts to conform to the internationalregulations.
Question 131.
Re. Question 245 (WT/ACC/VNM/3).  Could Vietnam please clarify which categories of
agricultural and food imports are considered to be consumer goods?
Answer:
Please refer to Appendix 1 in WT/ACC/VNM/3/Add.1
Question 132.
Re. Question 248 (WT/ACC/VNM/3).  Could Viet nam please submit a revised version of
Annex 7, List 2 in WT/ACC/VNM/3Add.1 that includes the rationale or justification for eachproduct subject to import restrictions.
Answer:
Please see the answer to question 123 herein.
Question 133.
Re. Question 250 (WT/ACC/VNM/3).  Vietnam notes that sugar no longer has a specific quota,
but that the relevant ministries are authorized  to “determine market demand and to appoint
appropriate import channel, with the aim of satisfying production and consumption
requirements and avoiding wide market fluctuation”.  How will the relevant ministriesdetermine market demand?  At what time of the year will this assessment take place?  Will the
import channel be a State enterprise or will the private sector also be eligible?  What are the
selection criteria for a State enterprise or a private business to be appointed as an importer of
sugar?
Answer:
The Ministry of Trade, the Ministry of Planning and Investment and the Ministry of
Agriculture and Rural Development jointly estimate the demand for sugar in the following year at the
end of the year.  These demand estimates are reviewed at important periods such as the Lunar NewYear or at the end of the sugar harvesting season (in May and June).
Market demand is estimated using the estimated figure of sugar consumption in the previous
year, an expected growth rate of sugar demand and other factors which may impact on sugar
consumption in the following year (e.g. climate cond itions, lunar festivals, etc.).  The demand figureWT/ACC/VNM/6
Page 52
is determined by subtracting the amount of stock holding (of large producers and traders) from total
supply (including production and importation).  Data are taken at the time of calculation.  The method
mainly used is extrapolation.
The indicative import amount of raw sugar is allocated to the sugar refineries.  The indicative
import amount of refined sugar is allocated on first-come-first-served basis.  Imports of refined sugar
are not channelled through assigned companies and the importers are not required to meet any criteria.
Vietnam, however, does not commit not to apply these measures in the future.  Restrictions on sugar
imports will be appropriately addressed in the context of accession negotiations.
Question 134.
Re. Questions 236 and 295 (WT/ACC/VNM/3).  According to list 2 of Appendix 7 in
WT/ACC/VNM/3/Add.1, Vietnam prohibits imports of tobacco (2401, 2402, and 2403), worn
clothing and other worn articles, etc. (6 90900 and 63100020), used parts and accessories of
vehicles (8714) and aircraft launching gear (8805.00).  No import prohibitions or restrictions
other than duties shall be maintained.  Exceptions should be narrowly interpreted andconsistent with the WTO rules.
We therefore ask Vietnam to lift these prohibitions and restrictions.
Answer:
Vietnam's position concerning quantitative restrictions is given in the answer to question 138
herein.
Question 135.
Re. Questions 242, 291, 92 and 293 (WT/ACC/VNM/3).  We welcome Vietnam's statement that
it will terminate the 20 per cent import restriction and replace it with customs duties.  Offers on
goods are expected to be submitted soon.  Is the import licensing system indicated in Annex 3 of
WT/ACC/VNM/3/Add.1 different from the one indicated in the list 2 of Appendix 7 of the same
document?  If so, please explain the outl ine of the system in the said Annex 3.
Answer:
Please see the answer to question 123 herein.
Question 136.
Re. Question 246 (WT/ACC/VNM/3).  Does Vietnam intend to maintain the import restriction
on vehicles?
Answer:
A comprehensive schedule for phasing-out of WTO-inconsistent import restrictions will be
addressed in the market access negotiations.
Question 137.
Re. Question 247 (WT/ACC/VNM/3).  Although List 2 of Appendix 7 in
WT/ACC/VNM/3/Add.1 indicates that Vietnam does not prohibit the importation of
pharmaceutical products, in its answer to question 247, Vietnam explains the contrary.  IfWT/ACC/VNM/6
Page 53
Appendix 7 is not a comprehensive product list of import prohibitions, please provide us with a
comprehensive one.
Answer:
Vietnam does not prohibit imports of pharmaceuticals.  The word "drugs" in the answer to
question 247 in WT/ACC/VNM/3 was used to refer to "narcotics".  The list of import prohibited
goods in Appendix 7 (WT/ACC/VNM3?Add.1) is ap plicable for 1998.  This list is stipulated
annually.
Question 138.
Re. Questions 250, 252 and 263 (WT/ACC/VNM/3).  Some products are subject to import quota.
According to the list of products subject to  import restrictions in 1995, 1996 and 1997, the
amount of the quotas on some products has been gradually reduced.  On the other hand, new
quotas were introduced on some products in 1997.  The quantitative restrictions are considered
to be incompatible with the free trade regime.
Does Vietnam intend to maintain the import quota system?
Answer:
Vietnam's trade liberalization process has been on-going and Vietnam's approach to trade
liberalization is serious.  However, the extent a nd duration of application of the import restriction
regime are contingent upon many factors.
Question 139.
Re. Questions 256 and 270 (WT/ACC/VNM/3).  Could Vietnam provide the action plan to
abolish the quantitative restri ctions indicated in the answer to question 256 in WT/ACC/VNM/3
and in list 2 of WT/ACC/VNM/3/Add.1?
Will Vietnam abolish the quantitative restrictions on sugar after its accession to the WTO?
Information on import quota after 1996 should be provided.  There seems to be a discrepancy
between the answer to question 256 in WT/ACC/VNM/3 and Annex 1 in
WT/ACC/VNM/3/Add.1.  For example, the former shows 70 thousand tons in 1995, the latter
140 thousand tons in 1995.
Answer:
Vietnam's position concerning quantitative restrictions is given in the answer to question 138
herein.  For a schedule for removal of quantitative restrictions, please see the answer to question 316
herein.  With respect to sugar, please see the answer to question 159 herein.
Due to printing errors, the figures on sugar imports in 1995 in the answer to question 256 in
WT/ACC/VNM/3 are not correct.  The quota in 1995 was 170,000 tons and the actual amount
imported was 140,000 tons.
Question 140.
Re. Question 282 (WT/ACC/VNM/3).  Vietnam's answer provides the conditions necessary for
enterprises to be eligible for the allocation of  import quotas and the criteria required to beWT/ACC/VNM/6
Page 54
granted import-export trading rights and import/export licences with regard to the products in
question.
Are there discriminatory treatments for foreign enterprises in such criteria?
Answer:
Import and export operation of Vietnamese wholly owned enterprises and enterprises with
foreign investment are ruled by different sets of regulations.
Please refer to the answer to question 79 herein.
Question 141.
Re. Question 284 (WT/ACC/VNM/3).  We note that the import prohibition on motor vehicles
with right-hand steering is due to the Traffic Code, which prohibits the use of right-hand
steering vehicles on the roads.
Does Vietnam allow the importation of right-hand steering vehicles for the purpose other than
going on roads?
Could Vietnam explain the background for prohibiting right-hand steering vehicles on roads?
Answer:
Imports of right-hand drive vehicles which are used for purposes other than going on roads
may be allowed by special approval of the Prime Minister.  These vehicles include buses fortransporting passengers in airports, cranes, fork-lift trucks for in-factory usage, etc.
In the late 80s and early 90s, Vietnam allowed imports and circulation of right-hand drive
vehicles.  These vehicles caused numerous accidents due to the impeded view of the driver.  For that
reason, it was later required that right-hand drive vehicles have to be adjusted to left-hand dive prior
to registration.  However, these adjusted vehicles still caused car accidents.  As a result, Vietnam
applied a prohibition on imports of right-hand drive vehicles and vehicles which are originally right-hand drive but have been adjusted to left-hand drive.
Question 142.
What is the legal definition of consumption goods limited in importation?Is it possible to designate HS code to consumption goods?
Answer:
Please see Appendix 1 in WT/ACC/VNM/3/Add.1 fo r the complete list of consumer goods.
Question 143.
Re. Question 246 (WT/ACC/VNM/3).  Does Vietnam intend to maintain the import restrictions
on vehicles?WT/ACC/VNM/6
Page 55
Answer:
For reasons given in the answer to question 114, Vietnam plans to maintain, for a certain
duration, the import restrictions on road-going vehicles, particularly in the big cities.  The import
regime would be more liberal for vehicles which has minimal harming effect on urban traffic (e.g.trucks) or which can improve urban traffic condit ions(e.g. buses).  In the beginning of 1998, the
Government has - on trial basis - removed import restrictions on trucks and buses of all types.  If the
removal is found not to be harmful to the balance between infrastructure and the number of vehicles,
it will probably be applied officially on permanent basis.
Question 144.
We ask the Government to lift discriminatory policies concerning the export of Korean
automobiles to Vietnam because, apart from G7, South Korea is the most likely nation that is
able to export automobiles to Vietnam.
Answer:
Vietnam has never maintained discriminatory policies against automobile imports from
Korea.  In the first 8 months of 1998, Korea was the largest automobile exporter to Vietnam.
Question 145.
Would you confirm specific items benefited from import-export restriction, quota and export
subsidies?
Answer:
Please see the answer to question 123 herein.
Concerning export subsidies, Vietnam is compiling its agricultural export subsidies in the
WT/ACC/4 format and its industrial subsidy meas ures. The information will be provided in due
course.
Question 146.
In addition, prohibiting to import the automobile is against free trade.  What is the standpoint
of the Vietnamese Government on this matter?
Answer:
Vietnam does not prohibit automobile imports.  Import prohibition is only applied to right-
hand drive vehicles as mentioned in the answer to question 141 herein.
(f) Import licensing procedures
Question 147.Vietnam states that “import licensing reflects the necessity to ... regulate flows of goods to the
domestic market”(WT/ACC/VNM/2, section IV.1(f)(i)).
Import licensing measures which restrict or distort imports violate the Agreement on Import
Licensing as well as Article XI of the GATT.  Many of the items listed in Annex 3 ofWT/ACC/VNM/6
Page 56
WT/ACC/VNM/3/Add.1 are subject to import li censing for the purpose of quantitative
restriction or control of the supply and demand in the domestic market.
How does Vietnam plan to reform its licensing system and bring it into compliance with WTO
norms?
Answer:
Concerning Vietnam's position in relation to quantitative restrictions, please see the answer to
question 138 herein.  For information relating to import licensing, please see the answer to
question 158 herein.  With respect to the reform schedule, please see the answer to question 322
herein.
Question 148.
Vietnam’s import licensing system restricts eligibility for merchandise import licences to
Vietnamese wholly-owned enterprises.
- This regime conflicts with the principle of national treatment contained in GATT
Article III because by limiting access to import licences by foreign-invested firms, it
provides, in effect, less favourable conditions for the internal sale, offering for sale and
distribution for imports.
- How does Vietnam plan to bring its import licensing regime into conformity with WTO
provisions for national treatment?
Answer:
In our view, the national treatment provisions in Article III GATT 1994 are only applied to
goods.  Vietnam's view is that whole sale and retail trading rights through commercial presence is
subject to the provisions of GATS, not GATT.
Initial steps have been taken to relax the right to import and export of foreign-invested
enterprises.  Please see the answer to question 79 herein for details.
Question 149.
Vietnam has indicated that “in its bid to make preparations for WTO accession and implement
the obligations of the ASEAN Free Trade Area (AFTA)”, it is considering unspecified options toreplace the merchandise licence (WT/ACC/VNM/3/Add.1, Annex 3).
- What is the current status of these reforms?  Can Vietnam report on any specific plans
in this regard in the near to medium term?
- When implemented, will these reforms mean  that all enterprises in Vietnam, both
foreign-invested and wholly domestically owned, be eligible to apply for the new licences
on an equal footing?
Answer:
Please see the answer to question 113 herein for information relating to reform of Vietnam's
merchandise licence regime.  The trade liberalization process will be continued.  However, at present
Vietnam is not able to provide a detailed schedule for the reform process.  With respect to foreign-
invested enterprises, please see the answers to questions 79 and 80 herein.WT/ACC/VNM/6
Page 57
Question 150.
The right to import items designated to be of special importance to the national economy, e.g.
petroleum products and fertilizer, is limited to “specialised business enterprises”.  Items falling
under this designation change over time (WT/ACC/VNM/3/Add.1, Annex 3).
Are there any additional items not mentione d in WT/ACC/VNM/3/Add.1, Annex 3 subject to
importation by specialised business enterprises?
Answer:
Annex 3 presents the currently applicable list.  Vietnam recognizes the necessity of reviewing
the line management system and its coverage.  We will provide further information when it is
available.
Question 151.
Vietnam assures that the “minimum and maximu m time to process the application form [for
merchandise import licences] shall be announced if it is deemed necessary”.  Vietnam also says
that the maximum processing time for import  licences for goods not subject to quantitative
restriction is 15-30 days (WT/ACC/VNM/3/Add.1, Annex 3).  The WTO Agreement on ImportLicensing Procedures requires that automatic licensing procedures for goods not subject to
quantitative restrictions be limited to a ma ximum of ten days (Article II.2(a)(iii)).
Does Vietnam have plans to conform with this GATT 1994 provision?
Answer:
Investment and time are needed to improve Vietnam's licence processing system, the inter-
ministerial information network, etc.  Therefore,  Vietnam needs some time before it can conform to
the GATT 1994 provisions.
Question 152.
Vietnam states that some import licences require the approval of two or more authorities
(WT/ACC/VNM/3/Add.1, Annex 3).  The WTO Agreement on Import Licensing Procedures
stipulates that importers may not be required to petition more than three administrative bodies
for licensing (Article I.6).
Can Vietnam guarantee that import licences do not require the approval of more than three
administrative bodies?
Answer:
Vietnam intends to meet the WTO requirements on the number (not more than 3) of
administrative bodies involved in licensing.  This plan is being implemented under the on-going
administrative reform process.  One-stop licensing procedures have been introduced and will
gradually prevail in import licensing, in particul ar with respect to foreign-invested enterprises.
Question 153.
Vietnam provided a table listing items subject to import licensing in WT/ACC/VNM/3/Add.1,
Annex 3.WT/ACC/VNM/6
Page 58
Can Vietnam provide the corresponding Harmonized Tariff Schedule numbers for the items
listed?
Answer:
Please refer to the answer to question 150 herein.
Question 154.
Vietnam's laws, regulations, practices and proced ures for granting import and export licences
will need to be refined to bring them into conformity with WTO requirements.  Issues oftransparency, timeliness in granting licences, removal of preferential treatment for State-owned
enterprises are examples of areas which need to be addressed.  We note in particular that, in
order to be issued "merchandise licences", 100  per cent Vietnamese-owned enterprises must be
established under Vietnamese law, have foreign trading rights and an import-export business
licence.  In order to obtain foreign trading ri ghts the enterprise must register its business to
include foreign trade (Annex 3, WT/ACC/VNM/3/Add.1 refers).
Are foreign trading rights automatically issued to such enterprises on request?  If not, what
criteria need to be met?
Answer:
Concerning the trading rights of Vietnamese wh olly owned enterprises, please see the answer
to question 79 herein.
Question 155.
Enterprises with foreign trading rights may be granted an import-export business licence
subject to certain criteria, one of which is having at least two employees with qualifications of
foreign trade and foreign languages (Annex 3, WT/ACC/VNM/3/Add.1 refers).
Could Vietnam please advise what is meant by "qualifications of foreign trade"?
Answer:
The import-export business licence has been removed.  Please refer to the answer to
question 79 for more details.
Question 156.
Discretionary import licensing, which is inconsistent with WTO rules, applies to the items
referred to above including sugar.
- Are raw cane and beet sugar both subject to discretionary licensing?- Which enterprises are el igible to import sugar?
- What is the nature of the Government's discretionary control?
- Could Vietnam please advise which government agencies are responsible for, and the
criteria used in, licence allocation for sugar imports?WT/ACC/VNM/6
Page 59
- Has a quantitative limit been set on raw sugar imports for 1998?  If so, please advise the
level?
Answer:
Import restrictions and licensing requirements are not applied to raw sugar cane.  Beet sugar
is subject to the same restriction as cane sugar.
The purpose of sugar import control is mainly to  ensure incomes for sugar cane growers, to
ensure the normal course of production and consum ption and to protect against price fluctuations
(please see the answer to question 283 in document WT/ACC/VNM/3).
For the responsible agencies and allocation to importers, please refer to the answer to
question 133 herein.
The quantitative limit for import of raw sugar in 1998 was set at 60,000 tons, which is
allocated directly to the sugar refineries by the Ministry of Agriculture and Rural Development.
Question 157.
Re. Question 297 (WT/ACC/VNM/3).  In Annex 3 (Import Licensing) of
WT/ACC/VNM/3/Add.1, Vietnam lists unprocessed wood and forestry products as requiringlicensing for “contribution to environmental protection in the world” (page 46).  Could Vietnam
explain whether it is applying its environmenta l standards related to the production of wood
and forest products upon the production practices of other countries?  Vietnam also indicates
that complete equipment for forestry production and wood processing industry requires
licensing for “management of quality and standards of imported breeds”.  Could Vietnamfurther explain this rationale?
Answer:
Vietnam is a party to some international environmental conventions and applies standards on
environmental protection in accordance with these conventions' regulations and rules.
There was a spelling mistake in the phrase "management of quality and standards of imported
breeds" which should be corrected as "management of quality and standards of imported technology".
Question 158.
Re. Question 242 (WT/ACC/VNM/3).  Vietnam is planning to replace its licensing regime for
consumer goods by tariffs which will be the main tools for regulating imports of consumer
goods.
We would like to know the implementation schedule and the tariff lines for which import
licensing requirements will be removed.
Does Vietnam have any plan to abolish all its import licensing requirements to further liberalize
trade?
Answer:
Vietnam's liberalization process is on-going.  Within that process, will reduce its import-
export licensing requirements in conformity with the WTO Agreement on Import Licensing
Procedures.WT/ACC/VNM/6
Page 60
Question 159.
Re. Question 283 (WT/ACC/VNM/3).  Vietnam indicates that the import restriction (licensing
requirement and quota) imposed on sugar for the last 3 years is a temporary measure to ensurea market for domestically planted sugar cane.  We would like to know when Vietnam would lift
this restriction?
Answer:
The removal of restrictions on sugar imports as well as its timing will be addressed in the
context of market access negotiations.  Factors mentioned in the answer to question 138 herein will betaken into consideration.
Question 160.
There are currently three types of import licence s in Vietnam:  merchandise licence, method-of-
import licence and enterprise licence.  Vietnam indicates in the document that it is considering
replacing merchandise licence by other measures, though its is still early to provide details of
those alternative measures.
We would like to know the alternative measures Vietnam has in mind for replacing
merchandise licence and when the details will be available.
Are there any plan to replace the method -of-import and enterprise licence as well?
Answer:
Merchandise licensing has been partly substituted by tariffs.  Please refer to the answer to
question 113 herein for details.
Import licensing for goods for processing or goods for consignment to agencies has been
removed.  Licensing for temporary imports for re-export is under consideration for eventual removal.
Vietnam has no plan to remove licensing for goods in transit, goods for exhibition and advertisementpurposes, goods for financial leasing and goods imported into Vietnam for implementation of bidding
contracts.
Foreign invested enterprises are required to registered annual import plans.  These plans
should be based on their licensed scope of investment.  Provincial authorities and management bodiesof industrial zones are entitled to issue import licences for foreign invested enterprises.
Question 161.
It is stated in the document that there is no concrete regulation in Vietnam pertaining to the
time limits for processing applications for the merchandise licences.
We would be interested to know whether the Government of Vietnam could meet the
requirements with respect to the processing of licence applications (30 days if applications are
considered as and when received and 60 days if all application are considered simultaneously)
as set out in Article 3.5(f) of the Agreement on Import Licensing Procedures.
Answer:
Please refer to the answers to questions 151 and 152 herein.WT/ACC/VNM/6
Page 61
Question 162.
The document states that "performance ability"  is the most important criterion for processing
merchandise licences in Vietnam, and that new importers are also be allocated an import quotaif they can prove their financial and other business-related ability required for the importation
of the item in question.
We would like to know the criteria for assessing the "performance ability" of individual
enterprises for the issue of licences as well as import quotas.
What are the exact financial and business-related ability required of a new importer?Is there an established monitoring system to en sure transparency and equity of the system?
Answer:
Please refer to the answer to question 79 herein.
Question 163.
To engage in foreign trade activities, a non-pro duction trading enterprise must be established
under Vietnamese Law and be granted an import-export business licence after fulfilling certain
criteria (i.e. having working capital of US$200,000 or more).  Vietnam is now in the process of
reducing the minimum requirements for applying export-import business licence.
We would like to know the details of the simplified procedures and its implementation schedule.
Answer:
Please refer to the answer to question 79 herein.
Question 164.
With respect to the method-of-import licence for good s in transit, only enterprises of countries
having a common land border with Vietnam are a llowed to apply for the transit licence and the
goods in transit are subject to a transit fee of 1 per cent of the value of goods.
We would be interested to know whether the restriction on allocation of the applying
enterprises will limit the freedom of transi t as provided for under GATT Article V.2, and
whether the 1 per cent fee commensurate with ad ministrative expenses entailed by transit or
with the cost of services rendered for individual cases as required under GATT Article V.3.
Answer:
Upon accession to WTO Vietnam will observe GATT 1994 rules on the freedom of transit
and on transit fee commensurate with the cost of services rendered.
Foreign goods in transit in Vietnam and Vietnamese goods in transit in other countries are
ruled by the agreements on goods in transit si gned between the concerned Governments.  The
regulation on transport licensing for goods in transit is part of each agreement.  Enterprises of the
signing parties should apply for and be licensed by th e Ministry of Trade for the goods in transit.  This
practice, therefore, fully conforms with international practice and is formulated on the principle of
equality and mutual benefit. It is not a restrictive measure for goods in transit.WT/ACC/VNM/6
Page 62
Fees applied to goods (including postal packages and parcels), luggage, means of transport in
transit hiring Vietnamese transport networks such as roads, inland waterways, railways, are calculated
according to the means of transport and the length of the journey.
Please see Annex 2 of document WT/ACC/VNM 6/Add.1 for more details on current fee
rates.
The rate of 1 per cent previously mentioned has been superseded.
Question 165.
What is the average time needed to obtain an import licence?  Is  there a legal obligation to issue
or refuse the licence within a certain time limit?
Answer:
Please refer to items III.1.8 and III.3 of Annex 3 in WT/ACC/VNM/3.
Question 166.
What is the proportion of goods for which an import licence is not required?  Do importers have
to pay to obtain an import licence?
Answer:
Import licence is required for all imports of goods that are specified in Annex 3
(WT/ACC/VNM/3). Other goods can be imported after customs formalities have been cleared.
Importers do not have to pay to obtain an import licence.
Question 167.
Are changes made to the import licensing procedures published prior to their entering into
force?
Answer:
Yes.
Question 168.
We appreciate Vietnam's intention to replace the merchandise licence by other measures.
Could Vietnam provide further details of the measures it intends to take for this purpose?  DoesVietnam intend to replace also the two other types of licence?  It is important that Vietnam
commits to adopt only measures that are fully compatible with the re levant WTO rules and that
its import licensing system is consistent with WTO rules by accession.  To this end we would
appreciate the presentation of a precise plan of action with the changes that Vietnam will
introduce and a timetable for their implementation.
Answer:
Vietnam will abide itself by the principles of the WTO with an appropriate schedule of
implementation. A detailed schedule will be submitted in the context of market access negotiation.WT/ACC/VNM/6
Page 63
Question 169.
Besides the enterprise's ability to implement the allocated quota, what are the other criteria that
have to be respected for obta ining the merchandise licence?
Answer:
The enterprise's ability to implement the allocated quota is often the most important criterion
in the merchandise licensing. However, for some pr oducts (e.g. motor-bicycles), the first-come-first-
serve principle is prioritized. For import of products relating to the major equilibrium of the national
economy (i.e. fertilizer, cement, etc.), the enterprises' past performance is prioritized.
(g) Other border measures
Question 170.
Re. Question 311 (WT/ACC/VNM/3).  Vietnam ha s noted that the General Department of
Customs sets minimum prices for “goods which are not subject to the State management in
respect of customs values and for which the contract values cannot be applied”.  Could Vietnam
confirm that these products are the same as listed in their answer to Question 313?
Answer:
These products are completely different from those listed in the answer to question 313.
Please refer to the answer to question 156 herein.
Question 171.
Who can conduct border trade in the Vietnam-Cambodia border areas?
Answer:
Vietnam is establishing rules for border trade in the Vietnam-Cambodia area. It is expected
that residents in this area can trade a duty-fr ee amount of up to 500,000 VND (equivalent to 35 USD).
For a larger amount, trade will have to pay duties.
(h) Customs valuation
Question 172.The Government of Vietnam has acknowledges in Annex III of WT/ACC/VNM/3/Add.1 that it
does not apply the WTO Customs Valuation Agreement.  Therefore, Vietnam should begin nowto make the changes to its laws and regulations that will be necessary to comply with the WTO
Valuation Agreement.
What is being done to prepare for that eventuality?
Answer:
For the purpose of implementing the WTO Customs Valuation Agreement (CVA), Vietnam
has been carrying out the following:WT/ACC/VNM/6
Page 64
- elaboration of a legal framework in accordance with the CVA;
- preparation for the establishment of a Customs Valuation System pursuant to the
CVA;
- organization of training courses on customs valuation, application of the CVA for
customs officers (including in-country and overseas training courses).
Question 173.
One area that is of particular concern is the use of minimum prices/values for customs valuation
purposes, as outlined in the response to question 313 of WT/ACC/VNM/3.
The use of minimum values for customs valuation purposes is prohibited under the WTO
Valuation Agreement.
Answer:
The use of minimum prices is not the only me thod employed for customs valuation.  It should
be noted that the value of most imported goods and all exported goods for customs purpose is
determined as per the actual contracted prices.  Minimum prices for customs valuation are used for a
few groups of imported goods.
The use of minimum prices in Vietnam is aime d at fighting fraudulent commercial practice.
It is effective when the contracted price differs largely from normal and comparable prices in the
international market.
Vietnam will, in the process of accession to WTO, phase out these minimum prices for the
customs valuation purpose.
Question 174.
A second area of concern where we would like so me clarification is whether the importer has
the right to judicial review of Customs decision  on the value of the im ported goods.  According
to the Government of Vietnam's responses to the WTO Committee on Customs Valuation
Questionnaire (WT/ACC/VNM/3/Add.1, Annex 4) it appears that only administrative appeals to
Customs and to the Minister of Finance are permitted.  However, Vietnam's response to
question 322 (WT/ACC/VNM/3), indicates that an importer may appeal to the "administrative
court".
- Please explain how the administrative court functions and what its relationship is to
Vietnamese judicial courts.
- If the response to this inquiry reveals that the administrative court is not an
independent judicial body, we should emphasize that the WTO Valuation Agreement
requires that judicial review of the Cust oms decision be available to the importer.
Answer:
According to Vietnamese legislation, apart from making a claim against administrative
rulings or behaviours under the administrative procedures, an importer may make a claim against
administrative rulings and behaviours to an admini strative court in accordance with the Ordinance on
Procedures for Settlement of Administrative Disputes dated 21 May 1996.WT/ACC/VNM/6
Page 65
Article 13 of this Ordinance stipulates that in case an importer does not find a customs
administration's decision on settlement of its claim satisfactory, the importer has the right to appeal to
the higher administrative body or to bring the case before the administrative court.
Administrative courts are established at the People's Courts at provincial level and at the
Supreme Court (national level).  There is no administrative court at the district level, but there are
administrative magistrates who are authorized to settle administrative cases. Administrative courts are
an independent part of the People's Court (normal courts) system and independent from the executive
branch.
An importer has the right to request (in writing) the Administrative Court to review valuation
decisions on imported goods made by the customs administration.  Valuation decisions can be in theform of:  (i) duty collection and duty recovery decisions;  (ii) decisions on fines for administrative
offences;  (iii) decisions on settlement of claims on fines for administrative offences.
The purpose of the importers' right to make a request to the administrative court to review
customs valuation decisions on imported goods is, firstly, to ask for protection of their legitimaterights and interests from an independent judicial  body, and, secondly, to avoid overlapping between
the executive and judicial authorities in settling administrative claims (so as to reduce administrative
costs).  Therefore, this importers' right is limited by the operational mechanism of the administrative
court as provided in the Law on Import and Export Duties and the Ordinance on Procedures for
Settlement of Administrative Disputes.
The operational mechanism of the administrative court (relating to the settlement of claims
against customs valuation decisions of Customs Administration) is as follows:
- under the Law on Procedures, an administrative claim is first tried by the
administrative court at the provincial level.  Appeals and cassational (final) appeals
are settled by the Administrative Court at the Supreme Peoples' Court.
- the administrative court will not handle a matter after the expiry of the specified
period (30 days from the date the claimant receives the written response to its claim)
unless there are legitimate reasons.  Nor will it handle a matter where a decision has
been reached on a fine for administrative offences proceeded according to theadministrative procedures as provided in the law.
Question 175.
Could Vietnam supply the following documents to the Secretariat for Working Party review:Referred to in WT/ACC/VNM/3:
 - Decision No. 918- TC/QD/TCT, da ted 11 November 1997 (Question 311)
- Circular No. 74/TC/TCT, dated 20 October 1997 by the Ministry of Finance
(Question 314).
Referred to in WT/ACC/VNM/3/Add.1:
- Decision No. 258/TCHQ-GSQL, 16 December  1994 by General Department of Customs;
- Decision No. 287/TCHQ-THTK, 19 December 1995, by General Department of
Customs;
- Decision No. 189/TCHQ-GSQL, 7 October 1994, by General Director of Customs;
- Directive 224/TCHQ-GSQL, 11 October 1994, by General Director of Customs;
- Decision No. 79/TCHQ-GSQL, 14 June 1994, by Director General of Customs;
- Decision No. 192/TCHQ-KTTT, 15 May 1995, by General Director of Customs.WT/ACC/VNM/6
Page 66
Answer:
These documents are available in the Secretariat (Accessions Division, Room 1126) for
consultation.
Question 176.
Vietnam needs to change current import and tariff regulations to rectify discriminatory
customs valuation practices that can see higher tariffs imposed on imports from some countries
(e.g., on wine, butter, malt for beer, skim milk powder and UHT milk).  These practices raise
issues of non-MFN treatment of imports, tran sparency and consistency with the Agreement on
Customs Valuation.
What steps is Vietnam taking to rectify such discriminatory customs valuation practices?
Answer:
The minimum price system in Vietnam is used to fight fraudulent commercial practices in the
context of the limited efficiency of the country's administrative and managerial apparatus.  It is not, by
any means, to imply discriminatory treatment to goods of different origins.  Different products
classified to the same tariff line may be subject to the same or different minimum prices.  These
minimum prices are determined on the basis of recently calculated c.i.f. prices at Vietnam's majorports.
Commercial practices have proved that products from different origins may have different
quality, enjoy different level of consumer confidence and be sold at different prices.  The minimum
prices reflect the influence of these factors.  Please refer to the answer to question 172.
Question 177.
We note that minimum customs values are applied to 21 product groups ranging from milk
powder to iron and steel to automobiles.  We understand that in the application of Decision
No. 918-TC/QD/TCT (11 November 1997) Vietnam us es three country of origin categories for
the purposes of applying minimum customs values .  This results in the non-MFN treatment of
imports.  This is exacerbated by the lack of  a clear and consistent policy and considerable
variation in practice which sees the categorisation changing from time to time.  This will need to
be brought into conformity with WTO rules.
- How do these measures and practices operate?- What action does Vietnam intend to take to bring these policies into WTO conformity?
Answer:
As mentioned in the answer to question 176, the classification into country groups is based on
known prices of goods and is used as an objective principle used for determining minimum prices.
Therefore, it does not aim at discriminatory treatment. It is a process designed to reflect differentiated
market prices.
However, it is difficult to determine prices for customs valuation of imported products in
transactions executed by multinational companies.  Vietnam has been trying to find enforceable
measures for determining correct customs values, th at are efficient in fighting fraudulent commercial
practices and will allow progressive elimination of the List of minimum buying prices.WT/ACC/VNM/6
Page 67
Please refer to the answers to questions 156 and 138 herein.
Question 178.
Recent decisions by the Customs and Finance Departments (No. 155/1998/TCHQ-QD of
27 May 1998 and No. 590A/1998/QD/BTC of 29 April 1998, respectively) have changed customs
valuation procedures.  We understand that in ca ses where the invoice price is considered too
low and unreasonable, whether the customs office applies the stipulated minimum price (i.e., the
minimum customs value) or the invoice price in calculating tariffs depends on whether the item
is on the government's control list, as well as on the level of that low price.
We ask Vietnam to explain and provide a detailed summary of its system of minimum customs
values.
Answer:
Following is a description of the process of customs value determination:
The Minister of Finance issues the "Table of groups of goods with import price controlled by
the State" and the "List of minimum buying prices at border for goods with import price controlled by
the State".  This table is used by customs for customs valuation purposes with respect to imported
goods for which the contractual terms do not justify the price in the contract, or the contract price islower than the set minimum buying price in the list, and with respect to goods imported under specific
modalities other than normal international transactions with payments through the banking system.  If
the contract price of the imported good is higher than the respective price in the List of minimum
buying prices, the former will be applicable for customs valuation purposes.  The Minister of Finance
regularly (about twice a year) reviews and updates the pr ices in the list in order to make adjustments
for changes in domestic and international prices.
The current Table covers 20 groups of products.The General Department of Customs is authorized to issue the "List of minimum import
prices for customs purposes" (after consultation with the Ministry of Finance).  This list deals with
goods for which the import conditions do not provide grounds for customs valuation based on thecontract price and which fall outside the coverage described in the above paragraphs, and with goods
imported under special modalities other than normal international transactions with payments through
the banking system.
In the cases where imported goods are: (i) listed in the Table of groups of goods with import
prices controlled by the State, but are included in the List of minimum buying prices;  or (ii) not listed
in Table of groups of goods with import price controlled by the State, and not included in the List of
minimum import prices for customs purposes, Custom s officers calculate duty on that value declared
by the owner and then report immediately (with proposals for a minimum price) to the General
Department of Customs and/or the Ministry of Finance.
Question 179.
We note Vietnam's actions to reduce the number of products subject to minimum customs
values.  The answers to questions 316, 320 and 324 (WT/ACC/VNM/3), however, do not clearlystate whether or not Vietnam will cease to apply minimum customs values completely from the
time of accession.
- Can Vietnam please provide definitive advice on whether or not it will cease to apply
minimum customs values completely from the time of accession?WT/ACC/VNM/6
Page 68
- If so, what is its timetable to achieve this and conform to the requirements of Article 7:2(f)
of the Agreement on Customs Valuation?
Answer:
Vietnam has set itself the objective of eliminating the use of minimum prices upon its
accession to WTO.  However, depending on the practical situation at that time, Vietnam may need to
maintain the list, but with limited coverage, in conformity with the provisions on reservations
contained in the Agreement on the Implementation of Article VII of GATT 1994.
Question 180.
In answer to questions 322 and 326 (WT/ACC/VNM/3), Vietnam seems to indicate that recourse
to appeal of a customs valuation decision to the Minister of Finance is an alternative to recourse
to judicial appeal.  This does not seem to conform to the requirements of Article 11.2 of the
Agreement which requires that in addition to administrative appeals processes the legislation ofeach Member shall provide for the right of appe al without penalty to a judicial authority.
Is Vietnam taking action to redress this inconsistency with the Agreement?
Answer:
According to existing legislation, (specificall y the Ordinance on Settlement of Appeals and
Denunciations or the Ordinance on Procedures for Se ttlement of Administrative Disputes), there are
two ways of settling administrative claims:
- recourse to State administrative authorities;
- recourse to administrative courts.
Please refer to the answer to question 80 for more details on the procedures for appealing to
administrative courts.
- An importer may submit a claim regarding customs valuation decisions made by the
customs administration to the higher administrative body or to an independent
judicial body (the administrative court).  The importer is not allowed to submit a
claim to the administrative court and to the General Department of Customs at the
same time.
- If the importer has already opted to make a claim to the General Department of
Customs, its appeal to an administrative court will not be accepted.  However, the
importer still has the right to appeal to the Minister of Finance.  The decision of the
Minister of Finance will be final and binding.
- If the importer's claim is made to an administrative court, the final decision does note
rest with the Minister of Finance.  It lies in the decision of the court at successivelevels as the case may be.
Question 181.
Re. Questions 312, 316, 318 and 313 (WT/ACC/VNM/3).  We appreciate Vietnam's
confirmation to abolish a minimum import price system and to implement the Customs
Valuation Agreement upon accession to the WTO.
Vietnam applies import minimum prices to 21 categories of merchandise (milk powder, wheat
flour, vegetable oil, beverages, tyres, electric appliances, automobiles, etc.).WT/ACC/VNM/6
Page 69
Could Vietnam indicate the minimum import price for each of the 21 categories of
merchandise?
Answer:
Minimum prices are adjusted periodically according to price fluctuations in the world market.
Please see the List of minimum border purchase prices used for calculating tariffs issued with
Decree No. 590A/1998/QD/BTC dated 28 April 1998.
Question 182.
Re. Question 316 (WT/ACC/VNM/3).  We note that Vietnam plans to apply the Agreement on
Customs Valuation upon accession to the WTO.  As  a first step in this direction, Vietnam has
reduced the number of products subject to minimum import price from 34 to 21 groups of
products.
When will Vietnam abolish minimum import prices  on the remaining 21 groups of products?
Answer:
Please see the answer to question 179 herein.
Question 183.
What is the reason behind the change of the expo rt price level not based on the origin of goods
but with its brands?
Answer:
Vietnam's current policy does not imply the control of export prices.
Determination and adjustment of the minimum import price are mainly based on actual
transactional prices.  Goods with different brands may be sold at different prices, and Vietnam has
temporary regulations on minimum prices based on calculated transaction prices.
Please refer to the answer to question 177 herein.
Question 184.
What is the exact difference between the "contract price" foreseen in the Vietnamese legislation
and the "transaction value" of the Agreement on Customs Valuation?
Answer:
The transaction value is the price the buyer actually pays to the seller, adjusted according to
Article 8 of the Agreement on Customs Valuation.. The contract price is the payable price as provided
for in the contract without adjusting according to  Article 8 of the Agreement. In summery, the
difference between the "contract price" and the "transaction value" is the adjustments made in
consistence with Article 8.WT/ACC/VNM/6
Page 70
Question 185.
We commend Vietnam for undertaking to fully apply the Agreement on Customs Valuation
upon accession.  Could Vietnam specify the type of action that it will undertake to this effect
and the timetable for such action?
Answer:
Vietnam is making its best efforts in order to adopt the Agreement on Customs Valuation. In
fact, initial steps have already been taken in this direction. The list of items subject to minimum
import price has been narrowed down from 34 to 21 a nd then 20 as currently stipulated in Decision
590A/1998/QD/BTC on 29 April 1998.
In order to adopt the Customs Valuation Agreement, Vietnam is making the following
preparations:
- Re-training of staffs, educating the business community;
- Establishing a post-customs inspection system which will be an important  basis for
the implementation of the Customs Valuation Agreement;
- Gradually adopting the valuation principles, phasing out the list of items subject to
minimum import price.
(j) Pre-shipment inspection
Question 186.Vietnam's answers to questions 331 - 334 (WT/ACC/VNM/3) do not indicate whether or not it
intends to use pre-shipment inspection (PSI).
It would be helpful to know Vietnam's intentions  at this stage while recognising that Vietnam
may have a need to use PSI for a period and that its right to so determine is recognised in the
Agreement on PSI.
Answer:
Pre-shipment inspection is still not used in Vietnam.  Vietnam however intends to conform to
the Agreement on PSI only after accession to WTO. Provisions applicable to developing countries
would be invoked.  We will explore applying PSI on particular consignments on trial basis, when
possible.
(k) Application of internal taxes on imports
Question 187.
We appreciate Vietnam’s efforts to adopt a more transparent tax system through the conversion
of the Turnover Tax to the VAT, to be applied from 1 January 1999.  We also appreciate that
the VAT will be applied on a national treatment basis.
Answer:
Please see answer 36 herein.WT/ACC/VNM/6
Page 71
Question 188.
Re. Questions 93, 337 and 339 (WT/ACC/VNM/3).  Vietnam indicates that the Turnover Tax
will be replaced by the Value Added Tax (VAT).   Please provide a comprehensive list that
clearly shows each item taxed on HS basis and its corresponding tax rate.
Answer:
Please see Article 8 of the Law on VAT that is available in the WTO Secretariat for products
covered by VAT.  At present, a classification on HS basis is not available.
Question 189.
Re. Question 340 (WT/ACC/VNM/3).  We have some concerns about the lack of conformity of
the excise tax regime with WTO norms, however, particularly GATT Article III.
In WT/ACC/VNM/3 reply 340, Vietnam states that the excise tax is applied equally to both
domestic and imported goods in the covered categories except for domestically manufactured
automobiles (full exemption) and cigarettes (lower rate on domestic items).
These deviations from the equal application of excise taxes violate the national treatment
provisions in GATT Article III.  Vietnam must be gin to take steps now to bring the excise tax
regime into conformity with WTO norms.
Vietnam should apply an equal excise tax to do mestically produced autos and should harmonize
the rates applied to cigars/cigarettes produced  from domestic inputs and cigars/cigarettes
imported or produced domestically from imported tobacco.
Please provide the Working Party with an update on the steps Vietnam is taking to bring the
excise tax system into conformity with WTO rules.
Answer:
Please refer to the answer to question 204 herein.
Question 190.
Re. Question 340 (WT/ACC/VNM/3):  We appreciate Vietnam's commitment to review those
domestic tax measures that are inconsistent with Article III GATT.  Could Vietnam provide theWorking Party with a clear timetable for the revision of these measures so as to assure that they
will be consistent at latest by the time Vietnam joins WTO?
Answer:
In fact, Vietnam has already adjusted some internal tax measures that are consistent with
Article III of the GATT e.g. amending the Law on Special Consumption (Excise) Tax, replacing the
Law on Turnover Tax by the new Law Value Added Tax. The measures that are inconsistent with
Article III, if any, w ill be reviewed and phased out.WT/ACC/VNM/6
Page 72
Excise Tax
Question 191.
We have some concerns about the lack of confor mity of the excise tax regime with WTO norms,
however, particularly GATT Article III.
Answer:
Please refer to the answer to question 204 herein.
Question 192.
In WT/ACC/VNM/3 reply 340, Vietnam states that the excise tax is applied equally to both
domestic and imported goods in the covered categories except for domestically manufactured
automobiles (full exemption) and cigarettes (lower rate on domestic items).
These deviations from the equal application of excise taxes violate the national treatment
provisions in GATT Article III.  Vietnam must be gin to take steps now to bring the excise tax
regime into conformity with WTO norms.
Vietnam should apply an equal excise tax to do mestically-produced autos and should harmonize
the rates applied to cigarettes and cigars produc ed from domestic inputs and cigars/cigarettes
imported or produced domestically from imported tobacco.
- Please provide the Working Party with an update on the steps Vietnam is taking to
bring the excise tax system in to conformity with WTO rules.
Answer:
Please see answer to question 41 herein for the new features of the amended Law on Excise
Tax applicable to automobiles.
Question 193.
In WT/ACC/VNM/3 reply 96, Vietnam states that certain types of enterprises (newly-
established production units entering into operation from 1993, and enterprises investing and
expanding production or applying new technology) are eligible for excise tax exemptions if they
have “suffered losses” as a result of paying this tax.
- This appears to be a subsidy to firms practising import-substitution in the six sectors
subject to excise tax.  The broad eligibility requirements would appear to capture most
Vietnamese firms operating in these sectors.
- How many Vietnamese firms operating in the tobacco, alcohol, beer, fireworks, autos or
petroleum sectors were eligible for this exemption in the last tax year?
- If most Vietnamese enterprises are eligible fo r the exemption, then the excise tax is not
applied on a national treatment basis in practice.  Vietnam must ensure that GATT
Article III will applied prior to accession.WT/ACC/VNM/6
Page 73
Answer:
The new law on excise tax passed in May 1998 has removed these provisions on tax
exemption and reduction.  The requested statistics are not available.
Question 194.
In WT/ACC/VNM/3 question 97, Vietnam is asked for the value of domestic production of
goods subject to excise.  Vietnam replied that these statistics are not available.
Is there any domestic production in each category?  Can Vietnam give a general overview of
domestic production in these sectors?
Answer:
There is domestic production of all products covered by the excise tax.  For instance, there are
14 joint-ventures in automobile production, 5 cigarette factories, etc.
As mentioned above, the excise tax covers both domestically manufactured and imported
goods considered to be non-essential and where Vietnam applies the excise tax for the purpose of
regulating incomes and guiding production and consumption.
Question 195.
Vietnam has advised that it is gradually reformin g its tax system and is considering the national
treatment requirements of GATT Article III (reply to question 103, WT/ACC/VNM/3).
What progress has Vietnam made towards ensuring that its internal taxes and charges are fully
consistent with Article III  prior to accession?
Answer:
The process is complicated and not yet completed.  Some results are described in the answers
to questions 1, 47 and 204 herein.
Question 196.
Excise tax is applied equally to domestic and imported goods in the covered categories except
for domestically manufactured motor vehicles (reply to question 94, WT/ACC/VNM/3).
Please specify the motor vehicles subject to the excise tax and the rates applicable to imported
and domestically manufactured motor vehicles.
Answer:
Please refer to the answer to question 204 herein.
VAT
Question 197.
In WT/ACC/VNM/3 reply 93 Vietnam states that there are 22 types of VAT exemptions.WT/ACC/VNM/6
Page 74
Can Vietnam confirm that these exemptions apply equally to domestically-produced and
imported goods?
Answer:
The Law on Value Added Tax (that replaces the Law on Turnover Tax and comes into effect
on 1 January 1999) exempts 26 types of goods and services from the tax. VAT will not apply to goods
that fall within the coverage of the excise tax at the local production or import stage.  However, in
subsequent trading stages, they will be subject to VAT whether they are domestically produced or
imported.  Therefore, domestically produced or imported passengers vehicles of under 24 seats --
which are subject to the excise tax -- will not be subject to VAT at this stage.
Question 198.
Vietnam states in WT/ACC/VNM/3 reply 102 that good s subject to excise tax will not be subject
to VAT.  Domestically-produced autos are not subject to excise tax.
Can Vietnam confirm whether domestically-produced autos are subject to VAT?
Answer:
Goods that are subject to excise taxes are not subject to VAT.
Natural Resource Tax
Question 199.
The intent of WT/ACC/VNM/3 Question 116, “Are foreign natural resource taxpayers subject
to the natural resource tax under the same terms and conditions as domestic natural resource
taxpayers?" is to determine whether this ta x is applied on a national treatment basis.
Can Vietnam confirm that domestic and foreign firms pay the same rates for exploitation of
natural resources?
Answer:
Article 1, Paragraph 2 of the Ordinance on Natural Resources Tax (modified) dated May 1998
and in effect on 1 June 1998 stipulates that all organisations and individuals exploiting natural
resources in mainland, islands, inland waters, territorial waters, economic privileged zones, and thecontinental shelf of Vietnam are subject to the natural resources tax, except where the Vietnamese
partner to a foreign joint venture contributes registered capital in the form of natural resources.
Special Sales Tax
Question 200.
Re. Question 340 (WT/ACC/VNM/3).  Could Vietnam list the beverages that are subject to the
“special sales tax”?
Answer:
Please see the Law on Excise Tax as referred to in document WT/ACC/VNM/3/Add.1.WT/ACC/VNM/6
Page 75
Question 201.
Re. Question 102 (WT/ACC/VNM/3).  Although Vietnam answers that no special sales tax is
imposed on domestically produced automobiles, a report indicates that the Vietnam Congress
passed a bill in May 1998 to impose special sale s tax on domestically-produced automobiles.
Please explain such amendment in  the tax law.  Is there a tr ansitional period for its full
implementation?
Answer:
Please refer to the answer to question 204 herein.
Question 202.
Re. Question 103 (WT/ACC/VNM/3).  Vietnam answers that it considers revising its tax law in
order to provide national treatment with regar d to the taxation on tobacco, alcohol and beer.
Has there been any recent de velopment on this matter?
Answer:
Please refer to the answer to question 204 herein.
Question 203.
Re. Questions 107 and 385 (WT/ACC/VNM/3).  Vietnam answers that the preferential tax rate
of 15 per cent is applied where at least 80 per cent of products is exported and that of
20 per cent is applied where at least 50 per cent of products is exported.  These measures shouldbe operated in a manner whereby they are not cla ssified as "prohibited subsidies" within the
meaning of the SCM Agreement.
Answer:
The answers described the current policies of Vietnam.
Question 204.
Special sales tax for domestically produced automobiles:Would appreciate provision of information regarding the content of the revised law, as well as
transitional measures for the implementation.
Answer:
In May 1998, the National Assembly passed the new Law on Excise Tax to be effective from
1 January 1999.  The major modifications are:
- extending the coverage to non-essential goods and services such as domestically
produced cars under 24 seats, air conditioners, votive paper, votive objects, dancing
halls, massage parlours, karaoke bars, casino, horse racing and car racing bettingtickets, etc.;
- reducing the rates of tax for several items such as cigarettes, beers, liquors;WT/ACC/VNM/6
Page 76
- providing for tax reductions and exemptions for loss-making local automobile
assemblers and manufacturers (vehicles under 24 seats) (applicability being limited to
ten years from the date of effectiveness—1 January 1999), for golf businesses for a
three year period from introduction of the new rates, and for small beer producers
making losses for up to five years, as may be decided by the Government on case bycase basis.
For automobiles, the new law on excise tax brings locally manufactured cars (under 24 seats)
under the coverage of the excise tax in order to ap ply the same tax rate to locally manufactured cars
and imported cars. However, during the transitional stage, local automobile assemblers and
manufacturers may be granted preferential reduction or exemption as determined by the Government.
(l) Rules of origin
Question 205.As with its original Memorandum, Vietnam' s responses to the most recent questions in
WT/ACC/VNM/3 note that Vietnam presently has no specific legislation or regulations on rules
of origin.
- How does Vietnam expect to be able to administer obligations it will assume under the
Agreement on Rules of Origin?
- What timeframe is envisaged for development and implementation of legislation and
regulations in this area?
Answer:
Vietnam has a plan for the elaboration of legi slation on rules of origin.  The WTO Agreement
on Rules of Origin will be the basis to formulate this legislation.
Question 206.
We appreciate Vietnam's commitment to properly apply the WTO commitments on rules of
origin.  Could Vietnam provide this Working Party with a clear timetable for the
implementation of this commitment so as to assure that they will be consistent at latest by the
time Vietnam joins WTO'?
Answer:
At present, Vietnam is a member of the ASEAN Free Trade Area (AFTA) and adopts AFTA's
preferential rules of origin.
Vietnam has not developed detailed non-preferential rules of origin. In the process of drafting
non-preferential rules of origin, Vietnam will take into full accounts the WTO's commitments on rulesof origin.
(m-o) Anti-dumping, countervailing duty and safeguard regimes
Question 207.Vietnam has no provisions for anti-dumping, coun tervailing or safeguard measures.  In reply to
question 346 (WT/ACC/VNM/3), Vietnam advised it intends to formulate relevant provisions in
the near future;  while in reply to question 347 (WT/ACC/VNM/3), Vietnam noted it is
"improving and systematising" existing legislation.WT/ACC/VNM/6
Page 77
Could Vietnam please advise if there has been any progress in drafting legislation that will be
consistent with WTO's requirements and in place by the time of accession?
Answer:
The Law on Amendment and Revision of a number of Articles in the Law on Import and
Export Duties passed by the National Assembly on 20 May 1998 (Articles 2 and 9) states:
"In addition to duty paid under the paragraph 1 of this Article, imported goods must be taxed
additionally in the following cases:
(a) goods imported at a price lower than normal price as a result of dumping practices,
and consequently causing difficulties to domestic producers of like products;
(b) goods imported at a price lower than normal price resulting from subsidy in the
exporting country, consequently causing difficulties to domestic producers of likeproducts;
(c) imported goods originating from a country that applies discriminatory treatment
against Vietnamese goods with respect to tariff rates and/or any other measures".
The Standing Committee of National Assembly will elaborate specific additional tariff rates
for each of the above cases for implementation.  Therefore, Vietnam has decided to apply additional
duties on imported goods that are dumped, subsidized or that originate from a country discriminating
against Vietnamese goods.
Moreover, the Legislation Formulation Programme of the National Assembly Section X (to
the year 2002) lays out the Government's intention to formulate Ordinance on MFN treatment,
National Treatment, safeguards, and rules of origin.
The Law on Amendment and Revision of a number of Articles in the Law on Import and
Export Duties passed by the National Assembly on 20 May 1998 regulates anti-dumping and
countervailing duties.  However, in order to apply these duties, Vietnam needs to establish legal andinstitutional frameworks for their proper enforcement.
Question 208.
Re. Question 346 (WT/ACC/VNM/3).  Could Vietnam confirm that it will ensure consistency
with the WTO Agreement regarding the laws on anti-dumping, countervailing duties and
safeguard measures that Vietnam intends to formulate?
Answer:
Vietnam has been developing legislation for the implementation of Article 9 on anti-dumping,
countervailing duties and safeguard measures of the Law on Import Export Tax.  In the process,
Vietnam will refer to WTO's rules and submit a copy in English to the Working Party.
Question 209.
Does Vietnam intends to formulate its provisions on anti-dumping, countervailing duties and
safeguard measures prior to its accession to the WTO?WT/ACC/VNM/6
Page 78
Answer:
On 02 December 1998, the National Assembly of Vietnam has approved its Legislation
Program for laws and ordinances to the year 2002. The Program contains a bill of Ordinance on MFN,
NT and Safeguards Rectifying the Deficiencies in International Trade of the Socialist Republic ofVietnam. The bill is scheduled to be submitted to the National Assembly in the year 2000.
2. Export Regulation
(b) Customs tariff nomenclature, types of duties, duty rates, weighted averages of ratesQuestion 210.Re. Questions 108 and 341 (WT/ACC/VNM/3).  Please provide HS numbers to the products on
which export duties are levied (i.e. the products listed in the answers to questions 108 and 341).
Answer:
Please see Annex 4 to doc ument WT/ACC/VNM/6/Add.1.
Question 211.
Re. Question 349 (WT/ACC/VNM/3).  We note that Vietnam is introducing a new tariff system
in accordance with the HS 1996.
When does Vietnam intend to enter the HS Convention, i.e. will Vietnam ratify the HS
Convention before accession to the WTO and thus  submit its schedule based on the HS 1996?
Answer:
Vietnam has already entered the HS Convention, with effect from 1 January 2000.  That is,
from that time tariff schedules for import and export duties as well as for statistical purposes must be
based on HS 1996 at 6-digit level.  An Import Tariff Schedule is being formulated based on HS 1996.
(c) Quantitative export restrictions
Question 212.The response to question 358 (WT/ACC/VNM/3) indicates that Vietnam enforces export
prohibitions for timber logs, sawn wood, charcoal, and products and processed plates made of
wood of a certain type, semi-processed wood products and raw rattan and “strictly controls
logging for the purpose of protecting the environment”.
- Can Vietnam confirm that domestic production of these items also restricted to protect
the environment?  If so, please describe how and to what extent.
- If not, it would appear that the export barrier is not intended to save the trees but
rather to save them for domestic utilisation.  This would be inconsistent with Article XI
and Article XX in that it would act as a disguised barrier to trade.
Answer:
Restrictions on use of natural forest wood products are applied to domestic production and
exportation.  The Prime Minister stipulates annually the maximum volume of wood that can be takenWT/ACC/VNM/6
Page 79
from natural forests.  Part of this volume is used fo r domestic needs, and the remaining part is used for
producing goods for export.
Question 213.
Export quota for rice may become WTO inconsistent.  We would appreciate provision of
domestic and international price difference of rice and amount of domestic need of rice.
Answer:
According to Dow Jones, the domestic price of 5 per cent-broken rice of Vietnam was
4,600 VND/kg in August 1998 (i.e., approximately US$307/ton).  At the same time, the price ofexported rice (5 per cent broken) of Vietnam was US$320/ton and international price was US$325/ton
(in the Thai market).
Following are some figures for 1995 taken from the Survey on Rice Production of Vietnam in
1995 - 1996 - carried out by the International Food Policy Research Institute in December 1996:
- per capita demand: 147 kg/year (equivalent to 1,417 Kcal/day);
- population: 74,090,000;
- paddy production: 24,693,000 tons (equivalent to 13,850,000 tons of rice);
- average rice production per head: 187 kg/year;
- amount of surplus of rice (after subtracting domestic consumption): 2,982,000 tons;
- exported amount of rice: 2,532,000 tons.
Question 214.
Vietnam should develop a plan for the proper reform of its export restrictions so that they will
be consistent with WTO rules by the time of accession.
Answer:
With respect to exports, at the moment Vietnam only applies a flexible export restriction on
rice for the purpose of food security.
Question 215.
Re. Question 362 (WT/ACC/VNM/3):  How does Viet nam intend to adjust the measures applied
to certain agricultural products (rice, cashew nu ts and coffee) in order to make them consistent
with WTO rules?
Answer:
Vietnam does not yet have any plan to adjust its export restriction on rice. The surcharges for
the purpose of Price Stabilization Fund that may, from time to time, be applicable to coffee and
cashew nuts will be adjusted in consistent with WTO's rules.
(f) Export financing, subsidy and promotion policies
Question 216.
Re. Question 374 (WT/ACC/VNM/3).  Although the privatization of State-owned enterprises is
being implemented, the preferential treatment received by State-owned enterprises, which
dominate industry, banking, trade and transport, is well documented.  In light of this, is priorityWT/ACC/VNM/6
Page 80
access to financing given to private businesses at the same frequency as it is given to
State-owned enterprises?  Is there a difference in the criteria for determining the priority of
access to financing for private businesses and St ate-owned enterprises?  Is there a difference in
the requirements for loans to private busines ses compared with those to State-owned
enterprises?
Answer:
Access to credit is governed by the Regulations on lending to customers of Credit
organisations issued by the State Bank of Vietnam.  Lending conditions which are applied uniformly
to all borrowing legal entities are as follows:
- having legal status and business capacity as stipulated by current Laws of Vietnam;
- having an economically viable project with definable resources for debt service;
- having own capital invested in project, where the specific level of invested capital is
stipulated by the Director General (Director) of the Credit organisations;
- having measures to ensure loan repaym ent in accordance with the agreement; except
in the case of non-secured loans provided by State owned credit organisations under
the direction of the Government, where losses on such loans are resolved by the
Government;
- if required, having assets created from loans insured by insurance companies legally
operating Vietnam;
- carrying out accounting and financial management in accordance with the Accounting
and Statistics Ordinance and the organization's charter;
- complying with Regulations on lending to customers of Credit organisations issued
by the State bank and specific rules set out by lending Credit organization;
- having investment projects approved and licensed by competent agencies in
accordance with relevant Laws and regulations.
In accordance with the existing legislation, there is no distinction between State-owned
enterprises and private enterprises in respect of acc ess to finance, eligibility for getting a loan and
requirements attached to lending.  The requirements that must be satisfied when getting a loan depend
on the amount of the loan (which, in turn, depends on the capital and the size of the enterprise and the
security provided for the loan).
Question 217.
Re. Question 379 (WT/ACC/VNM/3).  Vietnam notes that it maintains export subsidies, but the
Memorandum, (WT/ACC/VNM/2, Section IV, 2(f)) i ndicates that Vietnam does not have export
subsidies.  Could Vietnam please clarify whether it does or does not maintain export subsidies?
If it does, what is the nature of these export subsidies and to which products are they applied?
Answer:
Please see the answers to questions 326, 203, 223 herein.
Question 218.
Could Vietnam please list the export subsidies still maintained?
Answer:
A notification on industrial subsidies and the WT/ACC/4 on agricultural subsidies will be
submitted by Vietnam as long as they are completed.WT/ACC/VNM/6
Page 81
(g) Export performance requirements
Question 219.
Does the new Law on Foreign Investment of 11 December 1996 contain the same provisions as
the 1993 law for a 2 year profit tax exemption fo r exported goods, as noted in the response to
question 380?
Answer:
A profits tax rate of 20 per cent applies to foreign invested enterprises and foreign parties to a
Business Cooperation Contract if they export at least 50 per cent of products.  They are exempted
from profit tax for a period of one year commencing from the first profit-making year and are granted
a 50 per cent reduction of profit tax for the two subsequent years.
A profits tax rate of 15 per cent applies to foreign invested enterprises and foreign parties to a
Business Co-operation Contract if they export at l east 80 per cent of products.  They are exempted
from profit tax for a period of two years commencing from the first profit-making year and are
granted a 50 per cent reduction of profit tax for the three subsequent years.
Please see also the answers to questions 222 and 300 herein.
(h) Import duty drawback schemes
Question 220.
Re. Question 381 (WT/ACC/VNM/3).  Vietnam notes that some duties are refunded for imports
which are re-exported.  Are agricultural products  for food processing are also accorded this
refund treatment?
Answer:
Article 16, Decree No. 54/CP dated 28 August 1993 making detailed provisions for
implementation of the Law on Export and Import Duties provides that the tariff duties imposed on
imported materials used as inputs for production of exports are refunded proportionate with the actual
quantity of exports.  The provision is applicable to all imports satisfying that requirement, including
agricultural products.
(e) Other measures
Question 221.Re. Question 368 (WT/ACC/VNM/3):  Vietnam affirms that minimum export prices on rice and
crude oil serve only as guidance prices.  Does th is mean that they are not compulsorily applied?
Please specify.
Answer:
The minimum export prices on rice and crude oil (which served only as guidance price) have
been abolished.WT/ACC/VNM/6
Page 82
3. Internal Policies Affecting Trade in Goods
(a) Industrial policies and subsidiesQuestion 222.In response to question 386 (WT/ACC/VNM/3), Vietnam states that it grants a lower profit tax
rates and possible reduction or exemption from profit taxes, duty exemptions for capital
machinery, and priority access to investment funding for export production.
These would appear to be prohibited subsidies under the WTO Agreement on Subsidies and
Countervailing Measures.  Could Vietnam provide more information on these and other exportsubsidy measures currently in place?
Answer:
In respect of subsidies in the agricultural sector, Vietnam is presently undertaking the
classification of subsidies in WT/ACC/4 format.  Please see the answer to question 326 herein.
In respect of subsidies in the industrial sector, the classification will be taken into
consideration and results will be forwarded to the Working Party as soon as it is completed.
Preferential profit tax rates are applied to export-producing enterprises.  Details are as
follows:
- foreign invested enterprises established under the Law on Foreign Investment in
Vietnam:
- the profit tax rate of 20 per cent is applied to investment projects if they export at
least 50 per cent of their production.  This rate is applied for a period of 10 years
from the time when the project commences its production or business activities.
Projects are exempted from profit tax for one year commencing from the first
profit-making year and are granted a 50 per cent reduction for the two subsequent
years,
- the profit tax rate of 15 per cent is applied to investment projects if they export at
least 80 per cent of their production.  This rate is applied for a period of 12 years
from the time when the project commences its production or business activities.
Projects are exempted from profit tax for two years from the first profit-making
year and are granted a 50 per cent reduction for the three subsequent years,
- export-producing enterprises established under the Law on Promotion of Domestic
Investment:
- a profit tax rate of 25 per cent is applied to those enterprises that export their
products.  The enterprises are exempted from profit tax for a period of 2 years
from the first profit-making year and are granted a 50 per cent reduction for the
three subsequent years,
- profits tax rate of 20 per cent is applied to export-producing enterprises that are
located in the regions with socio-economic difficulties.  These enterprises areexempted from profits tax for a period of 3 years from the time when they start to
earn profits and are granted a 50 per cent reduction for the 5 subsequent years,
- profits tax rate of 15 per cent is applied to export-producing enterprises that are
located in the regions with socio-economically harsh conditions.  These
enterprises are exempted from profits tax for a period of 4 years from the firstWT/ACC/VNM/6
Page 83
profit-making year and are granted a 50 per cent reduction for from 7 to 9
subsequent years;
- the preferences in tariff applied to equipment and machinery which are used as means
of production are applied uniformly, i.e., no specific preferences are given to export-producing enterprises.
Question 223.
Re. Question 385 (WT/ACC/VNM/3).  Could Vietnam ensure that the preferential treatment
granted to prioritized industries cannot be considered as "export subsidies" prohibited by the
SCM Agreement.
Answer:
Subsidies, if any, will be consolidated and notified in due course.
Question 224.
Re. Question 385 (WT/ACC/VNM/3).  Vietnam provides "favourable access to financing" and
applies minimum tax rate to a number of "prioritized industries" including export production.
We would like to know whether these measures are consistent with the SCM Agreement?
Answer:
Subsidies, if applied, will be notified in due course.
Question 225.
Import duty exempted to machinery for capital construction and expansion of the project
concerns vis-à-vis the Subsidies Agreement.  We would appreciate provision of scope of the
exemption.
Answer:
The Law on Amendments and Supplements to the Law on Export and Import Duties which
comes into force on 1 January 1999 provides that  equipment, machinery and specialised means of
transport specified in Article 47 of the Law on Foreign Investment in Vietnam and Article 25 of the
Law on Promotion of Domestic Investme nt are exempted from import tariffs.
Question 226.
Re. Question 392 (WT/ACC/VNM/3):  The granting to State-owned enterpri ses of raw materials
at low costs, monopolies of supply, control of distribution and privileged access to credit couldconstitute subsidies to industrial production contrary to WTO rules.  Please comment.
Answer:
The information relating to state-trading entities will be notified in the WTO's G/
STR/N/4/VNM in due course.WT/ACC/VNM/6
Page 84
(b) Technical specifications and standards
The scope of the WTO Agreement on Technical Barriers to Trade (TBT Agreement) is broad
in nature.  Its disciplines are applicable to a range of industrial and agricultural products.  The
Agreement establishes fundamental rules and procedures regarding the development, adoption, andapplication of voluntary standards, mandatory standards (“technical regulations”), and the procedures
(“conformity assessment procedures”) used to determine whether a particular product meets such
standards.
Given the breadth of the Agreement, and in order to ensure effective and ongoing
implementation of its obligations, it is imperative for governments to establish a coordinated approach
to the development, adoption and application of standards, technical regulations and conformityassessment procedures to ensure that all ministries, agencies, and private bodies involved in these
activities are aware of the obligations and abide by them on an ongoing basis.
To this end, we have the following questions:
Question 227.
The information Vietnam has provided indi cates that imported goods are subject to
consignment-by-consignment inspection.  Domestic production and imported goods also appear
to be subject to inspection on the market.  Fu rther, imports and exports are distinguished from
domestic production for internal consumption.
We are concerned that this approach does not meet obligations for non-discriminatory
treatment.
Answer:
The answer to question 394 of WT/ACC/VNM/3 indicated that some imports are subject to
quality inspection on a consignment-by-consignment ba sis.  However, the answer did not reflect the
point that the consignment-by-consignment inspection method is the most stringent.  It is mainly
applicable to products that are imported for the first time and with unknown or contestable origin or to
imported goods which are known to have quality-related problems.
There are no differences between technical standards applicable to the inspection of imported
goods and those applicable to the registration of domestic goods.  Vietnam publishes annually a list of
imported goods that are subject to inspection and a list of domestic goods that are subject to
registration as well as related-technical standards.  The publication ordinarily takes place in the fourthquarter and comes into force in the following years.  The technical standards are also included in
Vietnam Standards Catalogue 1998 and in Internet Website on Vietnam Standards (address:
http://home.vnn.vn/tcvn).
Market inspection at the wholesale or retail stage is principally targeted at domestically
produced goods, smuggled goods and counterfeit goods.  After inspection at border gates, imported
goods are not subject to any inspection on the market unless claims against them are duly made.
Question 228.
Vietnam has also stated that it is considering use of supplier’s declaration of conformity and the
recognition of equivalent standards.  We would commend such considerations.
We are concerned, however, with statements that  indicate a move to making current voluntary
standards mandatory.WT/ACC/VNM/6
Page 85
- What is the rationale for such an approach?
- Is there an established policy or criteria to guide agencies in determining whether a
standard must be mandatory?
- We would be interested in seeing the detailed plans and how they will ensure that
technical regulations and conformity assessment procedures do not create unnecessary
barriers to trade.
Answer:
Vietnam has issued regulations on producer's declaration of conformity with Vietnam
standards with reference to ISO/IEC Guide 22 and EN 45014.  Vietnam is providing guidance to
enterprises on the application of the regulation.  The regulation took effect on 1 July 1998.
As stipulated in procedures for formulating national standards, a Vietnamese standard is
voluntary in nature as soon as it is issued.  Some standards are made compulsory as may be decided
by the Minister-in-charge in accordance with the following criteria:
- ensuring hygiene and safety for human, animals and plants;
- protecting ecological environment;
- applying to goods that are significantly important to the economy;
- harmonizing of standards.
The intention of the Government of Vietnam is to remove unnecessary barriers to trade with a
view to facilitating trade.  To this end, Vietnam pl ans to review annually the existing legal documents,
including technical regulations and conformity assessment procedures.  The criteria for such reviews
are as follows:
- ensuring effective surveillance in parallel with facilitation of production and business
activities;
- ensuring the consistency of technical regulations and standards with that of the
International Standardization Organization and/or other international/regionalorganisations.
Technical regulations are developed on the basis of provisions in Article XX-GATT and other
related provisions in WTO Agreements.
Question 229.
Currently, draft technical regulations, standards and conformity assessment procedures are not
published as proposals for public comment.
What are Vietnam’s plans for implementing a sy stem to meet the transparency requirements
under the TBT Agreement?
Answer:
Vietnam will take the point in question into co nsideration when issuing technical regulations.
However, drafts of particularly important standards have been made available through the mass media
(daily newspapers and television).  In parallel, draft lists of Vietnam standards are also published in a
magazine dealing with standards, measurement and quality issues.WT/ACC/VNM/6
Page 86
Vietnam has applied the following measures with a view to ensuring the transparency of
technical regulations and standards:
- establishment of a public reference system documenting technical regulations and
standards and conformity assessment procedures;
- establishment of an electronic mail system providing information on technical
standards and regulations;
- providing primary descriptions on the Internet of activities and services conducted or
provided on technical regulations, standards and conformity assessment procedures of
Vietnam;
- publication of the proposed plan for developing Vietnam standards annually for
public consideration and comment;
- adoption of WTO Members' experiences with respect to the establishment and
operation of WTO enquiry points;
- introduction of contact points involved in technical regulations, standards and
conformity assessment procedures in Vietnam.
Question 230.
Concerning product registration, inspection, and certification:- Please clarify the purpose, objective and process for product registration?  Inspection?
Certification?
- How does the Ministry of Science, Technology and Environment determine whether a
good should be on its list of goods subject to mandatory conformity certification?
Answer:
The purpose of the required quality registration, quality inspection and the conformity
certification is to ensure that compulsory standard s relating to the safety, hygiene, national security
and principal interests are applied.
The criteria provided in the answer to questi on 228 herein are basis for determining whether a
good should be subject to mandatory conformity certification.  The determination is made public after
getting approval of the in-charge ministries or agencies.
Question 231.
Re. Question 394 (WT/ACC/VNM/3).  Vietnam states that its inspection regime is not yet fully
consistent with international practices.  Mo st import inspections are carried out on a
"consignment-by-consignment" basis.  Vietnam states that they are moving to an "offered
sample" and representative sampling regime.
Could Vietnam please define "offered sample" (chosen/submitted by whom) and the levels of
representative sampling.
Answer:
An "offered sample" is a sample of a particular good that is intended to be imported in
Vietnam.  An offered sample is submitted by the importer to the designated inspection body in
Vietnam for quality inspection.  If the offered sample satisfies appropriate requirements, the
consignment in line with the offered sample is no longer subject to inspection on a consignment-by-
consignment basis at the border gate (Please see the answer to question 234 herein).WT/ACC/VNM/6
Page 87
A representative sample is picked up from a consignment being inspected.  The level of
representative sampling depends on various factors as quantity, the size of the consignment,
acceptance quality level, the actual situation of the imported consignment, quality inspection reports
of the product under the provisions of Vietnam Standards for each product.
Question 232.
Re. Question 395 (WT/ACC/VNM/3).  Vietnam notes that it “... has not so far taken steps to this
end.  However, in this regard, preparatory work is implemented".
Could Vietnam provide a time frame and indicate what steps it is taking/planning to bring its
regime in accordance with the TBT Agreement?
Answer:
Vietnam has been taking steps to bring its regime in accordance with the TBT Agreement:
- harmonization of Vietnam standards with international standards (please see the
answer to question 239 herein);
- establishment and improvement of information provision systems and contact and
enquiry points with a view to meeting the transparency requirement under the TBTAgreement (Please see the answer to question 229 herein);
- conduct of technological and physical infrastructure building and training in order to
meet the requirements of the TBT Agreement on development, adoption and
application of the technical regulations and standards as well as the conformity
assessment procedures.
To the aforesaid objective, Vietnam is seeking technical assistance in this regard provided by
the WTO Secretariat and WTO Member countries.
Question 233.
Re. Question 398 (WT/ACC/VNM/3).  Could Vietnam provide examples (as it did in
Question 418 pertaining to plant quarantine) of  goods, including imports, that did not meet
Vietnam’s food hygienic standards.
Answer:
In 1995, Vietnam denied one chicken container from one European country from importation
into Vietnam because it did not meet hygienic standards.  In addition powdered milk from one
European country was barred from importation due to Clostridium Perfringers infection.
Food safety: on 4 April 1998, Vietnam issued a List of hygienic standards applicable to food
products.  Since then, none of the imported food and foodstuffs is reported to have failed to meet food
hygienic standards.
Question 234.
Reforms will be necessary to ensure that, in accordance with the TBT Agreement, technical
regulations and standards and conformity assessment procedures do not create unnecessary
obstacles to trade.  Vietnam has noted that it would have difficulty in applying the TBT
Agreement in respect of formulating internationally compatible standards, applying
international standards, and applying assessment  of conformity to standard regulations (replyWT/ACC/VNM/6
Page 88
to question 400).  In reply to question 407 (WT/ACC/VNM/3), Vietnam advised that
manufacturers' declarations of conformity was under consideration for application in the near
future.  Vietnam has also advised that it did not accept certification from third country
certification bodies.  However, it was cooperating with ASEAN countries to develop a common
approach to this issue (reply to question 408).
- What plans does Vietnam have regarding conformity assessment procedures for
relevant international standards?
- What progress has been made regarding accepting a manufacturer's declaration of
conformity?
- When will Vietnam permit conformity assessment of international standards to be
carried out by appropriately accredited testing laboratories in the country of
manufacture?
Answer:
The conformity assessment procedures for relevant international standards are as follows:
- in respect of the accreditation of testing and calibration bodies, the conformity
assessment procedures applying in Vietnam are completely consistent with ISO/IECGuides (that are adopted as Vietnam standards);
- in respect of product inspection and certification, Vietnam's conformity assessment
procedures are developed in line with relevant ISO/IEC, CODEX guides;
- in respect of assessment of conformity of imports to international standards, Vietnam
is presently applying a range of conformity assessment approaches, including:- consignment inspection in accordance with the approach 6 of ISO/IEC and the
approach F of the EEC on the conformity assessment of goods that are subject to
quality inspection and are imported into the country for the first time or are
historically known as of bad quality,
- inspection of offered samples conducted in line with the approach 2 of ISO/IEC
or the approach B of EEC,
- no inspection required for goods that are certified in accordance with foreign
standards recognised by Vietnam or that are inspected in the exporting countries
under the mutual recognition agreement between the two countries.
On 7 April 1998, the Chief of the Directorate of Measurement and Quality promulgated
regulations on the procedures for an enterprise's declaration of conformity with Vietnamese standards.However, the application of this approach is initially limited to enterprises that are certified to have
quality regimes under TCVN/ISO-900, Q-Base, HACCP and GMP or are given Vietnam Quality
medals (gold or silver medals) by the Ministry of Science, Technology and Environment.  The
Directorate of Measurement and Quality will give approvals on a case-by-case basis if an enterprise
other than those satisfying this requirement wishes to make their own declaration of conformity.Vietnam is actively promoting MRA-related-activities under the framework of ASEAN, ASEM and
APEC, so that Vietnam can recognise the conformity assessment of foreign countries.  It is expected
that Vietnam will achieve this objective in the near future.
Please see the answer to question 228 herein.
Question 235.
Re. Question 406 (WT/ACC/VNM/3).  Canada notes the extensive lists of products subject to
mandatory quality inspection as listed in Appendix 5 of WT/ACC/VNM/3/Add.1.  Does thisWT/ACC/VNM/6
Page 89
refer to quality as related to the particular good or does this refer to conformity with the terms
and conditions of the commercial contract of the particular good?  Could Vietnam please
provide a justification for each product requiring mandatory quality inspection?  Could
Vietnam further elaborate on its plans regarding  future use of manufacturers self-declaration?
Answer:
Mandatory quality inspection as listed in Appendix 5 of WT/ACC/VNM/3/Add.1 refers to
inspection of quality or quality-related aspects such as packaging, labelling ... of a particular product.
It does not refer to conformity with the other terms and conditions of the commercial contract such as
prices, time of delivery, insurance, dispute settlement.  Please see the answer to question 228 on the
criteria for product inspection.  Please see the answer to question 234.
Question 236.
Re. Question 407 (WT/ACC/VNM/3).  Does Viet nam have plans to implement GMPs and
HACCP for food products other than fish?
Answer:
Yes, Vietnam does have plans to implement GMPs (Good Manufacturing Practices) and
HACCP (Hazard Analysis Critical Control Po int) for food products other than fish.
In addition to fishery products, Vietnam is implementing GMPs for pharmaceuticals and
HACCP for foodstuffs as wine, soft drink.
Question 237.
Re. Question 400 (WT/ACC/VNM/3).  Could Vietnam provide more detailed information on its
difficulties to implement the TBT Agreement?
What is the current situation on enquiry po ints and on the publication of TBT-related
regulations?
Answer:
The major difficulties in implementing the TBT Agreement are as follows:
- development of international standards due to lack of funding and experience;
- application of some international standards, particularly standards of newly
established sectors as EMC, radiation, etc. due to ineffective and outdated technical
infrastructure and managerial skills;
- establishment of enquiry point on TBT due to the scattering of information and the
lack of a modern information system.
Please see Appendix 5 of WT /ACC/VNM/3/Add.1 on TBT incl uding the list of enquiry
points in Vietnam.
Question 238.
Re. Question 411 (WT/ACC/VNM/3).  Has Vietnam concluded any bilateral agreements in the
field of standards certifications other than with China?
Does Vietnam intend to negotiate concluding similar agreements with other countries?WT/ACC/VNM/6
Page 90
Answer:
Vietnam always expresses its willingness to conclude mutual recognition agreements with
other countries.  Vietnam is cooperating with ASEAN countries to develop the agreement on mutualrecognition and is preparing for joint sectoral mutu al recognition agreements.  In addition, Vietnam is
considering joining APEC mutual recognition agreements.
Question 239.
We have some further questions on Vietnam's future commitments under the TBT Agreement.
How many national standards are now not aligned to international standards?
How has work been proceeding to  harmonize national standards with international standards?
We would appreciate details of all of Vietnam's national standards which are currently more
restrictive than international standards.  How do those standards meet the requirements of the
TBT Agreement?
Answer:
So far, there have been no detailed assessment on the number of national standards which are
not aligned to international standards.  However,  Vietnam would provide some data for reference.
The 1998 Vietnam Standards Catalogue contains 4,252 standards in force, of which 979 have
been developed by adopting the relevant international and regional standards such as ISO, FAO, IECand former COMECON, and foreign standards such as American standards.
The remaining standards are aligned to the releva nt international or foreign standards to some
extent.
Vietnam has a plan for reviewing and revising the standards with a view to helping
enterprises to strengthen their competitiveness.
The harmonization of national standards with international standards is an important objective
in the process of Vietnam's accession to the WTO, particularly in participation in the TBT Agreement.
To this objective, Vietnam is:
- reviewing and revising the Vietnamese sta ndards system with a view to harmonising
with international standards.  The work is conducted annually by the National
Standardization Agency;
- participating in the programmes on harmonization of national standards with
international standards under the framework of regional arrangements such asASEAN, APEC;
- participating in international, regional conformity assessment regimes;
- joining in the activities regardin g mutual recognition agreements;
The development of Vietnamese standards for over 40 years has been based on international
and regional standards where they have reached a higher level of economic development and
Standardization than Vietnam (which is one of the countries with the lowest GNP per capita in the
world).  Therefore, in most cases, Vietnamese standards are either compatible with standards that are
developed by adopting the relevant international and regional standards or are less restrictive than
international or foreign standards.WT/ACC/VNM/6
Page 91
However, it might be the case that foreign standards that Vietnam has adopted are more
restrictive than the relevant international standards.   Vietnam will take this matter into consideration
and will implement measures in line with the TBT Agreement."
Question 240.
Re. Question 394 (WT/ACC/VNM/3):  In the answer to this question, Vietnam lists a series of
activities that it is carrying out to remedy th e deficiencies in the regulation of technical
standards.  Please specify which actions have  already been completed and when the remaining
steps will be taken.
Answer:
The specific information relating activities referred to in answer 392 is as follows:
- The review of Vietnamese standards (TCVN): Vietnamese standards are reviewed
every year with a view to adjusting a nd amending for the purpose of harmonising
with regional and international standards. Par ticular attention is paid to international
standards which are relating to hygiene, safety, and environment or are subject to
harmonization programme of the ASEAN, APEC, etc.;
- Adoption of standards: As of present, Vietnam has fully adopted 640 international
standards (e.g. ISO, CAC, OILM, and IEC), 406 regional standards (e.g. EN, SEV)
and 03 American standards;
- Import and export inspection: Vietnam's inspection regime of imports and exports are
constantly reviewed and adjusted in order to facilitate trade. In 1999, a number of
regulations governing import and export inspection will be amended in this direction;
- Establishment of testing facilities in line with the requirements of Guide 25: Vietnam
has so far established 19 testing facilities which are certified by Guide 25 of ISO/IEC;
- Mutual recognition: Vietnam has participated in the drafting and then adopted the
ASEAN Framework Agreement on mutual recognition and conformity. Vietnam is
also planning to join APLAC-APEC arrangements on mutual recognition.
Question 241.
Re. Question 395 (WT/ACC/VNM/3):  Could Vietnam submit a detailed plan of action for
achieving the full implementation of the TBT Agreement by the time of accession?
Answer:
Vietnam is preparing for the implementation WTO's TBT Agreement. In this process,
Vietnam appreciates other countries' technical assistance.
Question 242.
How many Vietnamese standards are mandatory and how many are voluntary?
Answer:
As contained in the List of Vietnamese Standards in 1998, there are 4252 national standards,
of which 149 are mandatory.WT/ACC/VNM/6
Page 92
Question 243.
Re. Question 407 (WT/ACC/VNM/3):  Has Vietnam concluded its consideration about the
possibility of introducing the manufacturer's declaration of standard conformation?
Answer:
On 7 April 1998, the Director General of Department of Standards and Quality Measurement
issued regulations introducing the manufacturer's declaration of conformity with the Vietnamese
standards. With respect to manufacturer's declar ation of conformity to international standards,
implementation will be in consistence with the regional or bilateral agreements which Vietnam may
conclude. It thus will be considered in the future.
Question 244.
Has Vietnam developed a plan for the intr oduction of a quality assurance system?
Answer:
Vietnam is in the process of establishing a quality assurance system on the basis of guidelines
of ISO, Codex (GMP, HACCP) and the systems of other countries such as New Zealand (Q-Base),
Japan (TQM). Up to present, Vietnam has certified GMP system for 23 enterprises. In addition, anumber of pharmaceutical enterprises have been licensed to apply GMP in accordance with ASEAN's
guidelines.
(c) Sanitary and phytosanitary measures
Question 245.
Re. Question 416 (WT/ACC/VNM/3).  Vietnam has noted that it anticipates difficulties in
applying the SPS Agreement.  Could Vietnam provide an indication as to how it is planning to
overcome these difficulties?
Answer:
Concerning difficulties that Vietnam faces in applying the SPS Agreement: please see the
answer to question 253 herein.
Plan to overcome the situation: reviewing and amending the legislation on plant quarantine;
training on PRA and plant quarantine activities; and purchasing software for PRA.
Question 246.
Re. Question 417 (WT/ACC/VNM/3).  Vietnam has indicated that the Questionnaire on SPS
Measures will be submitted in due course.  Could Vietnam provide a specific time frame?
Answer:
Vietnam will notify the specific time frame on the submission of the Questionnaire on SPS
when we are in the position to do so.WT/ACC/VNM/6
Page 93
Question 247.
In reply to question 417 (WT/ACC/VNM/3), Vietnam states that it will submit a response to the
Questionnaire on Sanitary and Phytosanitary measures in due course.
Vietnam is strongly encouraged to complete this questionnaire and submit it to the Working
Party as soon as possible.
Answer:
Vietnam is making best efforts to complete this questionnaire and will forward it to members
of the Working Party.
Question 248.
From the comprehensive information provided by Vietnam in WT/ACC/VNM/3 and Add.1 it is
clear that there are many layers of administrative control applied for the purposes of protectinghuman health and flora and fauna life.  This includes various laws, decrees and ordinances,
administrative authority assigned to Ministries, import licensing, State trading and mandatory
inspection requirements.  While we would expect  that the administrative regime will be a matter
for detailed discussion, such arrangements should not be applied in such a manner as to
obstruct trade in products which conform with Vietnam's SPS requirements.
To some degree it is unclear whether these controls are aimed at enforcing quality standards, as
distinct from sanitary and phytosanitary requirements.  We would appreciate clarification of
this.
Answer:
Vietnam has various legal documents regulating sanitary, phytosanitary and health
quarantine.  There are also different agencies with different authority as assigned by the State to exert
control in the area which they are responsible.  It is by no means aimed to obstruct trade between
Vietnam and other countries.  There is a close cooperation among the responsible agencies at the
border gates.
The functioning of these various agencies is aimed to ensure the State management with
respect to sanitary and phytosanitary measures in accordance with the laws - it does not mean to
enforce quality standards.
Question 249.
We welcome the detail provided in WT/ACC/VNM/3 and Add.1, but would appreciate further
clarification of the role and relationship of va rious bodies involved in implementing sanitary
and phytosanitary requirements.
Answer:
Please see the answer to question 250 herein.
Question 250.
The SPS Agreement calls for the nomination of national enquiry points (Annex B) to provide
answers to all reasonable questions.  We would appreciate advice of the steps Vietnam intends
to take to comply with this requirement.WT/ACC/VNM/6
Page 94
Answer:
The structure of sanitary and phytosanitary agencies in Vietnam, in other WTO Members as
well as in the world are different depending on their respective socio-economic conditions.
Re. Annex B of SPS Agreement on National Enquiry Point, Vietnam will inform WTO
Members of its appointed official agency as soon as possible.
Question 251.
We are particularly interested in the processes for establishing sanitary and phytosanitary
measures  in Vietnam.  The Ordinance on Ve terinary Activities, 1993, does not provide any
insight into this (unlike the Ordinance on the Quality of Goods, which relates to quality
standards, and which does provide information on the establishment of standards).  In addition
to Codex, the SPS Agreement calls for Members to adhere to the standards, guidelines and
recommendations of the International Office of Epizootics and the relevant international and
regional organisations operating within the fr amework of the International Plant Protection
Convention.
We would welcome advice as to whether Vietnam is a member of these bodies, or whether
action is in hand to gain membership.
Answer:
The Ordinance on Plant Protection and Quarantine was enacted by the State President on
15 February 1993.  Regulations on Plant Quarantine were promulgated together with DecreeNo. 92/CP of 27 November 1993, and the Decisions subsequently issued by MARD on implementing
the Ordinance and Regulations.  The above legal documents were formulated drawing on the
International Plant Protection Convention (1978), Regulations of the Asia Pacific Plant protection
Commission (APPPC) and Vietnamese laws, as well as on the legislation on plant quarantine of other
countries.
Vietnam is now an official member of ASE AN, APPPC and has close cooperation with FAO.
Plant quarantine work has been applied uniformly countrywide from the central to local levels and on
the scientific-evidence basis.  Vietnam is a full member of the OIE.
Question 252.
We refer to the system of mandatory quarantine inspection mentioned on page 40 of
WT/ACC/VNM/3/Add.1 and the mandatory quality inspection applied to products listed in
Appendix 5 of the document (page 98).
- We would appreciate advice as to the basi s of the standards, i.e. there is a need to
distinguish between quality standards and sanitary and phytosanitary aspects, and the
scientific basis for sanitary or phytosanitary standards.
- We would also appreciate advice whether Vietnam intends to establish arrangements for
the acceptance of exporter certification as we ll as for the recognition of other Members'
sanitary and phytosanitary measures, where these can be demonstrated as equivalent to
Vietnam's requirements.WT/ACC/VNM/6
Page 95
Answer:
Plant quarantine:
According to the new revised text of the International Plant protection Convention (1997),
importing country only accepts the phytosanitary certificate issued by national plant quarantine
agency of the exporting country for exported goods.  Since exporters do business, they are not eligible
to issue certificate of plant quarantine for exports.
Vietnam and other ASEAN member countries have made efforts to prepare for harmonization
of SPS measures within the ASEAN Region and to facilitate the implementation of AFTA.  We
recognise phytosanitary certificates from other countries, consistent with international and nationallegislation.
Animal Quarantine:
With assistance from the European Communities, Vietnam is drafting a law on sanitary
measures to meet the domestic sanitary requirements.  It is intended that the law will be consistent
with the WTO SPS Agreement.
Vietnam is trying to better equip its laboratories used for sanitary inspection purposes.
Vietnam is also trying to improve its sanitary and vaccination management, human
development, information network and international cooperation.
Question 253.
We note that in response to question 416 in WT/ACC/VNM/3, Vietnam envisages some
difficulties in the application of Codex standards due to limited facilities, infrastructure and
processing techniques and technology in the agri culture sector as well as lack of experience and
facilities in inspection, control and approval processes required under Annex C of the SPS
Agreement.  We will be looking to Vietnam to identify any shortcomings and put in place the
appropriate facilities for meeting the inspec tion, control and approval processes under the
Agreement from the time of its accession.
How far have Vietnam's reform efforts progressed in this regard?
Answer:
Some difficulties in application of SPS agreement in Vietnam for the time being are as
follows:
- developing software for pest risk analysis (PRA);
- application of PRA for GMOs including genetic modified organisms, materials for
genetic transmission and novel organisms;
- completion, amendment of legislation on plant quarantine in accordance with the new
revised text of IPPC (1997) and international standards.
- Efforts that Vietnam is currently making in this area are:
- overseas training on PRA for experts;
- reviewing existing legislation on plant quarantine in the light of the new revised text
of IPPC (1997).
Vietnam is making best efforts to build the in frastructure for hygienic inspection of animals
and animal-related products.WT/ACC/VNM/6
Page 96
Question 254.
Re. Question 419 (WT/ACC/VNM/3).  Vietnam states that, "all products made from animals
imported to Vietnam cannot be infected with any virus, bacteria during process of production,transportation and preservation".  This is very restrictive, and, depending upon the
interpretation could result in the import refusal  of almost any food. How will Vietnam ensure
that this requirement will not unjustifiably restrict trade?
Answer:
Vietnam's sanitary regulations applicable to  animals and products made from animals
imported into Vietnam are based on standards provided by international and regional organisations as
CODEX, OIE, ASEAN.  They are, therefore, not unjustifiably restrictive.
Question 255.
Re. Question 416 (WT/ACC/VNM/3).  More detailed information on Vietnam's current
situation regarding the implementation of the SPS Agreement should be provided.
What is the current situation of Vietnam's prep aration for joining the relevant international
agreements and for setting up enquiry points?
Answer:
Plant quarantine:
Legislation on Vietnam's plant quarantine is being reviewed according to the SPS Agreement
of WTO, the new text of the International Plant Protection Convention (IPPC) and International
Standards on plant quarantine as well as international standards with a view to harmonising it with
plant quarantine systems of ASEAN, APEC and WTO Members.
Vietnam is now a full member of the ASEAN, and Asian and Pacific Plant Protection
Commission (APPPC).  Accordingly, Vietnam has been reviewing its legislation on plant quarantinefor amendment in order to meet the requirements of the new text of the IPPC and SPS Agreements of
WTO and the harmonization process of ASEAN.
Animal quarantine:
Vietnam is reviewing its plant quarantine and sanitary regulations. It is planned that by the
year 2002, Vietnam will have a law on sanitary measures.
Vietnam is now a member of the World Sanitary  Organisation, ASEAN, and the International
Council for Food Standardization (CAC).  Therefore,  in the drafting of its law on sanitary measures,
Vietnam will refer to the regulations of these organisations in order to make its regulations compatible
with international standards, in particular those contained in the WTO SPS Agreement.
Question 256.
Re. Question 421 (WT/ACC/VNM/3).  Could Vietnam explain in detail about the requirements
and procedures for phytosanitary inspections on  imported vehicles for transporting goods?WT/ACC/VNM/6
Page 97
Answer:
Requirements and procedures for phytosanitary inspection for vehicles that transport goods
imported into Vietnam are as follows:
Requirements:
Phytosanitary certificate for the consignment is issued by the National Plant Quarantine
Organization of exported country following the format of IPPC.
Vehicles and goods are not infected by pests identified in Vietnamese plant quarantine
regulations.
Procedures:
Imported plants or materials for planting: the importer has to contact the Ministry of
Agriculture and Rural Development of Vietnam (MARD) to get an import permit at least 10 daysbefore the consignment is to be imported through the first entry point.
Declaration at the nearest plant quarantine (PQ) office at least 24 hours in advance.The PQ office has to check vehicles and goods, sample, identify and issue phytosanitary
certificate within 24 hours. In cases where this will take more than 24 hours, the PQ office has to
inform the importer.
Technical inspection procedures and documents on PQ are specified in detail by MARD for
application in the whole country.
The PQ office is responsible for supervising,  with respect to PQ, the imported consignment
after the goods are imported into the territory of Vietnam.
Animal quarantine:
Requirements
Animal quarantine requirements for vehicles transporting imported goods into Vietnam are as
follows:
- sanitary certificate is issued by the national sanitary authority of the exporting
country certifying that the animals are healthy, free from infectious diseases and the
animal products are safe for consumers and free from infectious diseases;
- vehicles and goods are not infected by diseases.
Procedures:
The exporter has to apply to the Sanitary Department and has to declare the imported
consignment to the Animal Quarantine Office at the border gate appointed by the Sanitary
Department.
The Quarantine Office will conduct its sanitary inspection of the vehicles and, if necessary,
sanitise the vehicle.  Then the Quarantine Office will check the goods, verify the documents, take
samples, inspect the goods and issue the import quarantine certificate.  Failure to meet sanitary
standards or documentation requirements will be dealt with in accordance with the laws of Vietnam.WT/ACC/VNM/6
Page 98
The method of inspection, documentation and procedures are stipulated by the Ministry of
Agriculture and Rural Development and are applied uniformly in the territories of Vietnam.
Question 257.
Please explain to us the details concerning heath inspection system.
Answer:
The Ministry of Health is designated to exert State control over food safety.  According to the
existing legislation, food products which are on the list determined by the Ministry of Health are
subject to quality registration at the Ministry of  Health or provincial/municipal Health Offices.
Imported foodstuffs:
Imported foodstuffs must be inspected in terms of quality by sampling with a view to being
certified for import registration.  The authorized inspection agency undertakes quality inspection ofimported foodstuffs that have already been registered  in respect of quality and certifies them with a
"Quality import certificate" for the purpose of customs clearance.  The imported foodstuffs will not be
permitted to enter the country if they fail to meet the quality requirements.  The owners must find a
solution by themselves.
Domestically produced food and foodstuff:
Food and foodstuffs which are locally produced or processed by domestic or joint-venture
enterprises are subject to sample inspections as well as quality registration before being circulated on
market.  If they are found not in conformity with the registered quality while circulating on themarket, the enterprise is subject to administrative penalties and will be required either to reprocess or
to destroy the products, depending on how serious the breach is.
(d) Trade-related investment measures (TRIMs)
Question 258.
We would appreciate Vietnam’s response to Question 423 (WT/ACC/VNM/3).
Answer:
Please see the answer to following question.
Question 259.
Please indicate whether the described TRIMs- inconsistent practices noted by Vietnam in
questions 107 and 222 (WT/ACC/VNM/3) will be eliminated in the context of WTO accession.
Answer:
In the context of WTO accession, Vietnam will eliminate measures which are inconsistent
with TRIMs Agreement, if any, in accordance with  the principles and rules of WTO.  However, some
measures mentioned in question 107 are investment incentives aimed at attracting investment into
industries, sectors where Vietnam has comparative advantage and at addressing employment
problems.  Such policies are applied by many countries.  To our understanding, the export
performance requirement is not inconsistent with WTO rules.WT/ACC/VNM/6
Page 99
We will answer question 222 concerning the localization policy for the automobile
manufacturing sector later, because at present Vietnam is reviewing this policy in order to make more
detailed regulations on this issue in accordance with WTO rules.
Question 260.
The response to question 426 (WT/ACC/VNM/3) indicates that Vietnam intends to phase out
export balancing investment requirements.  Coul d Vietnam give an indication of the timetable
for this transfer?
Answer:
The answer to question 426 in WT/ACC/VNM/3 referred to foreign exchange balancing
requirement, not export balancing requirements.
Vietnam's foreign exchange is so limited that Vietnam can only meet the needs of enterprises
that have invested in priority sectors. In addition, it should be noted that Vietnam does notdiscriminate between foreign and domestic investors in respect of foreign exchange access.
Foreign exchange access will be relaxed when the balance of payments and the foreign
exchange reserve situation improve.  However, there exists no specific time frame for this.
Question 261.
It is stated in response to question 424 (WT/ACC/VNM/3) that “localization policies are
formulating.”
- Does this mean to state that additional TRIMs-inconsistent policies based on local
content are being developed?  If so, what is Vietnam’s explanation and justification for
implementing new WTO-inconsistent policies over three years after it first applied for
WTO Membership.
- If not, please clarify what this phrase me an operationally?  Please provide additional
details.
Answer:
Please see the answer to question 271.
Question 262.
What is meant by the phrase “study of the investment project” in the response to question 425?
Answer:
The answer to question 425 of WT/ACC/VNM/3 provided that foreign investors are allowed
to import products in accordance with the objective, the licence and feasibility study of the investment
project.  Submission of a feasibility study stating th e amount of capital, input sources, products, etc. is
one of the criteria for investment licence issuance.
Question 263.
Concerning the response to question 427:  as  requested earlier, please explain how these
regulations satisfy TRIMs requirements?WT/ACC/VNM/6
Page 100
Answer:
Please see the response to question 265 herein.
Question 264.
If Vietnam is prepared to acknowledge that these regulations are not TRIMs-consistent,  please
describe the remedial steps that Vietnam intends to take to bring them into conformity.
Answer:
Please see the response to question 265 herein.
Question 265.
What is the time period for the process of  “deregulating and gradually eliminating the
requirements” as described in the answer to this question?
Answer:
With respect to foreign exchange:  The Go vernment of Vietnam requires that foreign
investors shall meet, by themselves, their fore ign currency needs, because the foreign currency
reserves of Vietnam are insufficient to meet investors' foreign currency demands.  This is not aimed at
restricting imports.  Along with the effort to increase foreign currency reserves, Vietnam has been
deregulating and will continue to deregulate this requirement.
With respect to localization policy: please see the answer to question 271 herein.
Question 266.
When will the list referred to in Question 429 be prepared?
What does the phrase “privileges that may be granted for developing countries” mean?
Answer:
The phrase "privileges that may be granted for developing countries" means that Vietnam
wishes to be entitled to have a 5 year transitional period for phasing out TRIM-inconsistent measuresas provided for developing countries in the TRIMs Agreement.  Vietnam is categorising TRIMs-
inconsistent measures and will notify the Working Party as soon as it is completed.
Question 267.
Import licences granted to production enterprise s to import products for their own production
in accordance with their business plans is related to the volume of local production.
Why does Vietnam consider that this licensing procedure is not covered by item 2(a) of the
TRIMS Annex? (reply to question 203, WT/ACC/VNM/3 refers).WT/ACC/VNM/6
Page 101
Answer:
The illustrative list in the Annex of the TRIMs Agreement covers, inter alia , local content
requirements and restrictions on export or sale for export.  Therefore, trading right-related measures
that Vietnam applies to production enterprises are not inconsistent with the TRIMs Agreement.However, export-import business licensing has been discontinued.  Please see the answer to
question 79 herein for more details.
Question 268.
Vietnam states in reply to question 207 (WT/ACC/VNM/3) that some aspects of the
import/export licensing regime applied to foreign -invested enterprises may not be in conformity
with the provisions of the TRIMs Agreement.
Could Vietnam please elaborate?  What aspects of the regime is Vietnam thinking of revising?
Answer:
Foreign-invested enterprises are allowed to import products in accordance with investment
licence and export almost products as provided for in the answer to question 79.
At the beginning of a year, enterprises must submit their plan of importation in that year to
the Ministry of Trade. The plan can be adjusted at any time of the year whenever amendments or
supplements are made.
The described import licensing regime does not violate the TRIMs Agreement.
Question 269.
In reply to question 429 (WT/ACC/VNM/3)Vietnam states it will work out a programme for
gradually eliminating and adjusting measures towards consistence with the TRIMs Agreement,
"taking into account the flexibility, and pr ivileges that may be granted for developing
countries".
Could Vietnam please elaborate on its reply?
Answer:
Please see the answers to questions 266 and 271 herein.
Question 270.
Vietnam has stated in its reply to question 431 (WT/ACC/VNM/3) that it will maintain the
scheme requiring foreign joint venture motor vehicle manufacturers to produce a minimumproportion of their components locally.
Could Vietnam please explain how this scheme is consistent with the TRIMS Agreement?
Answer:
Vietnam is considering the localization policy in automobile manufacturing sector.  Fourteen
(14) automobile manufacturing joint-ventures have been licensed so far.  In practice, the described
regulations in this regard are no longer in force.  Please see the answer to question 271 herein.WT/ACC/VNM/6
Page 102
Question 271.
Re. Question 427 (WT/ACC/VNM/3).  Vietnam is reviewing its policy system in order to find
out the consistency with the TRIMs Agreement .  These included the requirements for buying
and using local components in certain manufacturin g projects such as electronic appliances, car
manufacturing, etc.
We would be interested to know when the review of policy system will be completed.
Answer:
We are actively reviewing our policies and regulations to identify inconsistencies with the
TRIMs Agreement.  This work includes reviewing existing regulations as well as drafting new
regulations.  However, the timing of this process depends on many factors and will be notified in due
course.
Question 272.
The export requirement of 80 per cent in respect of 24 products may be WTO inconsistent.  It
should be abolished.
We would appreciate provision of list of 24 products broken down in HS, at least 4 digit level.
Answer:
Please see the answer to question 54.
At present, there exists no list of 24 products categories with HS code.  Please see Annex 3 to
document WT/ACC/VNM/6/Add.1.
Question 273.
Please define the term “legal entities?”  Does this term include suppliers from foreign countries?
Answer:
Please see answer 311 herein.
Question 274.
Core Labour Standards
Paragraph 4 of the Singapore Ministerial Conference Declaration noted the commitment of all
WTO Members to the observance of core labo ur standards, i.e., recognising that the
International Labour Organization (ILO) is the relevant body to advise upon these standards
and declaring that all Members have an obli gation to promote and realise the fundamental
principles and rights at work.
In this context, could Vietnam provide information concerning:(a) the provision of core labour standards to workers in Vietnam through national law and
practice;WT/ACC/VNM/6
Page 103
(b) work undertaken with the ILO to modify its law and practice to bring these into greater
conformity with internationally recognised core labour standards;
(c) whether the government has requested technical cooperation and advisory services from
the ILO to promote its observance of these standards?
Answer:
Vietnam has ratified many conventions in th e framework of the ILO. The Labour Code of
Vietnam and other related legal documents have been established with reference to the conventions
and recommendations of ILO.
The Vietnamese Government has requested technical cooperation and advisory services from
the ILO in order to ensure that Vietnamese laws on labour are consistent with the established
international standards.
Question 275.
General Investment Issues:
The responses contained in WT/ACC/VNM/3 note  that Vietnam has an investment review
board which evaluates proposed investments based on various criteria.  And while Vietnam
permits up to 100 per cent foreign ownership of foreign investments, it also appears thatinvestment review can also deny an investment in a wholly owned foreign company.
Our experience is that in most cases it is most beneficial if such decisions rest with the market,
rather than government mandated investment decisions.  Could Vietnam indicate if it is
rethinking these requirements?
Answer:
Vietnam welcomes and takes the above suggestion for consideration.
The Decree No. 10/1998-ND/CP promulgated the li st of some sectors in which investments
with 100% foreign capital  are not allowed. These are important sectors, in which the State ofVietnam assumes that the participation of Vietnamese counterparts in operation of enterprises with
foreign owned capital is needed. The sectors in which investments with 100% foreign capital are not
licensed are listed in the Government Decree; therefore the investment license issuing bodies shall
appraise the investment proposals on the basis of the Decree’s provisions, not case by case. The
evaluation is also aimed at assessing the compatibility of the project with social-economic objectivesand market demand in order to decide the incentives and register import plans as stipulated in
applicable laws.
Question 276.
Would Vietnam explain why it requires a minimum percentage of foreign investment in some
projects?  Are there specific criteria for selecting the sectors to which this requirement is
applied?
Answer:
Requirement on the minimum capital contribution of foreign parties of 30% of the legal
investment capital is to assure that it is the FDI projects and thus can be subject to regulations and
enjoy incentives as provided for in the Law on Foreign Investment in Vietnam. This provision is
applied generally, with only a few exceptions. In cases where the project would provide considerableWT/ACC/VNM/6
Page 104
new technology or socio-economic benefits, the investment license issuing bodies may allow the
establishment of a joint-venture with foreign contribution of 20% of the legal capital. Otherwise,
foreign organisations or individuals can conduc t portfolio investment by purchasing shares of
Vietnamese share-holding companies up to 30% of legal capital of those companies. Vietnam is also
in experimental process of allowing foreigners to invest in forms of buying shares or capitalcontribution to Vietnamese enterprises.
Question 277.
Re. Question 427 (WT/ACC/VNM/3):  Has Vietnam reached a conclusion on the consistency
with the TRIMs Agreement of the measures described in answer to question 427?
Answer:
Vietnam is in the process of reviewing its regula tions in order to identify the inconsistencies
with the WTO's TRIMs Agreement.
(e) State-owned enterprises
Question 278.We appreciate the list of State-owned enterprises involved in agriculture as submitted by
Vietnam in Appendix 4 of WT/ACC/VNM/3/Add.1.
In order to more fully understand the operations of these State-owned enterprises, particularly
as they impact international trade in agricultural commodities, we request that Vietnam please
complete in full the new WTO notification format (contained in G/STR/N4) for all of itsagricultural State trading enterprises.
Answer:
Please see the answer to question 279 herein.
Question 279.
In its response to question 16 in WT/ACC/VNM/3, Vietnam states clearly that the purpose of its
State trading enterprises is to regulate prices and the level of supply and demand.  Article XVII
of the GATT, however, provides that State trading enterprises may not discriminate against
imports and that purchasing decisions must be taken on commercial considerations only, i.e.price, quality and availability.
Can Vietnam confirm that all State trading entiti es purchase products on a national treatment
basis, and do not block imports pending exhaustion of domestic supplies?
Answer:
Vietnam is preparing the G/STR/4 formatted notification and we will submit it to the
Working Party in due course.
Vietnam will publish the list of State-owned enterprises and the fields they are involved in.
We also intend to progressively commercialise the operation of State trading enterprises.WT/ACC/VNM/6
Page 105
Question 280.
Vietnam provides a list of State-trading enterprises in WT/ACC/VNM/3/Add.1, in Annex 6.Are all economic fields covered by State trading listed?  Are all of Vietnam’s State trading
enterprises listed, e.g., are there any other ent erprises with designated or exclusive trading
rights, that have not been included in this annex?  If so, please provide similar information on
their operations.
Answer:
Please see the answer to question 281 herein.
Question 281.
Please provide by HS number and product description the products traded by each State-
trading enterprise.
Answer:
This list indicates all economic areas where State-trading enterprises are operating.  Vietnam
will soon provide further information to the Working Party when it is available.  Please see the answerto question 279 herein.
Question 282.
Vietnam identifies State-trading enterprises,  focal-point enterprises and large national
corporations as entities which are involved in foreign trade.
What is the distinction between these three types of enterprises?  Do these enterprises apply the
same criteria with regard to the decision to im port? Do any of the above mentioned enterprises
enjoy exclusive or designated trading rights?
Answer:
Large national corporations are nation-wide State-owned enterprises to which the
Government has provided large initial capital as investment.
Focal-point enterprises may be of any economic sectors provided that they meet necessary
requirements to be involved in trading a few products as focal points (e.g. importing receiver and
transmitter equipment).
Question 283.
In the response to question 432 in WT/ACC/VNM/3, Vietnam states that only petroleum and
fertilizer are imported by focal-point enterprises.  However, Annex 6 (WT/ACC/VNM/3/Add.1)
seems to imply that focal-point enterprises also engage in the import of pharmaceuticals,
cultural products and materials used in the production of insecticides and veterinary medicines.
Could Vietnam clarify this for the Working Party, and outline the full-range of activities
trading activities of Vietnamese focal-point enterprises?WT/ACC/VNM/6
Page 106
Answer:
Annex 6 in WT/ACC/VNM/3/Add.1 provided in formation on State-trading enterprises,
including the focal-point importing enterprises.  This list will be further updated and elaborated in the
format of G/STR/N/4 and provided upon its completion.
Question 284.
Annex 6 (WT/ACC/VNM/3/Add.1) also states that the Vietnam National Gold, Silver and
Precious Stone Corporation is the only enterpri se with the right to trade in gold, precious
metals and stones.  The response to question 68, in WT/ACC/VNM/3 also notes that LNCs are
engaged in the trade of these goods.
Please clarify the role of LNCs and the Vietnam Gold, Silver and Precious Stone Corporation in
the trade of gold, precious metals and stones.
Answer:
Vietnam National Gold, Silver and Precious Stone Corporation, which is a State-owned
enterprise under management of the State Bank of Vietnam, is not the only enterprise allowed to
conduct business in gold, silver, precious stone.  Other national corporations and private companies
may also conduct business (sale, purchase, processing) in these items.  Please refer to the answer toquestion 291.
Question 285.
Also in the response to question 68 (WT/ACC/VNM/3), Vietnam states that in areas where
monopolies are retained, LNCs do not operat e on the same footing as other enterprises.
What exceptions does Vietnam make for monopolies with regard to the decision to import?
Answer:
State-trading enterprises must carry out commercial activities including importing in
conformity with commercial considerations.
Question 286.
Vietnam's moves towards reform of State-owned enterprises (SOEs) are welcome.  However,
SOEs are still shielded from domestic and foreign competition and have more favourable access
to inputs such as capital and land.  The preferential treatment given to SOEs by the
Government constitutes a significant impediment to the development of a dynamic private
sector.  Preferential treatment occurs in areas such as the allocation of import/export quotas,
grant assistance, borrowing and lending, debt forgiveness, land use rights, access to productioninputs, and treatment under the legal system.  A recent example is the announcement last month
by the Vietnam Bank for Industry and Commerce that it will apply incentives such as interest
rate reductions and lower service fees for State enterprises.  While it is stated that Government
agencies have no controlling power over the business activities of SOEs, elsewhere in its replies
to Members' questions Vietnam acknowledges that the role of the State is to control theeconomic activities of SOEs.
The reply to question 16 (WT/ACC/VNM/3) notes the Commercial Law provides that "the State
has the exclusive right to conduct commercial activities in certain fields and regions and with
respect to certain types of goods and services in lists to be published by the Government" butWT/ACC/VNM/6
Page 107
notes the lists are not yet formulated and that th ey will be provided to the Working Party when
they are available.  Can Vietnam advise of any progress on this issue?
Answer:
At present, this list is not yet available.  Please see the answer to question 279 herein.
Question 287.
Can Vietnam advise which State-owned or other enterprises currently have such exclusive
rights and in respect of which goods or services?  Do legislative requirements exist for such
enterprises to operate in accordance with GA TT Article XVII (State trading enterprises)?
Answer:
The list of State-trading enterprises including the enterprises having exclusive rights will be
provided to the Working Party as soon as it is completed.
All enterprises must act in a non-discriminatory manner, make purchases and sales involving
imports and exports on commercial considerations of price, quality, availability, marketability and
transportation.  However, Vietnam does not have an Anti-Trust Law. Such law (or legal document)
will be notified to the WTO Members if and when it is promulgated.
Question 288.
A major concern at a recent seminar on the oil and gas industry held by Prime Minister
Phan Van Khai was that Petrovietnam regulated the industry in which it participates at thecommercial level.  Could Vietnam please describe Petrovietnam's role in the industry?  Can
Petrovietnam be considered a State Trading Enterprise in terms of GATT Article XVII?
Answer:
The Vietnam Petroleum Corporation (PetroVietnam) is a State-owned enterprise.
Petrovietnam has the leading role in all petroleum activities in Vietnam.  At present, Petrovietnam is afocal-point enterprise of Vietnam.
It is entitled to carry out petroleum operations throughout the country including exclusive
economic zones, the continental shelf and islands under the sovereignty of the Socialist Republic of
Vietnam and to conduct petroleum activities outside the country mandated by the Government.Petrovietnam has integrated activities covering upstream, midstream and downstream operations.
In the field of midstream and downstream operations, Petrovietnam conducts activities such
as processing, transportation, distribution and storage of crude oil and petroleum products as a normal
commercial enterprise.
In terms of upstream operations, all petroleum exploration and production activities by other
organisations and individuals in Vietnam must be conducted under contracts with Petrovietnam, in
which Petrovietnam has two functions:
- Petrovietnam or its subsidiaries participate as business partners (with foreign or
domestic partners) in exploration and production contracts. In this case, Petrovietnam
is absolutely a normal business corporation;
- Petrovietnam is authorized by the Government of Vietnam to guard the interests of
the Government in the exploration and production contract. It supervises contracts toWT/ACC/VNM/6
Page 108
ensure they are carried out in the correct manner in terms of technical and legal
matters; assists contractors in administrative procedures; and fulfils all commitments
of the host country thus enabling contractors to implement contracts.
Question 289.
Some SOEs play an important role in purchasing goods for price stabilisation activities on a
range of agricultural goods including rice and su gar.  Is there an intention to remove such
enterprises from such activities?
Answer:
At present, Vietnam has no intention to change its programme to purchase agricultural
commodities (rice and sugar cane) when the market price is lower than floor price.
Question 290.
What proportion of Vietnam's major agricultura l production is purchased or sold by SOEs?
Answer:
The estimated proportion of Vietnam's major ag ricultural production which is purchased or
sold by SOEs is as follows:
- 90 per cent of the output of farming productions are purchased by private sectors;
- State owned enterprises mainly purchase agricultural goods in bulk from private
traders rather than purchase directly from farmers.  In 1997, the figures were asfollows: 60 per cent of rice for export, 70 per cent of coffee for export, 90 per cent
rubber export and 50 per cent of ground nut exports.
The market share of private sectors in provision of food and foodstuffs for domestic
consumption is 80 per cent.
The market share of the State-owned sector in domestic distribution of agricultural products is
between 20 and 30 per cent.
Question 291.
What plans does Vietnam have to open to comp etition the monopoly on the import and export
of silver, gold and precious stones?  Does the current monopoly carry out mining activities and,
if so, is it able to enter into joint ventures?
Answer:
The Government has deregulated the export and import of silver, gold and precious stones as
follows:
- for gold and silver:  there are no restrictions on export of silver and gold but in
reality, Vietnam does not have gold and silver for export because of low productivityand high processing costs.  Import of these items is subject to licensing;
- precious stones:  precious stones are special items.  Export and import of these items
are regulated by Circular No. 03TM-CSTTTN dated 11 March 1997 of the Ministry
of Trade on the guidance of the implementation of Government regulations on
purchase and sale, export, import and processing of precious stones;WT/ACC/VNM/6
Page 109
- for mining activities and joint-ventures in gold, silver and precious stones business:
gold, silver and precious stones enterprises which have been engaged in mining
activities may enter into joint-ventures with foreign companies.  However, such
activities must conform to the Law on Mineral Resources promulgated by the
National Assembly on 20 March 1996 and the 'Regulations on Management ofActivities in Precious Stones' enacted by Decree No. 65/CP dated 13 October 1995 by
the Government.
According to the newly promulgated regulations:
- the State Bank of Vietnam is authorized to issue and withdraw business licences
issued to credit institutions and gold trading enterprises for domestic and international
trading;
- the State Bank of Vietnam is authorized to issue and withdraw export and import
licences for international standard gold whic h have been issued to credit institutions
and gold trading enterprises;
- the Government will issue separate regulations on the management of trading in non-
international standard gold.
Question 292.
Re. Questions 432 and 439 (WT/ACC/VNM/3).  Could Vietnam provide additional information
to that contained in Appendix 4 List of State- Owned Enterprises Involved in Agriculture and a
Brief Description of Their Activities (WT/ACC/ VNM/3/Add.1)?  Do any of these enterprises
have authority to regulate and/or to influence the level of agriculture and agri-food imports?
Could Vietnam provide a breakdown of the agricultural and agri-food imports that are affected
at the 6-digit HS level?
Answer:
Appendix 4 listed the major State-owned enterprise s involved in agriculture.  None of these
State-owned enterprises has authority to regulate or influence the level of agriculture and agri-food
imports.  Enterprises regardless form of ownership are entitled to trade in agricultural products
provided that they have registered the scope of business with the responsible agencies upon
establishment.  Information on State trading enterpri ses is provided in the answers to questions 282,
279, 281 herein.  Additional information will be submitted in due course.
Question 293.
Re. Question 434 (WT/ACC/VNM/3).  There are gaps in the information provided in Annex 6
Information on State-Trading (WT/ACC/VNM/3/Add.1).  What are the criteria used fordetermining the quantities to be exported and/or imported?  How are the mark-ups on
imported products determined?  Are private traders allowed to import/export?  If so, under
what conditions?
Answer:
Please see the answer to question 279 herein.
Question 294.
Re. Question 438 (WT/ACC/VNM/3).  Vietnam noted that, after the promulgation of the
regulations implementing the Commercial Law of 10 May 1997, State-trading enterprises will
be identified and a list provided to the Working Party.  When will this list be provided to the
Working Party?WT/ACC/VNM/6
Page 110
Answer:
Please see the answer to question 279 herein.
Question 295.
Re. Question 441 (WT/ACC/VNM/3).  Could Vietnam provide a list of those State-owned
enterprises which are profit-oriented ente rprises and those which are public interest
enterprises?  Are these categories mutually exclusive?
Answer:
At present, there are about 5,800 SOEs including profit-oriented and public interest
enterprises.  These enterprises are under administration of the Government, ministries or local
governments.  Vietnam is pushing forward its prog ramme of equitization of  State-owned enterprises.
The list of large national corporations or A-category corporations has been provided in
WT/ACC/VNM/2.
Question 296.
In Vietnam, three different kinds of enterprise  such as State-owned enterprises, private
enterprises and collective enterprises exist until recently.
What are exact legal differences among then?What is the exact meaning of the leading role of State-owned enterprises cited in current law?
Also, it seems that the leading role of State-owned enterprises and the development of private
firms are contradictory in domestic economic sector.
Answer:
Three kinds of enterprise are different in terms of ownership but are treated equally before the
law.
State-owned enterprises may be mandated to carry out public interest activities, like social
services and activities in fields or areas of less advantage conditions.
The leading role of the State sector is descri bed as a guiding role with respect to market
development, supply-demand balancing and price stabilisation without constraining economic
development dynamism of other sectors.
Question 297.
Re. Question 435 (WT/ACC/VNM/3):  Please descri be what are the measures aimed at creating
a smooth and stable functioning of the mark et to which reference is made in answer to
question 435.  Please specify how different tr eatments are diminishing and transparency
observed.  In which fields does the State consid er retaining monopoly?  Does Vietnam intend to
manage these monopolies through SOES?
Answer:
For the purpose of market stabilization, Vietnam is applying some measures regulating rice,
cement, steel, etc. which are relating to the major equilibrium of the economy. With respect to rice,WT/ACC/VNM/6
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for example, Vietnam applies export limitations and provides interest-rate support for enterprises
purchasing rice in the harvest season. These measures are flexible and applied from time to time
corresponding to changes in the markets.
The information regarding the sectors where the State retains monopoly will be provided in
the WTO's format G/STR/N/4.
Question 298.
Please list the SOEs that retain "exclusive or special privileges" under Article XVII GATT and
their field of activity.
Answer:
The information regarding the SOEs that retain "exclusive or special privileges" under Art.
XVII GATT and their field of activity will be provided in the WTO's format G/STR/N/4.
Question 299.
How many of the Vietnamese SOEs are profit-oriented and how many are public interest
enterprises?  Please specify the field of activity of the latter.
Answer:
At present, in Vietnam there are 565 SOEs which are public interest enterprises and 5,459
SOEs which are profit-oriented.
The public-interest enterprises are operating in the following fields:
- Performing defence and security tasks;
- Producing and providing the following  public goods and services:
- Public transport, environmental cleaning and protection services, management of
public, botanical and zoological parks, public lighting, sewage, funeral, etc. in
urban areas.
- Managing, operating, maintaining infrastructures, including: national railway,
roads, sea-ways, sea-ports, airports; ship towing services, air control services.
- Technical inspection of  inland and water-way means of transport.
- Inspection, control and distribution of radio frequency.
- Operation and maintenance of irrigation works.
- Production of primary plants for seeding and animals for feeding, including: food,
fruit, forest plants, poultry and animal breeds, aqua-culture breed, etc.
- Publishing of text books and political books and newspapers.
- Production of news, documentary, scientific, television films, and children's'
movies.
- Production and provision of public goods and services under the State's social
programmes, e.g., production of salts, film-showing, supplies of goods and
provision of services for the remote, mountainous areas and the islands,
production and supply of medicines against epidemics, production and provision
of services for disabled people.WT/ACC/VNM/6
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(f-g) Free zones and free economic zones
Question 300.In response to questions 443-446 (WT/ACC/VNM/3), Vietnam described the incentives available
to its industrial zones and export-processing zones.
Are any of these incentives tied  to export?  Can firms located in these zones sell goods into
Vietnam, and if so, under what conditions?  Are there any export requirements for firms
located in the zones?
Answer:
An industrial zone is a defined geographical area without living residents where industrial
enterprises that specialise in manufacturing and processing products and providing production
services are concentrated.  Industrial zones are established by Decision of the Government or the
Prime Minister.
Export processing zones are industrial zones wh ere industrial enterprises that specialise in
producing goods for export and provision of production services are concentrated.
An export processing enterprise is an enterprise which specialises in producing goods for
export and export activities.  The establishment and operation of such enterprise are regulated by the
Regulations on Industrial zones, Export Processing Zones, High Tech Parks enacted by the Decision
No. 36/ND-CP.
Preferential treatments accorded to export of goods are as follows:- Profit tax for enterprises in industrial zones is based on the proportion of goods
produced for export:
- the profit tax rate of 15 per cent is applicable to enterprises, which export less
than 50 per cent of their output and profit tax exemption is be granted in the 2
years after the first profit-making year.  In case exports form 50 to 80 per cent of
the output, an additional deduction of 50 per cent of payable profit tax in 2consecutive years is granted.  The profit tax rate of 10 per cent is applicable to
enterprises exporting 80 per cent or above of their output.  A 2-year exemption
from profit tax and an additional deduction of 50 per cent of payable profit tax in
2 consecutive years after the first profit-making year are provided.
- Decree No 10/1998/ND-CP dated 23 Januar y 1998 of the Government stipulates
that enterprises in industrial zones which export 100 per cent of their output or
are qualified as a special encouraged investment project, are subject to a profit tax
rate of 10 per cent on earned profit.  Profit tax exemption for 4 years from the
first profit-making year and an additional deduction of 50 per cent profit tax in 4
consecutive years are provided.
Preferential treatments accorded to export processing enterprises are as follows:
- the profit tax rate of 10 per cent is applicable.  Export processing enterprises are
exempted from profit tax for 4 years after the first profit-making year and areduction of 50 per cent is allowed in the following 4 years;
- profit tax rates applicable to enterprises in industrial or export processing zones
operate during the whole life of the project;
- export processing enterprises are allowed to sell their products on the domestic
market after approval by the Ministry of Trade.  Domestic companies buyingWT/ACC/VNM/6
Page 113
products of these enterprises must pay import duty and conform to all regulations
concerning import of goods.
Question 301.
Re. Questions 445, 388 and 443 (WT/ACC/VNM/3).  Could Vietnam ensure that the preferential
treatment for investments in high-tech park s (indicated in the answer to question 388 of
WT/ACC/VNM/3), industrial zones and export processing zones (indicated in answer to
question 443) will not be granted in a manner inconsistent with the SCM Agreement?
Answer:
Preferential treatment provided by the Regulations on Industrial Zones, Export Processing
Zones, High-Tech Parks are measures which are commonly applied by other countries to foreign
investors to attract foreign direct investment.
Question 302.
Re. Question 446 (WT/ACC/VNM/3):  Do internal regulations of each zone add further
performance requirements to those already described?
Answer:
Besides the general regulations requirements as contained in the Vietnamese legal documents,
there are internal rules contained in the chapter of each export processing zone or industrial park.
However, these rules only specify what have alr eady been provided in the legal documents of the
State and must not be contrary to the laws.
(h) Trade-related environmental policies
Question 303.Vietnam strictly limits imports of new and used autos to limit the deterioration of the
environment and the traffic system.
- Does Vietnam limit the number of autos and other transportation vehicles produced
domestically by its 14 domestic manufacturers?  If so, how is this policy implemented?
Are the same quantitative restrictions applied to these 14 producers?
- In 1997 the domestic industry sold 6,000 autos, were these vehicles subject to the same
environmental restrictions that imported autos were?
Answer:
The Vietnamese Government allows foreign invested assemblers of automobiles to import
parts and unassembled kits proportionate to their annual plan for domestic and overseas sales, which
is formulated on the basis of market demand.
Models and the number of automobile to be manufactured or assembled by automobile joint
ventures must be in conformity with the approved Feasibility Study which is an integral part of the
investment licence.  The investment licence sp ecifies the number of automobiles which the joint-
venture may sell locally or export.WT/ACC/VNM/6
Page 114
This policy is uniformly applied to all automobile manufacturing and assembling enterprises
in Vietnam.
Automobiles manufactured in Vietnam and imported automobiles must conform to the same
environmental regulations.
Question 304.
Is it is not clear from the laws listed under “Environment” in WT/ACC/VNM/3/Add 1, Annex 2,
how Vietnam’s environmental policies are linked with import restrictions.
Please provide the Working Party with copies  of the environmental laws requiring import
restrictions.
Answer:
In the future, when there are laws directly lin ked to the environment, Vietnam will duly notify
WTO Members.
(l) Government procurement
Question 305.We appreciate Vietnam’s responses to our questions on practices, rules and regulations of the
Vietnamese government procurement regime.  Based on the responses we received, Vietnam
seems to be moving in the right direction to achieve a level of transparency in government
procurement which is needed for WTO accession.  However, we still have concerns on variousaspects of Vietnamese government procurement policies.
In WT/ACC/VNM/3 reply 451, Vietnam states that since the budget is allocated to the
government agencies and localities in a piecemeal manner, Vietnam is not yet in a position to
administer centrally all the government procurement activities.
Is Vietnam taking any steps to centrally monito r these purchases or to develop common rules?
Answer:
At present, government procurement is im plemented by the Law on State Budget.  All
expenditures of Government agencies which are funded by local or central government budgets mustconform to uniform regulation of budget item codes.  In the next several years, it is not expected that
further regulations in this regard can be legalized.
Vietnam still does not administer centrally the purchases of government agencies and
localities.
The Government is improving the regulations on levels and criteria for public assets use.
This provides a basis to ensure the conformity of the estimated budget allocation and management
plan with the Law on State Budget.  If the value of a Government procurement is of US$50,000 or
above, tendering is required.
Question 306.
World Bank Guidelines on Government Proc urement cover basic transparency provisions
including:  adequate notification; publication of information required in bids;  pre-qualificationWT/ACC/VNM/6
Page 115
information and disclosure of value of final contracts to bidders.  These guidelines require
notification to the World Bank at least 60 days prior to availability of tender documents, as well
as notification in at least one newspaper with  daily circulation in the borrower’s country with
sufficient time to permit competitive bidding.  The World Bank guidelines also stipulate
standards for the information to be contained in bid documents.  Bids over specified thresholds(which vary depending upon the country, government agency, etc. involved), are subject to an
open bidding process where the contents of bid contracts are stated aloud.
How does the Government of Vietnam adhere to these World Bank guidelines?
Answer:
The Regulations on Tendering of Vietnam are basi cally relevant to World Bank Guidelines on
Government Procurement and regulations of other international institutions.  When a project funded
by the World Bank is implemented, the implementing agency must conform to the Regulations on
Tendering of the Government and the International Treaty of ODA in conjunction with World Bank
Guidelines on Government Procurement.
The Regulations on Tendering of Vietnam also stipulates that in case there is a discrepancy
between the international treaty and the Regulations, a Prime Minister's approval will be required.
Article 26 of the Regulations on Management and Uses of ODA enacted by the Government's Decree
No. 87/CP dated 5 August 1997 furt her stipulates that if the International Treaty of ODA has a
provision contrary to the Regulations on Tendering of Vietnam, the International Treaty of ODA will
be applicable.
Question 307.
In WT/ACC/VNM/3 reply 452, Vietnam states that in response to possible membership in the
WTO Government Procurement Agreement (GPA), more time is required before Vietnam can
come to a decision.
Is Vietnam taking any steps to become more familiar with the issue of transparency in
government procurement, e.g., participating as an observer in the work ing groups examining
this issue in the WTO and in APEC?
Answer:
We appreciate this suggestion.  In the coming years, Vietnam will consider participating in
these working groups.
Question 308.
In WT/ACC/VNM/3 reply 453, Vietnam states that statistics are not available on a breakdown
of the public sector procurement market both by contracting entity and by product type.
Is it possible for Vietnam to provide a simple list of the names of governmental procuring
entities at the central and sub-central levels?
Answer:
This list is not yet available in Vietnam. Government procurement transactions are also
conducted through the free market. Please see also Answer 305 herein.WT/ACC/VNM/6
Page 116
Question 309.
In WT/ACC/VNM/3 reply 460, Vietnam claims that the terms and conditions for contract
signing and open bidding applied to ODA-fund ed procurement are specified in each loan
agreement signed between the Vietnamese Government and the donor.  Vietnam also states thatthe terms and conditions vary widely on the case by case basis.
- We recognise that terms for ODA-funded procurement contracts are determined on a
case by case basis.  However, what are determining factors that have led to either an
open or closed bidding process in the past?
- For non ODA-funded procurement contracts, how are contracts awarded?
Answer:
Before the issuing date of the Regulations on Tendering (16 July 1996), the bidding
procedures for an ODA-funded project mainly complied with the procurement guidelines of thedonor.  Therefore, the bidding procedures were determined on a case-by-case basis in accordance with
the International Treaty of ODA.
For non-ODA funded projects, bidding procedures and contract awards are implemented on
the basis of the Regulations on Tendering of the Government enacted by Decree No. 43/CP dated16 July 1996.  Contracts are awarded to the most advantageous bidder (e.g., bidder who ranks first in
the grading of bidders or who offers the lowest price).
Please refer to the answer to question 313 herein for more detailed information.
Question 310.
In WT/ACC/VNM/3 reply 465, Vietnam states that Decree No. 43/CP of 16 July 1996 is the
major legal document which governs procurement of utilities.
Please describe the procurement procedures for utilities contained in Decree No. 43/CP of
16 July 1996.
Answer:
The procurement procedures for utilities are the same as other procurement entities as
provided in Decree 43/CP of 16 July 1996 which is available at the Secretariat.
Question 311.
In WT/ACC/VNM/3 reply 467, Vietnam states th at if a dispute over government procurement
procedures arises between legal entities (inclu ding those who are not economic organisations),
the dispute can be settled in economic courts or arbitration boards.
- What is the process for filing a dispute in an economic court or an arbitration board?
How does this process work when a foreign supplier is involved?
- Please define the term “legal entities?”  Does this term include suppliers from foreign
countries?WT/ACC/VNM/6
Page 117
Answer:
Procedures for dealing with an economic disput e are provided in detail by the Ordinance on
the Settlement of Economic Disputes.  The English version of this Ordinance is available in the WTO
Secretariat.
The procedures for arbitration of disputes are stipulated in detail in legal documents of
Vietnam and in the regulations of each arbitration centre.
- The International Arbitration Centre of Vietnam that is managed by the Chamber of
Industry and Commerce of Vietnam has its own arbitration procedures for settlement
of international and domestic disputes.
- For the Economic Arbitration Centres which are established under Decree
No. 116/CP dated 5 September 1994 of the Government, certain principles for
arbitration procedures are also stipulated.  The procedures are spelt out in the
regulations of each economic arbitration centre but must be not contrary to the Decree
No. 116/CP.
The regulations on procedures in the Economic Court and on arbitration are applicable to all
enterprises without discrimination between foreign and domestic enterprises or between legal entities
and natural persons.
Article 94 of the Civil Code of Vietnam stipulates that an organization is recognised as a legal
entity if it satisfies all the following conditions:
- being established, permitted to be established, registered or recognised by the
authorized State authority;
- having an identifiable structure;
- having property independent from other individuals and organisations and
discharging abilities by recourse to such property; and
- independently participating in legal relations in its own name.
Question 312.
In WT/ACC/VNM/3 reply 468, Vietnam states th at under Article 45 of Decree No. 43/CP, there
are remedies available when either a tenderer or  party calling for tenders is in breach of
contract.
- What are the penalties under law for violating some aspect of the government
procurement provisions in Vietnam?
- What constitutes a breach under Vietnamese law?- Do these provisions also apply to foreign suppliers?
Answer:
The Regulations on Tendering only provides for the basic principles.  Specific penalty for a
violation is applied in accordance with Article 45 of the Regulations on Tendering and other legaldocuments such as the Civil Code, the Commercial Law and the Criminal Law.
Article 45 of the Regulations on Tendering is quoted as follows:"Dealing with breaches -WT/ACC/VNM/6
Page 118
Any acts in breach of the Regulations on Tendering, such as the disclosure of
confidential tender documents, files and in formation and any complicity in bribery in a
tendering process, shall be deemed to be acts that cause economic losses and shall be dealt
with as follows:
- where a tenderer is in breach, it shall be removed from the list of participating
tenderers and shall not be entitled to a refund of the tender guarantee. If the tenderers
conspire to lower the price, they shal l be dealt with in accordance with law;
- where the party calling for tenders is in breach, the tendering results shall be nullified
and the authority making the investment decision shall direct the reorganisation of the
tendering. The party calling for tenders shall be liable to reimburse the expensesincurred by the tenderers. If any members of a professional organization assisting in a
tendering process commit a breach, they shall be removed from the organization and
shall, depending on the seriousness of the breach, be dealt with in accordance with
law;
- where the person who has, or is delegated with, the authority to approve tendering
results is in breach, he or she shall, depending on the seriousness of the breach, be
dealt with in accordance with law."
These regulations are applied to both domestic and foreign suppliers.
Question 313.
In WT/ACC/VNM/3 reply 470, Vietnam states that both bidding procedures and notifications of
awards are stipulated in Decree No. 43.
The reply to question 470 is unclear as to where and how tenders are published.  Could you tell
us what your rules are for publishing tenders, where they are published, and are tender notices
available to the public, including foreign suppliers.  Does the notice also clarify whether a tender
is open or not with regard to foreign suppliers?
Answer:
The principles of bidding procedures are objective, publicised and effective.  The caller of
tenders must advertise in relevant mass media.  If the tender is an international tender, advertisement
in an English newspaper published nation-wide is required.  At the tender opening, the presence of
representatives of authorities and bidders to witness and sign the opening tender report is required.
Before implementing a tender, the investor must prepare a project bidding plan which must beapproved by the investment decision-making authority.  The bidding plan includes tender package
sharing, bidding modes and tender time.  The bidding plan provides a basis for the tender opening and
selection.
Limited tendering is a mode of tendering by which the investor only invites certain competent
bidders who may satisfy the requirements of the bidding invitation documents.  Limited tender is only
applicable to projects which time is limited or there are special technical requirements (such as
national defence security projects) or which the donor so requires.  In this mode, bidding information
is not required to be made public to irrelevant parties.
Question 314.
Re. Questions 451 and 452 (WT/ACC/VNM/3).  We would welcome Vietnam joining the
Government Procurement Agreement.  If Vietnam wishes to do so, we are ready to support
Vietnam's observer status at the Committee on Government Procurement.WT/ACC/VNM/6
Page 119
Answer:
Vietnam would welcome and appreciate support for Vietnam becoming an observer of the
Committee on Government Procurement.  We would be very grateful to receive any assistance fromother countries to improve our knowledge on government procurement.
4. Policies Affecting Foreign Trade in Agricultural Products
Question 315.Please clarify Vietnam’s response to question 483 in WT/ACC/VNM/3, where it is indicated that
Vietnam will request to be included in “List 7" of the Agreement on Agriculture when it accedes
to the WTO.  Please clarify what Vietnam means by the term “List 7".
Answer:
It was referred to List 7 of the Agreement on Subsidies and Countervailing Duties.
(a) Imports
Quantitative restrictions
Question 316.A review of the responses to questions section IV.4 of WT/ACC/VNM/3 confirms that Vietnam
uses bans, quotas, discretionary licensing and other quantitative restrictions to regulateagricultural imports.  The response to question 12 in WT/ACC/VNM/3 states that it is
Vietnam’s intention to adjust its tariff and non-tariff measures in conformity with obligations as
set forth in the WTO Agreements.
- Please list by tariff line the agricultural imports subject to quantitative restrictions or
other non-tariff measures.
- Could Vietnam discuss with the Working Part y its plans to bring its import regulations
into line with WTO provisions prior to its accession?
- We seek Vietnam’s commitment to eliminate these measures prior to accession to the
WTO.
Answer:
It was referred to List 7 of the Agreement on Subsidies and Countervailing Duties.
The requested list will be provided in due course.  Vietnam may enter into consultations with
the Working Party on adjustments of import measures in accordance with WTO's obligations.
Question 317.
We note the following specific problems:
In the response to question 13 of WT/ACC/VNM/3, Vietnam confirms that it uses quantitative
restrictions on agricultural products-intensive industries.WT/ACC/VNM/6
Page 120
The use of quantitative restrictions to regulate agricultural imports is prohibited by the WTO
Agreement on Agriculture, and Vietnam must conv ert all such non-tariff measures to tariffs as
a condition for accession.  We seek Vietnam’s commitment in this regard.
Answer:
Vietnam will take this comment into consideration and review the possibility of using tariffs
in place of quantitative restrictions.
Question 318.
In reply 52 (WT/ACC/VNM/3), Vietnam states that import quotas are operated in the
administration of regulations applying to rice and sugar.  In reply to question 283
(WT/ACC/VNM/3), Vietnam describes its discretionary import licensing scheme for sugar.
Article XI of GATT 1994 prohibits import quotas unless applied to restrict domestic production
as well.  As Vietnam is a major producer of rice and sugar, import quotas on these productswould not appear to be justifiable under the provisions of Article XI.
This system also appears to violate the WTO Agreements on Agriculture and Import Licensing
Procedures.
Vietnam must establish a tariff-based system for import regulation of rice and sugar as well as
for other commodities that are now subject to quan titative restrictions, before acceding to the
WTO.
Answer:
In reply 52 (WT/ACC/VNM/3) Vietnam clearly stated that:
- for rice:  Vietnam applies export quotas with a view to ensuring national food
security. Vietnam does not apply import quotas;
- for sugar:  Vietnam is implementing a domestic sugar production extension
programme. Therefore, Vietnam applies import restrictions and a sugar import dutyof 35 per cent to guarantee the interests of sugar cane growers.
Vietnam will take account of the above comment in considering a gradual adjustment of
current policies.
Question 319.
Vietnam states in reply 281 of WT/ACC/VNM/3 that imports of cigarettes are banned for
reasons of human health protection.
Article III of GATT 1994 states that regulations affecting the internal sale, purchase,
transportation, distribution, or use of products should not be applied so as to afford production
to domestic production, and the Article XX exception for restrictions supporting health
objectives does not permit the use of such requirements as a disguised form of protection.
If Vietnam allows the manufacture, sale, and distribution of cigarettes domestically, Article III
and Article XX of the GATT prohibit such measures.
To bring this measure into conformity with WTO provisions, Vietnam must substitute
health-based criteria or other WTO-consistent fo rms of regulation for this ban, and ensure thatWT/ACC/VNM/6
Page 121
any measures taken for health or safety purpose s are applied equally to similar domestic and
imported products.
Answer:
With respect to import prohibition on cigars and cigarettes, please refer to the answer to
question 272 in WT/ACC/VNM/3.  Vietnam does not have a plan to lift import restrictions on
cigarettes and cigars.
Tariff-rate Quotas
Question 320.
In response to question 226 (WT/ACC/VNM/3), Vietnam pledges to take the provisions of the
WTO into consideration when applying tariff-rate quotas (TRQs).  It is important that any
TRQ system administered by Vietnam provide maximum transparency and openness, including
provisions that enable the allocation of impo rt licences through a competitive, transparent
system using open and reviewable criteria for granting licences.
- Please provide information on how Vietnam will implement and operate its TRQ
administrative mechanisms, including details on its proposed system for awarding and
allocating import licences.
- How will licences be allocated between Vi etnam’s State trading enterprises and the
private trade?
Answer:
In the process of improving and systematising legal documents, Vietnam may promulgate
regulations on tariff quotas.  Such quotas and their mechanisms will be reviewed and published if they
are introduced.
Question 321.
In its Memorandum on the Foreign Trade Regime, Vietnam states that while it has no tariff
quotas currently in place, it "…reserves its righ t to impose the tariff quota when it is deemed
necessary and possible".  In response to questions on this point, in WT/ACC/VNM/3 Vietnam
states that it has not yet identified cases where tariff quotas are needed.
We would be interested in hearing whether Viet nam has yet identified ca ses where it considers
tariff quotas would be sought.  We would prefer a tariff only regime.
Answer:
This comment will be taken into consideration.  Vietnam is still in the reform process and has
not yet identified cases where this measure would be necessary (e.g., tariff quota as one of the
measures for safeguard purposes).
Question 322.
Vietnam states that it is planning to replace it s import licensing regime by a system of tariffs.
We would be interested to know whether Vietnam has advanced this undertaking, and whether
it has a schedule setting out the timeframe for the planned changes.WT/ACC/VNM/6
Page 122
Answer:
In the beginning of 1998, Vietnam removed quantitative restrictions and licensing
requirements on several hundreds of tariff lines.  Tariffs have been used as the main tool forregulation.  Please see also the answer to question 113 herein.
The trade liberalization process will be continued.  However, at present a detailed schedule
for this process is not available as Vietnam is still restructuring its trade regime.
(b) Exports
Question 323.
Re. Question 488 (WT/ACC/VNM/3).  Vietnam states that the Price Stabilisation Fund is used
by enterprises to purchase rice for export and domestic consumption.  Could Vietnam explain
why this is not considered an export subsidy?
Answer:
The Price Stabilization Fund is utilised to assist enterprises by granting soft loans when they
increase their stock to a level beyond normal commercial requirements to stabilize demand and supplyin the market.
Question 324.
Re. Question 489 (WT/ACC/VNM/3).  Is there sub-national support, including “green box”
support, given to the agricultural sector?
Answer:
There are certain local subsidies to agriculture including green box supports.
Question 325.
Does HS code applying to agricultural and fishing sectors?  If not when will it be introduced?
Answer:
Current HS codes are applicable to both agricultural and fishing sectors.
Question 326.
Re. Questions 379, 377, 378, 483 and 489 (WT/ACC/VNM/3).  We are concerned that Vietnam
intends to maintain export subsidies for agricultural products.  Export subsidies should be
treated not only in that it concerning the accession process but also regarding WTO as a whole.
We urge Vietnam to submit the domestic support (DS) tables and the export subsidies (ES)
tables at an early stage.WT/ACC/VNM/6
Page 123
Answer:
The WT/ACC/4 covering the domestic support and the export subsidies is being prepared
with the assistance from European Communities' specialists under the scope of the "Assistance to
Multilateral Trade Policies" project.  It is planned that this table will be completed and provided toWTO Members after completion of the second stage of the project.
(c) Export prohibitions and restrictions
Question 327.In reply to question 490 of WT/ACC/VNM/3, Vietnam states that it will notify certain export
quotas and restrictions in accord ance with Article 12 of the Agriculture Agreement soon after
accession.  In its reply to question 367, Vietnam i ndicates that it plans to maintain its export
quota on rice.
Article XI of GATT 1994 prohibits export quotas unless temporarily applied to prevent or
relieve critical food shortages.  As Vietnam is a major producer and exporter of rice, export
quotas would not appear to be justifiable under the provisions of Article XI.  When does the
government plan to eliminate these restrictions?
Answer:
Rice is the major food in Vietnam. Vietnam stretches over 16 latitudes and suffers from a lot
of natural calamities (12-14 typhoons a year). Therefore, regulating regime for rice plays a pivotal
role in the stabilization of macro-economic environment in general and food security in particular.
Vietnam's rice regulating regime is applied flexibly to ensure food security.
Question 328.
Re. Question 490 (WT/ACC/VNM/3).  Could Vietna m explain the justification and consistency
of an export quota to Article II.2(a) of the Agriculture Agreement?
What are Vietnam's views on the period necessary for establishing export quotas after its
accession to the WTO?
Answer:
Article II of the Agreement on Agriculture does  not mention export quota but Article XI.2(a)
of GATT 1994 does.  At present, Vi etnam only applies quota for rice exports with a view to ensuring
food security.  Rice is an essential commodity for Vietnamese people.  Thus, application of rice
export quota is not inconsistent with Article XI.2(a) of GATT 1994.  This matter will be discussed at
a relevant time.
(d) Export credits, export credit guaran tees and export insurance programmes
Question 329.Vietnam’s reply to question 374 (WT/ACC/VNM/3) indicates that a portion of interest financing
may be paid by the government to an enterp rise that suffers losses in exporting certain
agricultural products due to price fluctuations.
Can Vietnam confirm that it does not provide any direct export subsidies for agricultural
products that are contingent upon export performance?WT/ACC/VNM/6
Page 124
Answer:
Vietnam is preparing the WT/ACC/4 and will deal with this issue after its completion.
Question 330.
In its answer to question 483 of WT/ACC/VNM/3, Vietnam indicates that it does not provide
any export support in the form of direct transfers from the State budget.
- Please list any and all other forms of export assistance that are available to Vietnam,
including but not limited to all export subsidies subject to reduction commitments underArticle 9 of the WTO Agriculture Agreement.
- Our continued expectation is that Vietnam will not use export subsidies when it accedes
to the WTO.  Is Vietnam willing to make this commitment at this time?
Answer:
Vietnam does not provide any export support in the form of direct transfers from the State
budget.  All other forms of export support and assistance are consolidated and will be notified in due
course.
Question 331.
We note that in Section IV(4)(e) Vietnam explains that the government monitors and gives
guidance to commercial banks on adopting loan policies and on prioritising agriculturalproduction development at market interest rates.  Could Vietnam elaborate on the criteria
and/or mechanisms used to prioritise “agricul tural production development”?  How does the
government “monitor and give guidance” to commercial banks on prioritising loans?
Answer:
Agricultural and rural development is a priority in the economic and social strategy of the
Government of Vietnam.
The Government encourages commercial banks to provide loans to agricultural projects and
to farmers at market interest rate and on commercial considerations.
Soft loans may be made to poor farming households, to mountainous, island regions and
ethnic minority residence areas or for the purpose of relief from natural calamities.
The Government encourages State-owned commercial banks to provide sufficient loans to
enterprises to purchase all surplus products from farmers.  Records of these loans have to be reportedto the State Bank.  Commercial banks must be self-balanced with respect to its capital.  In case of
shortages of funds, the State Bank may consider supplying supplemental capital.
Question 332.
Re. Question 491 (WT/ACC/VNM/3).  Please provide further details of proposed export credit,
export credit guarantee, and export insurance programmes.WT/ACC/VNM/6
Page 125
Answer:
The State Bank is planning to set up an export credit programme and will encourage
commercial banks to participate in this programme.  This programme is the first step in an initiative to
establish the Export and Import Bank of Vietnam, which will support exports.  Vietnam will informfurther details whenever they are available.
Question 333.
Re. Question 492 (WT/ACC/VNM/3).  When will information on domestic support and export
subsidy measures, as required under Section IV.4(b) and (e) of WT/ACC/1, be ready for
distribution to the Working Party?
Answer:
Please refer to the answer to question 326 herein.
(e) Internal programmes
Question 334.Reply 56 of WT/ACC/VNM/3 describes measures to promote restructuring of agricultural
production.  These measures and the resulting expenditures, along with other domestic
agricultural support policies and export subsidy policies, should be reported in Vietnam’s
response to WT/ACC/4.
When can we expect this information to be provided?
Answer:
Please refer to the answer to question 326 herein.
Question 335.
In its reply to question 488 (WT/ACC/VNM/3), Viet nam says that State-owned enterprises are
responsible for buying rice directly from produ cers until the market price reaches an indicative
level.  Part of this rice is then sold for export or released onto the domestic market.
- In cases when the world price is either less than or greater than the government
determined indicative level, is there a mechan ism is used to equalize the internal price
with the world price?
- Please describe this mechanism in greater detail.
Answer:
The mechanism described in the answer to question 488 in WT/ACC/VNM/3 is aimed at
ensuring minimum buying prices to sustain the incomes of farmers and food production.
Question 336.
Regarding the reply to question 489 in WT/ACC/VNM/3, we again encourage Vietnam to
provide as quickly as possible detailed information on these programmes, including expenditure
information, as part of its WT/ACC/4 submission.WT/ACC/VNM/6
Page 126
Answer:
Please refer to the answer to question 326 herein.
Question 337.
Vietnam maintains that while it does not subsidise exports through direct budgetary outlays, it
does support exports in other ways, and it wants the freedom to continue to support exports in
some unspecified way (question 483, WT/ACC/VNM/3).
Could Vietnam provide further detailed informat ion on the nature of existing agricultural
export support measures?  Our expectation is that Vietnam's commitment on export subsidies
will be zero.  This is not a case of acceding countries being able to choose what policies they
want to have or policies they have had in the past.  Rather commitments are based on a
"snapshot" on what policies are currently in use and actual levels of support.
Answer:
The existing measures of export subsidies will be defined in detail after Vietnam has
completed the WT/ACC/4 and commitments will be addressed in the WTO accession negotiations.
Please refer to the answer to question 338 herein.
Question 338.
We note that Vietnam has domestic support which it considers "green box" under the
Agriculture Agreement (page 49, WT/ACC/VNM/2).
Could Vietnam provide further information on the exact nature of this government assistance to
agriculture, including whether it is provided on a product-specific or non-product-specific
basis?  In reviewing its agricultural support systems, we would strongly encourage Vietnam to
maximise its use of "green box" policies, rather than trade distorting support measures.  We
will not be willing to accept commitments which include an increase in trade distorting (amber
box) support policies.
Answer:
Most of Vietnam's agricultural subsidies are classified as 'Green Box' policies such as
scientific research, training, agricultural extension programmes, agricultural infrastructures services(irrigation, dykes, etc.), plant protection, sanitary and phytosanitary quarantine, national stockholding
for food security and environmental programmes (tree planting on bare hills or mountains, utilization
of deserted river banks, etc.), regional assistance for relocation and preferential loans granted for
rebuild houses in flooded regions, etc.
Other Government supports policies to agriculture which are qualified as exception from
commitments, special treatment or developmental programmes as provided to developing countries
include:
- provision of preferential medium and long term credits through banking channels for
farmers and agricultural enterprises to build workshops or processing facilities and to
plant perennial crops;
- provision of preferential short term credits through the Bank for the Poor People to
poor farmers; and
- subsidies for crop adjustment from opium trees to other plants.WT/ACC/VNM/6
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Other subsidies will be described in the WT/ACC/4.
Question 339.
We look forward to Vietnam submitting inform ation on export subsidies and domestic support
(in accordance with the format of WT/ACC/4) to help establish appropriate commitments in
this area.  Can Vietnam indicate when such information will be submitted?
Answer:
Please refer to the answer to question 326 herein.
Price Stabilisation
Question 340.
Currently, minimum and maximum prices can be set by Vietnam on a number of products
including some agricultural goods.  In addition, the Price Stabilisation Fund can also be
activated to ensure an "adequate" return for pr oducers, food security and to protect against
dumped or artificially priced products.  Price stabilisation is funded through export and import
surcharges on a number of goods which in turn provide for subsidised loans for State-owned
enterprises to purchase or sell goods to reach the desired price level.
Does Vietnam intend to limit the use of price st abilisation on agricultural goods in the future?
Answer:
In the future, to stabilize production and protect the welfare of workers and interests of
consumers, the Vietnamese Government will retain  the price stabilization mechanism for agricultural
commodities (rice and sugar).
Question 341.
The Vietnamese Government has indicated (paragraph 3, Annex 9 of WT/ACC/VNM/3/Add.1
refers) that it may apply price stabilisation on any product not listed as a product with a
minimum or maximum price where there is ev idence of artificial pricing or dumping.
- As Vietnam currently has no provisions on anti-dumping or safeguard measures, what
procedures are there to determine if dump ing or artificial pricing is occurring?
- Are these procedures transparent and subject to appeal?
Answer:
When enterprises exploit a monopoly position, or form a cartel to increase or decrease prices
causing damage to other enterprises, consumers and/or the State, the price control authority may
convene a price negotiation between the seller(s) and the buyer(s) for a mutually acceptable price.
The price control authority determines the existence of artificial pricing or dumping on the basis ofmarket prices.
The price negotiation procedures and results are publicly available for implementation by the
concerned parties. In case an agreement cannot be reached by the concerned parties, the Government
Pricing Committee is entitled to set "the reasonable price".WT/ACC/VNM/6
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V. TRADE RELATED INTELLECTUAL PROPERTY PROTECTION REGIME
(WT/ACC/VNM/3/Add.2)
1. General
(b) Responsible agencies for policy formulation and  implementationQuestion 342.Concerning the response to question 498 in WT/ACC/VNM/3/Add.2:How are proposals for amendments made publicly available so that others, including foreign
investors, will have the opportunity to express their views?
How much time is allowed for public comment before a proposal for an amendment is
promulgated as a new regulation?
Answer:
As regards bills of laws and ordinances, referendum is provided for in Sections 39, 40 and 41
Law on the promulgation of laws and regulations as follows:
 Section 39 provides for the decision on public referendum on bills of laws and ordinances as
follows:
“Based on nature, contents of a bill of a law or an ordinance, the National Assembly
or the Standing Committee of the National Assembly decides on the public referendum on the
bill.
Contents, scope, mode and time of the public referendum on a bill of a law or an
ordinance shall be decided by the Standing Committee of the National Assembly.
The Standing Committee of National Assembly shall direct the organization of the
public referendum and relevant correction of the bill.”
Subsection 1 Section 40 provides for the participation in referendum on bills of laws and
ordinances:
“Citizens’ comments on a bill of a law and an ordinance shall go through their
organisations, directly or by mail to The Office of the National Assembly,  to the authority
preparing the bill, or on mass media.”
Section 41 provides for the collection, consideration of the public comments to correct bills of
laws and ordinances:
“The public comments on a bill of a law and an ordinance shall be collected, assessed
and taken into account to correct the bill.
The Office of the National Assembly is responsible for the collection of the public comments
in full.
Authorities, organisations, representatives of the National Assembly submitting the bill shall,
in cooperation with the authority in charge of as sessment of the public comments, correct the bill
taking into account the comments and report to the Standing Committee of the National Assembly.”WT/ACC/VNM/6
Page 129
With respect to drafts of sub-law and sub-ordinance regulations, there are no provisions on
referendum of the public, but of the concerned author ities, organisations and individuals depending on
nature and contents of the drafts (Subsection 3 Section 61, Subsection 3 Section 65, Subsection
Section 66, Subsection 2 Section 68, Subsection 2 Section 70, Subsection 2 Section 74 of  Law on thepromulgation of laws and regulations).
(c) Membership of international intellectual property conventions, regional and bilateral
agreements
Question 343.
Concerning the responses to questions 499, 500, 530, and 531 in WT/ACC/VNM/3/Add.2:
Could Vietnam please indicate when it intends to accede to the Berne Convention and to the
other relevant IPR treaties?  If Vietnam intends to bring its legislation into line with the
provisions of these Agreements, why does Vietnam hesitate to commit to acceding to them?
Answer:
In the course of participation in the international intellectual property system, the most
important goal of Vietnam is to accede to the WTO and implement the TRIPS Agreement. Thoseinternational intellectual property treaties re ferred to in the TRIPS Agreement are the Paris
Convention for the Protection of Industrial Propert y (1967), the Berne Convention for the Protection
of Literary and Artistic Works (1971), the Rome Convention (1961) for the Protection of Performers,
Producers of Phonograms and Broadcasting Organisations and the Treaty on Intellectual Property in
respect of Integrated Circuits (1989) (IPIC Treaty).   Among those treaties, Vietnam has already been a
party to the Paris Convention since 1949 and it is now taking necessary steps to accede to the Berne
Convention as soon as possible. For the time being, Vietnam has not yet considered the issue of
accession to the Rome Convention or the IPIC Treaty as it believes that when it could join WTO there
would be no need of such accession because of the following:
The protection standards of related rights and integrated circuits provided for in the TRIPS
Agreement are almost equivalent to or even higher than those of the Rome Convention and the IPICTreaty. Furthermore, the number of WTO members is far greater than that of the Rome Convention
and the IPIC Treaty. The later is even below the minimum figure for the IPIC to become effective.
2. Substantive Standards of Protection
(a) Copyright and related rights
Question 344.Article 1 of the TRIPS Agreement incorporates Article 5(2) of the Berne Convention which
provides that the enjoyment of the exercise of rights shall not be subject to any formality.
In light of this provision, please describe the process for copyright registration of works with the
competent State agency, and specifically what benefits and/or disadvantages are contingent
upon registration. (Article 762, Civil Code)WT/ACC/VNM/6
Page 130
Answer:
The registration process is governed by the provisions of Articles 23, 24, 25, 26 of
Government Decree No. 76/CP of 29 December 1996 on Implementation of Certain Provisions
Concerning Copyright of the Civil Co de and includes the following steps:
- filing of an application and related documents by the author or the copyright owner of
a work with the Copyright Office of Vietnam (COV);
- within 10 days from the date of receipt of the application for registration, the COV
makes decision on the grant of a Registration Certificate to the applicant.
The holder of a Registration Certificate has no obligation to prove his or her copyright in
registered work in case of litigation.
Question 345.
Article 9 of the Berne Convention requires that any sound or visual recording be protected.Under the Civil Code, are sound recordings othe r than musical works, such as recordings of
speeches or theatrical performances, protected?  What are examples of “other works prescribed
by laws” which are protected but are not enumerated in the list of forms of protected works
found in Article 747 of the Civil Code?
Answer:
Sound recordings other the musical works (such as recordings of speeches or theatrical
performances) are protected in compliance with Articles 776 and 777 under the Civil Code.
"Other works prescribed by laws" refers to works protectable by copyright not listed in items
(a) to (o) of Article 747.1 of the Civil Code.  This is an open provision simplifying legislation
activities.  In the future, there may appear new kinds of works which need to be protected under
copyright law.  Then Vietnam would promulgate s ub-law regulations to make such kinds of works
protectable without amendment to the Civil Code.
Question 346.
Article 13 of the TRIPS Agreement provides that limitations or exceptions to exclusive rights
are confined to certain special cases which do not conflict with a normal exploitation of the
work and do not unreasonably prejudice the legitimate interests of the right holder.
- In this context, please describe how limitations on a copyright owner’s exclusive rights
are understood within the context of the law, particularly regarding reproduction of a
work for personal use and translation of a wo rk into the languages of ethnic minorities,
especially how they do not conflict with  a normal exploitation of the work or
unreasonably prejudice the legitimate interests of the right holder.
- Is any provision made for compensation (i.e . compulsory licences) for either these acts?
Answer:
The term "Reproduction of a work for personal use" refers to the reproduction made by an
individual and for the purposes of use by that individual only.WT/ACC/VNM/6
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The limitation on translation right is applicable only in cases of translation from works of
Vietnamese origin into Vietnamese ethnic language s (therefore, this limitation is applicable mainly to
the nationals of Vietnam).
There is no obligation to pay the compensation in these two cases.
Question 347.
Article 10 of the TRIPS Agreement and Article 7bis of the Berne Convention provide for
protection for works of joint authorship, including compilations and databases.
In respect of this obligation, please describe whether creators of selected or anthologies
(including compilations and databases) are pr otected under the Civil Code or elsewhere in the
Law.
Answer:
Selected and anthological works, including compilations, are protected by Article 745 of the
Civil Code and the Government's D ecree No. 76/CP as original works.
Databases are protected under the terms of computer software (Article 747 of the Civil Code
and Article 4 of the Government Decree No. 76/CP).
Question 348.
The TRIPS Agreement and the Berne Convention provide for the right to authorize certain acts
with respect to sound recordings.
- Please describe whether a copyright owner ha s the right of reproduction, right of rental
for sound recordings, right of sale, right of importation and/or right to dispose or
otherwise transfer unauthorised fixations of live performances in sound recordings
under the Law.
- How is the term “broadcasting” understood?  Does it include transmission by either
wire or wireless means?
Answer:
Owners of copyright in sound recordings have reproduction right.  However, there are no
provisions specifying the rental right provided for the owners of copyright in a sound recording and
right of sale, importation and/or right to dispose or otherwise transfer the unauthorised fixations of
live performances in sound recordings.
It is not clearly defined by the law that whether the term of "broadcasting" includes
transmission by wire.  It includes, at least, transmission by wireless methods.
Question 349.
Article 3 of the TRIPS Agreement requires each Member to accord to the nationals of other
Members treatment no less favourable than that it accords to its own nationals with regard to
the protection of intellectual property.
- In light of this obligation, please describe how foreign works are protected under the
law.WT/ACC/VNM/6
Page 132
- Are moral rights waivable under the law?
Answer:
Foreign works are protected in Vietnam.
(a) Under the law of Vietnam, if a work is:
- first published in Vietnam; or
- created and fixed in Vietnam.
(b) Under international treaties to which Vietnam is a party.
In case of differences between the provisions of the law of Vietnam and the
provisions of an international treaty, the latter are applicable.
Moral rights are protected under the law of Vietnam and include:
- right of paternity;
- right to protect the integrity of works.
Question 350.
Article 70 of the TRIPS Agreement requires that works existing at the time a Member is obliged
by the Agreement are protected.
In this context, please describe how pre-existi ng works, those works in which copyright arose
prior to the entry into force of the Civil Code and for which the copyright term has not yet
expired in the country of first publication, are protected.
Answer:
Works existing prior to the entry into force of the Civil Code are protected if their term of
protection has not expired.
Question 351.
Does Vietnamese law protect producers of phonograms against the importation of unauthorized
duplicates of their phonograms?
Answer:
Sound recordings other than musical works (such as recordings of speeches or theatrical
performances) are protected under Articles 776 and 777 of the Civil Code.
"Other works prescribed by laws" refers to works copyrightable but not listed in items a)
through o) of Article 747.1 of the Civil Code. This is an open provision simplifying legislation
activities. In the future, there may appear new kinds of works that need to be protected under thecopyright law. Then Vietnam would promulgate s ub-law regulations to make such kinds of works
protectable without necessity to amend the Civil Code.
If the duplicates of a phonogram are made abroad without the authorisation of the copyright
owner, their importation to the country for the pur pose of distribution to the public is not allowed.WT/ACC/VNM/6
Page 133
Question 352.
Does Civil Code Article 777 grant producers of phonograms the exclusive right to reproduce
such phonograms indirectly (e.g., by copying a transmission of the phonogram) as well asdirectly?
Answer:
- The Civil Code article 777 is silent on the indirect reproduction of phonograms.
Question 353.
Will Vietnamese Law or regulations require amendment in order to extends copyright
protection to foreign works that meet the criteri a for eligibility set forth in Articles 3 and 4 of
the Berne Convention and to foreign performanc es and phonograms that meet the criteria set
forth in Articles 4 and 5 of the Rome Convention?
Answer:
Please, see answer to question 494 of WT/ACC/VNM/3/Add.2.
Question 354.
For what purposes may compulsory licences be granted under current Vietnamese Law?
Answer:
Please see answer to questio n 502 in WT/ACC/VNM/3/Add.2.
Question 355.
Who is eligible to take advantage of a compulsory licence?
Answer:
Anyone is eligible to take advantage of compulsory licence.
Question 356.
What mechanism(s) exist to ensure that works are used under compulsory licences only by
eligible persons, only for eligible purposes, an d only on payment of the required remuneration?
What mechanism(s) exist for the collection a nd distribution of remuneration under compulsory
licences?
Answer:
There is no specific mechanism to ensure that works are used under compulsory licenses only
by eligible persons, only for eligible purposes, and only on payment of the required remuneration.
There is no specific mechanism for collection and distribution of remuneration under
compulsory licence.WT/ACC/VNM/6
Page 134
Question 357.
Concerning the response to question 505 in WT/ACC/VNM/3/Add.2:Given that the number of cases of copyright infrin gement that have been brought to court is too
small to give a representative estimate of the average time of duration, please state the duration
of time for each such case.
Answer:
For each of the two cases, the duration was about one year.
Question 358.
With reference to Article 5 of the Ordinance on Copyrights and given the Berne Convention
requirement for automatic protection free of formalities, please explain the reference in
Article 5 to the grant of protection to au thors who do not register but "have needs for
copyright", in contrast to the reference to pr otection granted on the basis of registration.
Answer:
The question is in the "Ordinance on Copyright Protection", which was published on July 1,
1996.
Question 359.
With reference to the exception in the scope of co pyright for reporting of news (Article 6) - are
there any tests for requiring fair treatment for reporting of news?
Answer:
The question is in the "Ordinance on Copyright Protection", which was published on July 1,
1996.
Question 360.
Article 7 contains wide provisions for denial of copyright.  Is it the case that this would require
any amendment to comply with Article 9.2 of the Berne Convention?
Answer:
The question is in the "Ordinance on Copyright Protection", which was published on July 1,
1996.
Question 361.
Given the apparent overlap in responsibilities  of the various agencies set out in answer to
question 496, how does a copyright owner determine which agency is the appropriate one to
pursue possible infringement action?  Is there a prospect of early clarification of this matter?
Answer:
The course of enforcement of IPR is entrusted to no special agency other than judicial and
administrative authorities responsible for enforcement of law in general.WT/ACC/VNM/6
Page 135
The judicial authorities responsible for enforcement of IPR include the People Supreme Court and
provincial People courts, having, as legal basis for their activities, Ordinance on civil procedures and
Criminal Code.
The administrative authorities responsible for enforcement of IPR include People Committees
of all levels, market control agencies, economic police, customs agencies, inspectorate of Science,
Technology and Environment. The legal basis of their activities includes Ordinance on measures
against administrative violations of 1995. Each of the agencies functions independently in the
principle of jurisdiction provided for in Article 37 Ordinance on measures against administrative
violations as follows:
“1. People Committees of all levels have jurisdiction over violations in the fields falling
under local administrations.
2. State administrative specialised authorities have jurisdiction over violations in the
fields falling under their management.
3. In case an administrative violation over which different authorities have jurisdiction
shall be handled by the authority who receives the case first.”
The administrative system plays an important role in the enforcement. Compared to judicial
procedures, administrative procedures have a disadvantage of limit to damages under one million
Vietnamese dongs, but they have an advantage of being fast, simple and cheap. Therefore, in thesituation  that almost infringements are minor and unintentional, and injunctions are powerful enough
to prevent further infringement, right owners rely heavily on administrative authorities, especially
market control agencies.
The course of preventing and combating IPR crimes is entrusted to no specialised staffs other
than the staffs responsible for the enforcement of law in general. There are no special measures as
incentives for the activities either.
Question 362.
Article 42 states that the owner of copyright may "take a law suit against the case at the court".
What steps must a copyright owner take to  commence legal proceedings for copyright
infringement?  Are local and foreign owners treated equally in this process and by the court?
Answer:
The question is in the "Ordinance on Copyright Protection", which was published on July 1,
1996.
Question 363.
What provision is there for judicial authorities to provide an opportunity for the parties to an
infringement action to be heard and for those authorities to provide written reasons for
decisions and judicial review?
Answer:
The obligation of judicial authorities to provide an opportunity for the parties to an
infringement action to be heard is provided for in Article 51 Ordinance on civil procedures as follows:
“1. After the Trial Board has finished inquiring procedures, parties to the proceeding,
their representatives or their defenders, the representatives of the social organisationsWT/ACC/VNM/6
Page 136
having initiated action for the public interest present their evaluation of evidences and
propose settlement the case. A party joining in argument exchange is entitled to make
one counter-argument to each of the others’ disagreed arguments. The Trial Board
can allow a party adding more  arguments, if necessary. After that, the public
prosecutor presents his proposal on the settlement of the case.
2. In case the argument exchange procedure requires more evidence, the Trial Board
may decide to take inquiring procedure and argument exchange procedure again.”
The obligation to provide parties to the proceeding with the judgement decision in writing
with its grounds stated clearly is provided for in following:
Section 53 of the Ordinance on civil procedures: During the course of making resolution, all
of arguments and the final decision of the Trial Board shall be recorded. In the judgement, the Trial
Board shall state fully contents of the case, all proved facts, the evidences and legal grounds on which
the Court based, and the Court’s final decision on the case. Injunctive relieves can be ordered
immediately by the Trial Board.
Section 57 of the Ordinance on civil procedures provides that No sooner has the trial
completed, parties to the proceeding shall be provided by the Court with extraction of the judgement
or the Court’s decision. Within 15 days from the date of judgement declaration, the Court shall, on
their requests, provide them with a copy of the judgement and other decisions. A party absent at the
trial shall be immediately forwarded by the Cour t extraction of the judgement and other decisions.
Regarding judicial review in appeal procedure, in the Ordinance on civil procedures, Criminal
procedures Code, the Ordinance on procedures for administrative cases there are provisions on appeal
trial procedures applicable to the first instance  judgements and decisions, except for the Supreme
Court’s first-final judgements and decisions.
(b) Trademark including service marks
Question 364.Please describe how protection for pharmaceutical trademarks will be brought up to TRIPS
consistent levels.
Answer:
The effective laws and regulations of Vietnam on the protection of trademark consist of the
following documents:
- the Civil Code 1995 (the Sixth Part);
- Decree No. 63/CP dated 24 October 1996 of the Government of Vietnam on detailed
Regulations on Industrial Property;
- Circular No. 3055/TT-SHCN of 31 December 1996 of the Ministry of Science,
Technology and Environment on guiding the Implementation of the Provisions on the
Procedures for Establishing Industrial Property rights and a number of other
Procedures in Decree No. 63/CP.
English version of the above listed documents are available at the WTO Secretariat for
reference.
The trademarks for pharmaceutical products are regulated by laws and regulations on
trademarks in general without any separate provisions.WT/ACC/VNM/6
Page 137
To comply with the requirements of the TR IPS Agreement, the following provisions on
trademark protection need to be changed:
Section 53(1) of Decree No. 63/CP defines the acts of trademark infringement as follows:
"A person other than the owner of an industrial property object, committing one of the using
acts as provided for in Article 805 of the Civil Code and as detailed in Section 34 of this
Decree, within the term of protection, and without permission of the owner or without a right
of prior use as provided for in Section 50 of this Decree, shall be considered as having
committed an act of infringement of an industrial property right, unless one of the exceptions
mentioned in Sections 51, 52 of this Decree applies."
Therefore, the scope of trademark protection is narrower than the requirement of the TRIPS
Agreement (Paragraph 1, Article 16).
The extension of the scope of trademark protection is expected to be made by a Decree on the
handling of administrative violations in the field of industrial property, which is scheduled to beenacted in 1998.
We have the following the additional questions and comments on the Trademark Ordinance
dated 14 December 1982 promulgated by Order No. 197.
The Trademark Ordinance (promulgated in conjunction with Decree No. 197/HDBT of
14 December 1982) was superseded and replaced by the documents listed in the answer to
question 364 herein.  However, the issues in the questions 365 through 395 will be answered in
accordance with the current laws and regulations.
Question 365.
References to industrial/commercial establishments should be changed to natural or legal
persons, i.e., so the ordinance c overs any person, not just firms.
There are numerous references in various provisions that ministries, State Committees, other
bodies responsible to the Council of Ministers, people’s committees of the provinces, towns andspecial districts under the direct authority of the central administration are required to use
marks in under specified conditions.
These restrictions appear to be a general violat ion of TRIPS Article 20 against encumbering the
use of a trademark.
Answer:
According to the current laws and regulations, right holders of trademarks are natural persons,
legal persons and other entities, not only "industrial and commercial enterprises".
The current laws and regulations have no provision obliging Ministries, State Committees,
other authorities under Council of Ministers, People's Committee of Provinces, Cities and Special
areas under the Central Government to use trademarks under specified conditions and have no
provision on obligation of using trademark contrary  to Article 20 of the TRIPS Agreement either.
Question 366.
The following trademark requirements are part of the WTO TRIPS Agreement, but are not
included in this Trademark Ordinance.WT/ACC/VNM/6
Page 138
- Article 15(4) of the Agreement states that the nature of goods or services shall in no case
form an obstacle to registration of a mark .  The Ordinance lacks this language or any
equivalent.
- It is unclear whether the Ordinance will provide for an exception to the rights conferred
by permitting fair use of descriptive terms as allowed for under TRIPS Article 17.
- There is no prohibition against the compul sory licensing of trademarks as required
under Article 21.
Answer:
The are no provisions corresponding to Article 15(4) of the TRIPS Agreement in Vietnamese
laws and regulations.  However, according to Section 6 Decree No. 63/CP, the nature of goods and
services bearing a trademark shall not be considered one of the bases for refusal trademark
registration.  Therefore, the requirement of the TRIPS Agreement is fully met.
The current laws and regulations of Vietnam do not provide for an exception to the rights
conferred by permitting fair use of descriptive terms as stipulated in Article 17 of the TRIPS
Agreement.  However, the Article 17 of the TRIPS Agreement is not understood that State Members
are obliged to provide that exceptions.
According to Article 802 of the Civil Code , and Section 51 of Decree No. 63/CP, non-
voluntary licences may be granted for inventions, utility solutions, industrial designs only. This is ex-
officio  understood that non-voluntary licences for trademark are not permitted.
Question 367.
Could Vietnam more clearly, define the meaning of an "unjustifiable reason" for the failure of
use of a trademark (Question 510, WT/ACC/VNM/3/Add.2)?  For example, what is meant by
the reference to "government restrictions"?
Answer:
In the answer to Question 510 in WT/ACC/VN M/3/Add.2, “justifiable reasons” for failure of
obligatory use of a trademark are understood to include the circumstances independent of the
trademark owner’s subjective will preventing him from use. Examples of justifiable reasons are
natural disasters, wars refraining the production, circulation of relevant goods, or government’srestrictions on use such as prohibition of importing, exporting or circulating a certain good, etc.
Question 368.
Re.:  Trademark Ordinance.  Chapter I - General Provisions.Chapter I-1(1):  This provision provides that  the listed entities engaged in “production,
commercial or service activities shall be entitled and obliged to register and use trademarks and
service marks to designate their products or services, pursuant to the provisions of this
Ordinance”.
- By providing a list of the types of entities entitled to use a mark, it risks the possibility
that certain types of entities, e.g., if there are charitable organisations now or in the
future.  Therefore, it is recommended that any “natural or legal person” be able to
“apply for a trademark or service mark that  is used to distinguish his/her goods orWT/ACC/VNM/6
Page 139
services from those of others”.  This also  avoids the requirement that the applicant be
specifically engaged in the activity listed.
- It is also a concern that the language states that entities “shall be entitled and obliged to
register and use a trademark or service mark".  Clarification of the meaning of thislanguage is requested.
Answer:
The current laws and regulations of Vietnam on trademarks are also applied to service marks.
The current laws and regulations of Vietnam provide for the right to apply for a trademark
registration, not for the obligation thereof. Secti on 2 Article 14 Decree No. 63/CP reads as follows:
"2. The right to apply for a Protection Title for a trademark:(a) Natural or legal persons or other entities legally engaged in production shall have the
right to apply for a Protection Title for a trademark to be used on their products;
(b) Natural or legal persons or other entities legally engaged in services shall have the
right to apply for a Protection Title for a service mark to be used for their services;
(c) Natural or legal persons or other entities legally engaged in the trade in products
manufactured by a third party shall have the right to apply for a Protection Title for a
trademark to be used for such products, provided the manufacturer does not use such
trademark for the respective products and the manufacturer does not object to such
application;...".
The charitable organisations also have the right to apply for a trademark registration under the
above provisions.
Question 369.
Is any natural or legal person able to ap ply for and receive a trademark registration?
Are legal entities that are not involved in commercial activities, e.g., charitable entities, other
non-profit organisations such as in the United States:  the national Olympic body, eligible to
apply for and obtain a trademark registration?
What, if any, type of legal entity is obliged to register and use a trademark or service mark?
Answer:
Under Section 2 Article 14 Decree 63/CP, any natural or legal person can apply for and
receive a trademark registration for his or its goods or services. The provision reads as follows:
“2. The right to apply for a Protection Title for a trademark:
(a) Natural or legal persons or other entities legally engaged in production shall have the
right to apply for a Protection Title for a trademark to be used  on  their products;
(b) Natural or legal persons or other entities legally engaged in services shall have the
right to apply for a Protection Title for a service mark to be used for their services;
(c) Natural or legal persons or other entities legally engaged in the trade in products
manufactured by a third party shall have the right to apply for a Protection Title for a
trademark to be used for such products, provided the manufacturer does not use suchWT/ACC/VNM/6
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trademark for the respective products and the manufacturer does not object to such
application.”
Legal entities that are not involved in commer cial activities, including charitable entities,
other non-profit organisations that are not involved in commercial activities (i.e. those who do nothave their own goods of services) do not have the right to apply for a trademark registration.
However, under Section 2(g) Article 6 Decree 63/ CP, signs and designations identical with, or
confusingly similar to, that of Vietnamese as well as foreign organisations may not, without
authorisation of such organisations, be registered as a trademark.
The prevailing laws and regulations of Vietnam do not provide for the obligation of
registration of trademarks.
Question 370.
Chapter I-1(4):  The second paragraph of this section raises a national treatment issue because
it limits foreign persons/entities to using the Chamber of Commerce of Vietnam as their
representative for purposes of applying for a trademark.
It is clear, however, that if Vietnam is to co mply with TRIPS, foreign persons/entities will have
to have access to trademark agents/representatives on the same basis as Vietnamese nationals.
Answer:
The current laws and regulations of Vietnam and Section 2 Article 2 of the Trademark
Ordinance 1982 stipulate that foreign individuals or entities shall file application for a trademark
registration though an industrial representative which is freely chosen among legally operatingindustrial representatives and which is not necessarily the Chamber of Commerce of Vietnam.
Question 371.
According to Chapter I-1(4), paragraph 2, foreig n persons and entities must use the Chamber of
Commerce of Vietnam as their representative for purposes of applying for a trademark.
- Are Vietnamese nationals also required to use this entity in applying for a trademark?
- If Vietnamese nationals are not so limited, will these restrictions be removed for foreign
nationals and entities so that they may have resort to the same agents as Vietnamese
nationals?
Answer:
The prevailing laws and regulations of Vietnam require that foreign natural persons and legal
persons shall file application for a trademark registration though an IP representative agent and thatVietnamese natural and legal persons may file application the  same way  either directly to National
Office of Industrial Property or through an industrial property representative. Vietnamese as well as
foreign entities can choose any of industrial property representatives legally operating in Vietnam.
Question 372.
Chapter I-2(2):  This provision gives responsibilit y to various levels of political administrations
the task of regulating the “types of products on which it is mandatory to affix registered marks
when they circulate on the market”.WT/ACC/VNM/6
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TRIPS Article 20 states that trademarks shall not be unjustifiably encumbered by special
requirements.  If this provision applies to only State enterprises then it should be more specific
as to this limited requirement.  However, it shou ld be made clear that no natural or legal person
is under an obligation of the type provided for because of the TRIPS restriction on encumbering
the use of the trademark.
Answer:
Please see the answer to question 374 herein.
Question 373.
Is this provision limited to State run/owned enterprises?  Is the acquisition of a registered
trademark a business decision or one dictated by the various levels of government?
Answer:
The prevailing laws and regulations of Vietnam do not require mandatory registration of
trademarks for any goods or services.
Question 374.
Chapter I-2(3):  This provision references th e obligation to register and obtain marks as
specified in the previous provision.  Due to the la ck of clarity, I-1 and I-2(2) should be clarified.
Answer:
The current laws and regulations of Vietnam have no provisions on obligation of registration
of trademarks for any goods or services.
Question 375.
Chapter I-3(1):  TRIPS Article 15(1) includes personal names as subject to registration, but, this
provision of the Vietnam law does not include personal names; thus, it fails to include asregisterable subject matter the types of signs listed in TRIPS.
Answer:
According to Article 785 Civil Code, a trademar k may be words, pictures or combination
thereof in one or different colours.  Section 2 Article 6 Decree No. 63/CP provides for the signs that
shall not be protected as trademarks, in which pers onal names are not included.  Therefore, without
listing the signs which may be protected as trademarks, Vietnamese laws, ex offiicio,  recognise
personal names as registerable signs.  In fact, many registered trademarks are personal names.
Question 376.
Can personal names be registered as a trademark?
Answer:
According to Article 785 Civil Code, a trademar k may be words, pictures or combination
thereof in one or different colours. Section 2 Article 6 Decree 63/CP provides for the signs that shall
not be protected as trademarks, in which personal names are not included. Therefore, without listingWT/ACC/VNM/6
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the signs which may be protected as trademarks, Vietnamese laws ex officio  recognise personal names
as registerable signs. In fact, many registered trademarks are personal names.
Question 377.
Chapter I-3(2):  In listing those signs that cann ot be registered, there is nothing that prevents
the registration of a sign that is likely to ca use confusion with an unregistered well-known mark,
which is to be protected under TRIPS Article 16(2).
Answer:
According to Section 1(e) Article 6 Decree No. 63/CP, a sign shall be considered distinctive
and protectable if: "not identical with, or confusingly similar to, another person's trademark
recognised as a well-known trademark (in accordance with Article 6bis Paris Convention) or another
person's widely used and recognised trademark."
Question 378.
How are unregistered well-known marks, whether owned by a Vietnamese national or foreign
person, protected?
How are marks determined to be well-known?Is the owner of a well-known mark able to oppose  the an application for registration of a mark
that is likely to confuse?  Or, to seek cancella tion after a mark that is likely to confuse is
registered? Or, both?
Answer:
According to Section 1(e) Article 6 Decree 63/CP, a sign shall be considered distinctive and
registerable if it is “not identical with, or confusingly similar to, another person's trademark
recognised as a well-known trademark (in accordance with Article 6bis Paris Convention) or another
person’s widely used and recognised trademark”. This provision is also applicable to foreigners’
trademarks in the principle of the protection of foreigners’ industrial property rights provided for inSection 63 Decree 63/CP.
Regarding the cancellation of a registered tradem ark identical with, or confusingly similar to,
a well-known trademark, Circular 437/SC of March 19, 1993 of Ministry of Science, Technology and
Environment on supplemental guidance of trademark registration provided in item 6.3  how aretrademarks determined to be well-known, as follows:
“Criteria for recognition of a well-known trademark may include: the quantity of consumers
having knowledge of the trademark by purchasing or using of goods or services bearing the trademark
or through promotion; the scope of territory areas where goods or services have been circulated; theturnover or sale of goods bearing the trademark; the period of time during which the trademark has
been used continuously; the reputation of the goods or services bearing the trademark; the number of
countries in which the trademark is protected, etc.”
Although Circular 437/SC has ceased to be effective, in practice its principles for
determination of well-known-trademarks are still  applied while there is not yet a substitute.
In accordance with the procedures provided for in Sections 27 and 29 Decree 63/CP, the
owner of a well-known trademark may request cancellation of the registration of  a trademark that is
likely to confuse with the well-known trademark. However, Vietnamese law does not provideWT/ACC/VNM/6
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procedures of opposition to a trademark application prior to its registration (prior to the grant of a
Protection Title).
Question 379.
Re.  Chapter II—Registration of Marks
TRIPS Article 15(3) requires Member States to pr ovide for the filing of a trademark application
for which use has yet to begin.  The provisions of the Vietnamese law in this Chapter do not
appear to include the ability to file an applicat ion based on an intent to use the proposed mark.
Answer:
The current Vietnamese provisions in Section 14(2) Decree No. 63/CP comply with the
requirement provided for in Article 15(3) TRIPS Agr eement.  In particular, natural, legal persons, or
other entities legally engaged in production, service have the right to apply for Protection Titles of
trademarks or service marks to be used on their products or services.
Question 380.
Can an natural or legal person apply for registration of a mark that it intends to use in the
future in accordance with TRIPS Article 15(3)?
Answer:
Please see answer to Question 379 herein.
Question 381.
Chapter II-6:  What about opposition, cancellation, appeal of refusal?
Answer:
The current Vietnamese laws has no provision on opposition to a trademark application
before the grant of a Protection Title.
According to Section 28 Decree No. 63/CP, any third party shall have the right to file an
application requesting the National Office of Industrial Property to terminate the validity of a
Trademark Protection Title in the following cases:
- the holder of a Trademark Registration Certificate claims to relinquish the rights
conferred by the Protection Title. In this case, the validity of the Certificate shall be
terminated from the date relinquishment is claimed;
- the owner of a Trademark Registration Certificate has not used the trademark without
legitimate reasons for 5 consecutive years prior to the request for termination of
validity. In this case, the validity of the Certificate shall be terminated from the first
day after such period of 5 years;
- the owner of a Trademark Registration Certificate has deceased or no longer operates
without a legal successor. In this case, the validity of the Certificate shall beterminated at the time operation ended or the owner of the Certificate has deceased.
According to Article 29 Decree No. 63/CP, any third party shall have the right to file an
application requesting the National Office of Industrial Property to cancel the validity of a Trademark
Registration Certificate in the following cases:WT/ACC/VNM/6
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- the person who has been granted a Trademark Registration Certificate was not
entitled to apply for its grant and has not been transferred such right by the entitled
person;
- the subject matter of protection does not meet the relevant criteria.
The application requesting termination or cancellation of validity of a Trademark Registration
Certificate shall be handled in accordance with the procedures provided for in Section 27 of Decree
No. 63/CP.
Question 382.
Does the trademark office conduct substantive examinations of applications leading to ex officio
decisions to refuse registration?
Can applicants for a trademark appeal a refusal to register a mark?
Can an interested party oppose an application for registration?  Is an adverse decision
appealable?
Are interested parties able to initiate an action, administrative or judicial, to cancel a registered
mark?
Are decisions regarding refusals, oppositions, canc ellations, etc., subject to review by a court or
is an administrative body the final review bo dy?  TRIPS Article 62(5) requires review by a
judicial or quasi-judicial body.
Answer:
Under Section 16.1(i) and 16.3(a) Circular 3055/TT-SHCN, the National Office of Industrial
Property of Vietnam conduct ex officio  substantive examination of trademark applications and make
decision on refusal of registration in case a trademark fails to meet the protection requirements.
Under Subsection 1(a) Section 27 Decree 63/CP an applicant for a trademark registration can
appeal a refusal to register the trademark as well as a refusal to officially accept the application.
The prevailing Vietnamese law has no provis ion on opposition to a trademark application
prior to registration (before the grant of a Protection Title).
Under Section 28 Decree 63/CP, the validity  of a Trademark Protection Title can be
terminated in the following cases:
- The holder of a Trademark Registration Certificate claims to relinquish the rights
conferred by the Protection Title. In this case, the validity of the Certificate shall beterminated from the date relinquishment is claimed;
- The owner of a Trademark Registration Certificate has not used the trademark
without legitimate reasons for 5 consecutive years prior to the request for termination
of validity. In this case, the validity of th e Certificate shall be terminated from the
first day after such period of 5 years;
- The owner of a Trademark Registration Certificate has deceased or no longer operates
without a legal successor. In this case, the validity of the Certificate shall be
terminated at the time operation ended or the owner of the Certificate deceased.WT/ACC/VNM/6
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Under Section 29 Decree 63/CP, the validity of a Trademark Registration Certificate can be
invalidated or terminated  in the following cases:
- The person who has been granted a Trademark Registration Certificate was not
entitled to apply for its grant and has not been transferred such a right by the entitledperson;
- The subject matter of the protection does not meet the relevant criteria.
The procedures of handling request for termination or invalidation of the Trademark
Registration Certificate are provided for in Section 27 of Decree 63/CP.
Review of decisions on refusals to officially accept applications, refusals to register
trademarks, termination or invalidation of trademark registrations at requests of third parties  is
provided for in Section 27 Decree 63/CP as follows:
“(1) The following persons shall have the right to appeal:
(a) An applicant shall have the right to appeal against the rejection of anapplication for a Protection Title or rejection of its grant;
(b) A person requesting substantive examination for inventions or utility
solutions shall have the right to appeal against the decision to grant a Protection Title
without being subject to a fee;
(c) Any third party shall have the right to appeal against a decision to grant aProtection Title upon payment of the due fees.
(2) The procedures for appeals under (1) of this Section shall be as follows:
(a) The appeal shall be presented in writing and clearly state the full name and
address of the appellant; the number, date and contents of the decision or noticesubject to the  appeal; the number of the respective application for a Protection Title,
the name of object of protection as referred to in the application; the  contents,
grounds and  arguments  the appeal is based on; and the exact claim on amendment or
cancellation of the related decision or conclusion;
(b) The appeal shall be submitted to the National Office of Industrial Property
within 3 months from the date of issuance of the decision or notice in case of appeals
under (1) (a) or (b) of this Section, or during the validity of the Protection Title incase of appeals under (1) (c) of this Section;
(c) Appeals submitted after the above-mentioned period shall not be taken into
consideration.
(3) Within 30 days from the date of receipt of the  appeal, the National Office of
Industrial Property shall respond to the  appellant in writing.
(4) In case of any disagreement with the response of the National Office of Industrial
Property referred to in (3) of this Section, the appellant shall have the right of further
appeal to the Minister of Science, Technology and Environment or initiateproceedings at the administrative court. The Minister of Science, Technology and
Environment shall, within 60 days from the date of receipt of the appeal, notify the
appellant of the result of the matter.
Under the above mentioned provisions and prevailing provisions of Ordinance on procedures
for administrative cases, as far as decisions of  National Office of Industrial Property regarding
refusals to officially accept applications, refusals to register trademarks, termination or cancellation of
trademark registrations are concerned, the final review authority may either be a court, namely the
Administrative Court, or an administrative author ity, namely the Minister of Science, technology and
Environment, which is up to the choice of the appellants can be freely, provided that the decisionsWT/ACC/VNM/6
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have previously appealed to the Director General of the National Office of Industrial Property.
However, the appellants having chosen the administrative procedure shall be bound by decisions of
the Minister of Science, Technology and Environment and cannot appeal further to court.
Regarding administrative procedures, appeals to the Minister of Science, Technology and
Environment and the process of settlement thereof shall comply with the provisions of Law on the
settlement of appeals and denounces of 1998. Under the Law, the appellant has the right to submit
arguments and evidence and receive a written decision made by the authority in charge.
Regarding judicial procedures, although there exists Ordinance on procedures of
administrative cases, there are not yet detailed provisions on cases concerning the establishment,
maintenance, termination and cancellation of trademark rights. For the time being, the promulgationof a joint circular guiding the judgement of cases relating to industrial property rights is being
considered by the Supreme Court in cooperation with related authorities and scheduled to be
completed by the year 2000.
In order to determine precisely necessary adjustment to laws and regulations and relevant
contents and measures, Vietnam would request the Working Party to examine the above-mentioned
provisions and assess their compliance with the requirement of Article 62(5) of the TRIPS Agreement
while explaining in details the requirement, particularly what can be considered quasi-judicial
authorities and quasi-judicial procedures.
Question 383.
Chapter II-8:  This should be clarified to exclude all non-State enterprises, if this is in fact what
is meant, from the requirement to register in Vietnam before registering in a foreign country.
As the economy evolves in Vietnam to a market economy, private enterprises, regardless of type
should be free to choose where it wants to register marks first.
Does Chapter II-8 apply to all entities or is it limited to State run/owned enterprises?
Answer:
The prevailing laws and regulations of Vietnam do not provide for the obligation to register a
trademark in Vietnam before registering it in a foreign country, except for registration under Madrid
Agreement.
Question 384.
Chapter III – Legal Protection of Trademarks.  Nothing in this Chapter addresses protection of
well-known marks as required in TRIPS Article 16(2) and (3).
- How are well-known marks protected?
- How are remedies/sanctions for infringing a well-known mark the similar or dissimilar
to those available to owners of registered marks?
Answer:
The prevailing laws and regulations of Vietnam do have provisions on the protection of well-
known trademarks against unauthorised registrati on, but do not have provisions on the protection of
unregistered well-known trademarks against unautho rised use. The promulgation of provisions on
fuller protection of well-known trademarks against unfair competition, complying with theWT/ACC/VNM/6
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requirements of TRIPS Agreement, is being considered and scheduled to be completed by the year
2000.
Question 385.
Chapter III –-10(2):  This provision imposes unnecessary requirements on the trademark owner
to “ensure and improve” the quality of the goods bearing the registered mark.
- This provision also states that without a guarantee of quality of goods registered in
particular classes, the trademark owner is subj ect to losing rights in the use of the mark.
- This provision is unrelated to the protection th at registration is to afford the owner of a
registered mark.  Rather, it imposes requireme nts on maintaining a mark that will likely
be determined by market forces, i.e., where consumers find a particular product
declining in quality.
Answer:
The current laws and regulations of Vietnam do have provisions on the protection of well-
known trademarks (see the answer to question 377 herein).  The promulgation of provisions on fuller
protection thereof against unfair competition, in compliance with the requirement of TRIPS
Agreement, is being considered and scheduled to be completed by the year 2000.
The current laws and regulations of Vietnam have no provisions requiring the owner of a
trademark to "maintain and improve" the quality of goods and services bearing the registered
trademark.
Question 386.
Does Chapter III-10(2) require trademark owners to “improve” the quality of their goods as a
condition for maintaining a trademark registration?
What substantive review, if any, of quality of the goods is conducted by the trademark office?
Answer:
The prevailing laws and regulations of Vietnam have no provisions requiring the owner of a
trademark to “maintain and improve” the quality of goods and services bearing the registered
trademark.
Question 387.
Chapter III-12(c):  This provision states that a ma rk shall be considered us ed when it is affixed
on a product, merchandise, packaging, correspondence or advertising material.
However, there is no language that meets the TRIPS Article 19(2) provision stating that when
subject to the control of the owner, use of the ma rk by another person shall be recognised as use
of the trademark for purposes of maintaining a registration.
Answer:
According to Section 46(3) of Decree No. 63/CP, the use of a trademark by a licensee shall be
considered as the use for the purpose of maintaining its registration.WT/ACC/VNM/6
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Question 388.
TRIPS Article 19(2) states that when subject to the control of the trademark owner, use of the
mark by another shall be recognised as use of  the mark for the purpose of maintaining the
registration.
If the trademark ordinance recognizes this, where in the ordinance is it?
Answer:
The prevailing Section 46 (3) Decree 63/CP provides that the use of an industrial property
object by a licensee shall be considered as the use under the industrial property owner’s obligation.Therefore, the use of a trademark by a licensee shall be considered as the use for the purpose of
maintaining its registration, as required by Article 19(2) of the TRIPS Agreement.
Question 389.
Chapter III-14(3):  regarding appeals from a decision to refuse registration,  refusal to grant a
certificate or invalidating/suspending a registration:
It does not include a provision that allows for the appeal of the administrative decision to any
court (TRIPS Article 41(4)).  Subparagraph 3 states that the decision of the State Committee forScience and Technology shall be final, which does not comply with the requirement to have
judicial review of administrative decisions in TRIPS.
Answer:
In relation to the establishment, maintenance, invalidation and cancellation of trademarks in
particular and of industrial property rights in general, according to Section 27(4) of Decree No. 63/CP
and the Ordinance on the judgement of administrative cases, decisions of the National Office of
Industrial Property may be appealed either to the Administrative Court or to the Minister of Science,
Technology and Environment, provided that they have previously been appealed to the Director
General of the National Office of Industrial Property.
However, decisions on merits of the case made by the Minister of Science, Technology and
Environment are final and may not be appealed further to the Administrative Court.  In order to
comply with the requirement of Article 62(5) of the TRIPS Agreement, Decree No. 63/CP and the
Ordinance on the judgement of Administrative Cases are scheduled to be amended by the year 2000.
Furthermore, Vietnam does not yet have detailed regulations on procedures for the judgement
of administrative cases relating to the establishment, maintenance, cancellation and invalidation of
trademarks in particular and of industrial property rights in general.  For the time being, the
promulgation of a circular guiding the judgement of cases relating to industrial property rights of the
Supreme Court and related authorities is considered and scheduled to be completed by the year 2000.
Question 390.
According to Chapter III-14(3), decisions of the State Committee for Science and Technology
are final.
Will this be changed to permit court revie w?  Or, in the proceedings before the State
Committee, are parties provided an opportunity  to submit arguments and evidence and receive
a written decision?WT/ACC/VNM/6
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Answer:
Regarding administrative procedures, appeals to the Minister of Science, Technology and
Environment and the process of settlement thereof shall comply with the provisions of Law on the
settlement of appeals and denounces of 1998. Under the Law, the appellant has the right to submitarguments and evidence and receive a written decision made by the authority in charge.
Regarding judicial procedures, although there exists Ordinance on procedures of
administrative cases, there are not yet detailed provisions on cases concerning the establishment,
maintenance, termination and cancellation of trademark rights. For the time being, the promulgation
of a joint circular guiding the judgement of cases relating to industrial property rights is being
considered by the Supreme Court in cooperation with related authorities and scheduled to becompleted by the year 2000.
In order to determine precisely necessary adjustment to laws and regulations and relevant
contents and measures, Vietnam would request the Working Party to examine the above-mentioned
provisions and assess their compliance with the requirement of Article 62(5) of the TRIPS Agreementwhile explaining in details the requirement, particularly what can be considered quasi-judicial
authorities and quasi-judicial procedures.
Question 391.
Chapter III-15(1):  This provision meets TRIPS Article 16(1) to the extent that the mark owner
has exclusive rights and can prevent the unauthorised use of identical or similar marks that
result in confusion.
Where in the Ordinance or implementing regula tions is the presumption of TRIPS 16(1) met,
i.e., confusion shall be presumed when the iden tical sign is used without authorisation for
identical goods or services?
Answer:
Infringement of trademark right is provided for in Section 53(1) of Decree No. 63/CP as
follows:
"A person other than the owner of an industrial property object committing one of the using
acts as provided for in Article 805 of the Civil Code and as detailed in Section 34 of this
Decree within the term of protection, and wit hout permission of the owner or without a right
of prior use as provided for in Section 50 of this Decree shall be considered as havingcommitted an act of infringement of an industrial property right unless one of the exceptions
mentioned in Sections 51, 52 of this Decree does apply".
In addition, according to Section 34(3) of Decree No. 63/CP use of a trademark means:
- applying a protected trademark on goods or their packaging, on service facilities or
transaction documents used in business activities;
- circulating; offering, advertising or storing for sale of goods bearing a protected
trademark;
- importing goods bearing a protected trademark.WT/ACC/VNM/6
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Question 392.
In an infringement situation, is there a presumption similar to TRIPS Article 16(1) that
confusion, i.e., infringement, is presumed when an identical sign is used without authorisation
for identical goods or services for which a mark is registered?
Answer:
Infringement of trademark right is provided for in Section 53(1) Decree 63/CP as follows:
"A person other than the owner of an industrial property object committing one of the using
acts as provided for in Article 805 of the Civil Code and as detailed in Section 34 of this Decree,within the term of protection, and without permission of the owner”, “shall be considered as having
committed an act of infringement of an industrial property right”
And the use of a trademark, as provided for in paragraph 3 Article 34 of Decree 63/CP, is the
committing one or more of the following acts for commercial purposes:
“- applying a protected trademark on goods or their packagings, on service facilities or
transaction documents used in business activities;
- circulating; offering, advertising or storing for sale goods bearing a protected
trademark;
- importing goods bearing a protected trademark.”
Although the prevailing provisions do not use exactly the same wording of Article 16 (1)
TRIPS Agreement, they are interpreted and practised in a manner compliant with the TRIPS
Agreement. This means that infringement, i.e.,  confusion, shall be presumed when a sign identical
with a registered trademark is used without authorisation for identical goods or services in respect of
which the trademark is registered.
Question 393.
Chapter III-15(2) and 16:  These provisions state that administrative and judicial sanctions are
available.
To what extent are the civil administrative en forcement provisions of TRIPS Arts. 41-50, border
measures for trademarks as described in TRIPS Arts. 51-60 and criminal sanctions for
trademark violations as required under TRIPS Ar ticle 61 available in the civil and criminal
code?
Answer:
According to Article 796 Civil C ode "the owners of inventions, utility solutions, industrial
designs, trademarks have the right to request in junction and damage order from the competent State
authority.
However, there are not detailed provisions on administrative and civil remedies and
procedures.  The promulgation of laws and regulations complying with the requirements of the TRIPS
Agreement on the enforcement of IPR is being considered and scheduled to be completed by theyear 2000.  The proposed laws and regulations are:
- A Decree of the Government on the handling of administrative violations in the field
of industrial property;WT/ACC/VNM/6
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- Joint-Circulars of the Supreme Court and related Ministries guiding the judgement of
cases relating to industrial property rights, copyright and neighbouring rights;
- Joint-Circulars of the General Department of Customs and related Ministries on
detailed procedures of IPR border control.
The Criminal Code of Vietnam has a proviso (Article 167) on crime of counterfeiting, as
follows:
"1. Any person involved in the production of, or trade in, counterfeit goods shall be
sentenced to imprisonment of one to seven years.
2. Any person having committed a crime shall be sentenced to imprisonment from five
to fifteen years in the following cases:
(a) Counterfeit goods are foodstuffs; medicines, prophylactics, construction
materials, fertilizers, pesticides;
(b) The crime has been committed organisationally or professionally;(c) The crime has been committed by taking advantage of his or her position,
power or of the name of State authorities, social organisations;
(d) Counterfeit goods are of great quantity and result in unlawful profits;
(e) The crime are seriously repeated.
3. Commitment of the crime with special seriousness shall be sentenced to
imprisonment from 12 to 20 years, life imprisonment or death".
(c) Geographical indications, including appellations of origin
Question 394.
How does Vietnam protect geographical indications?
Answer:
Under Section 7(2) of Decree No. 63/CP, on ly geographical indications of a special kind,
namely appellations of origin are protectable; geographical indications other than appellations of
origin, even signs symbolising the origin country or locality of goods, are not protectable.
Under Section 34(3) of Decree No. 63/CP, the foll owing acts of using an appellation of origin
are prohibited if committed by people other than the holder of a Certificate of the right to use theappellation of origin:
- applying a protected appellation of origin on goods or their packaging, on service
facilities or transaction documents used in business activities;
- circulating, offering, advertising or storing for sale of goods bearing a protected
appellation of origin; and
- importing goods bearing a protected appellation of origin.
Geographical indications in general are, to a limited extent, protectable under regulations on
trademark protection: signs liable to mislead, confuse or deceive consumers as to the origin of thegoods or services are not protectable as a trademark (Section 6(2)(d) of Decree No. 63/CP).
Vietnamese laws have no provision on additional protection for wines and spirits.  Provisions
on protection of appellations of origin apply generally to goods of all kinds, prohibiting "the illegal
use of an appellation of origin or signs confusingly similar thereto, including the case where the trueWT/ACC/VNM/6
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origin of the product or the appellation of origin is indicated or accompanied by wordings such as:
"kind", "type", "imitating", or similar words to th at effect (Section 47(1)(b) of Decree No. 63/CP).
The promulgation of supplemental laws and regulations on the protection of geographical
indications is being considered and scheduled to be completed by the year 2000.
Question 395.
Could Vietnam please provide greater detail on th e status of regulations on procedures for and
content of geographical indicators (Question 516, WT/ACC/VNM/3), and on the schedule of
legislative enactments required to comply with the TRIPS Agreement (Question 532,
WT/ACC/VNM/3)?
Answer:
Geographical indications of a special kind, namely appellations of origin are protectable
under the prevailing law of Vietnam. Geographical indications in general are, to a certain extend,protectable under regulations on trademark protection: signs liable to mislead as to the origin of goods
or services are not protectable as a trademark (Section 6(2)(d) Decree 63/CP).
Vietnamese laws and regulations have no provisions on additional protection for wine and
spirits. Provisions on the protection of appellations of origin apply generally to goods of all kinds,prohibiting “the illegal use of an appellations of origin or signs confusingly similar thereto, including
the case where  the true origin of the product or the appellations of origin is indicated or accompanied
by wording such as:  "kind", "type", "imitating", or similar words to that effect”  (Section 47(1)(b) of
Decree No . 63/CP)
The content of protection of appellations of origin of goods is provided for in details in Decree 63/
CP, as follows:
Protected subject-matters (Section 7):
“1. An appellation of origin to be protected shall be a geographical name of a country or
locality where the respective goods are produced and such goods have peculiarcharacteristics or qualities attributed to geographical, natural or human,  factors of
such country  or locality.
If the country referred to above is not Vietnam or the locality referred to above does
not belong to Vietnam, the respective appellation of origin shall only be protected if itis being protected in such country or locality.
2. The following objects shall not be protected by the State as appellations of origin:
(a) indications of origin which are not geographical names (including signs  which may
symbolise a certain country or locality without being the geographical name of thecountry or locality);
(b) appellations of origin which have become the common name of goods and lost the
function of indicating an origin.
Protection Title and term of protection (Section 9(2)(e)):
 “e) Protection Titles for appellations of origin shall be Certificates of the Right to Use an
appellation of origin with the term of validity beginning on the date of grant, expiring
at the end of 10 years counted from the official filing date and renewable indefinitely
for consecutive terms of 10 years”.WT/ACC/VNM/6
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The right to apply for a Protection Title (Section 14(3)):
“3. The right to apply for a Protection Title for an appellation of origin:
a) Natural or legal persons or other entities engaged in the production of, or trade in,
products with peculiar characteristics or qualities attributed to the country or locality
of a geographical name in compliance with the provisions of Section 7 of this Decree
shall have the right to apply for a Certificate of the Right to Use the appellation of
origin for their products;
b) Foreign natural or legal persons enjoying protection of an appellation of origin in
their respective home countries shall have the right to apply for a Certificate of the
Right to Use the appellation of origin for their products in the Vietnamese market;
c) The right to apply for a Certificate of the Right to Use an appellation of origin shall
not be transferable”.
The rights of Protection Title owner (Section 47.1):
“1. Who has been granted a Certificate of the Right to Use an appellation of origin shall
have the following rights:
a) to use the appellation of origin for  such products as specified in the list of registered
products;
b) to request the competent State authority to compel other persons to stop infringing
acts and pay compensation for damage caused by the illegal use of such appellation
of origin or signs confusingly similar thereto, including the case where  the true origin
of the product is indicated or the appellation of origin is translated into another
language or the use is accompanied by  "kind", "type", "imitating", or similar words
to that effect.
The concept “use of appellation of origin” as provided for in Section 34.3 of Decree
63/ CP is the undertaking the following acts for commercial purposes:
“- applying a protected appellation of origin on goods, their packaging, service facilities
or transaction documents used in business activities;
 - circulating; offering, advertising or storing for sale goods bearing a protected
appellation of origin;
 - importing goods bearing a protected  appellation of origin”.
Restrictions of the right to use appellations of origin (Section 35(1)):
 “The owner of a Certificate of the Right to use an appellation of origin shall not be entitled to
transfer the right to use such appellation of origin.”
Obligation of Protection Title owner:
(Section 46(2)):
“The owner of the appellation of origin shall have the obligation to use the appellation of
origin continuously and not suspend the use of such” “appellation of origin for more than 5
consecutive years. Failing to do so will subject the validity of the Protection Title for such
appellation of origin to cancellation in accordance with the provisions of Section 28 (2) (c) ofthis Decree”;WT/ACC/VNM/6
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(Section 47(2)):
“a) Who has been granted a Certificate of the Right to Use an appellation of origin shall
have obligation to ensure the peculiar quality or characteristics of products bearing
the registered appellation of origin;
b) to comply with requests of and create favourable conditions for the  competent State
authorities responsible for the controls of the quality of goods and organisations
responsible for the examination of peculiar quality and characteristics of products
bearing the appellation of origin, when necessary.
Procedures of the appellations of origin of goods registration are provided for in Decree 63/
CP and Circular No. 3055/ TT- SHCN in details as follows:
Applicant/Representative (Section 15(3) Decree 63/ CP):
 “a) Foreign natural persons resident in Vietnam or foreign legal persons having a legal
representative or a real and effective industrial or commercial establishment inVietnam may, directly or through an empowered industrial property agent, carry out
the  filing of application for a Protection Title and related procedures;
b) Foreign natural persons not resident in Vietnam or foreign legal persons without a
legal representative or a real and effective  industrial or  commercial establishment in
Vietnam may carry out the filing of application for a Protection Title and relatedprocedures only through an empowered industrial property representative services
organisations ”.
Requirements for appellation of origin applications: (Item 9.1 Circular 3055-TT- SHCN)
“The application must comprise the following documents:(i) The declaration requesting for the grant of certificate of the right to use the
appellation of origin of goods, made under the form set out by the National Office of
Industrial Property, 3 copies;
(ii) The document certifying the lawful business right (the business license, certificate of
business registration, etc.), 1 copy;(iii) The explanation of the peculiar qualities of the products bearing the appellation of
origin of goods, with the certification by a competent State agency, 1 copy;
(iv) The document of the competent agency certifying that the products produced or
traded by the applicant have peculiar characteristics and qualities and are produced on the
territory corresponding to the appellation of origin of goods (in conformity with theexplanation in document (iii)), 1 copy;
(v) A copy of the title of protection of the appellation of origin of goods granted by the
country of origin, or a document of the country of origin certifying that the right of the
applicant to use the appellation of origin of goods is currently protected in the country of
origin (in case the appellation of origin of goods comes from a foreign country), 1 copy;(vi) A map of the territory corresponding to the appellation of origin of goods, in which
the place where the applicant produces or conducts business is indicated, 1 copy;
(vii) Power of attorney (if required), 1 copy;
(viii) The voucher of payment of the application fee, 1 copy.
If the applicant applies only for the Certificate of the right to use an appellation of origin ofgoods which has previously been registered, the application can be filed without documents
(iii) and (iv). If the appellation of origin of goods is from a foreign country, the application
can be filed without documents (ii), (iii) and (vi).WT/ACC/VNM/6
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Submission time of documents (Item 9.2)
The above-mentioned documents must be submitted at the same time. The original of
document 9.1(vii) can be submitted within 3 months from the date of filing the application if
the application includes a copy of the original.(Item 9.3): The agency competent to certify the peculiarities of the products bearing the
appellation of origin of goods and certify that the products produced by the applicant have
such peculiarities  shall be the product quality control agencies at the central level or of the
locality indicated in the appellation of origin of goods.
Filing application (Item 10)
The application may be filed at the National Office of Industrial Property or at any other
application-receiving offices set up by the National Office of Industrial Property. The
application may also be sent by registered mails through the postal service to the above-said
application-receiving offices.
Formality examination (Item 13.8):
The time limit for the formality examination is 3 months from the date the application arrives
at the National Office of Industrial Property indicated on the application-receiving seal. For
an application with a document or documents being filed late as provided, the time limit forthe formality examination is 3 months from the date such document is added to the
application. Prior to expiry of the above time limit, the National Office of Industrial Property
shall have to conclude the formality examination and notify the applicant.
Substantive examination (Item 16.5):
The substantive examination time limit shall be 6 months for an application for an appellation
of origin of goods calculated from the date of signing the notification of official acceptance of
the application.
If, during the substantive examination of the application, the applicant wishes to, or at the
request of the National Office of Industrial Pr operty, amends and/or supplements documents,
the substantive examination time limit can be extended to cover the period for the amendment
and/or supplement.
Prior to the expiry date of the substantive examination time limit, the National Office of
Industrial Property shall have to notify the result of substantive examination to the applicant.
Procedures of extension of Protection Title validity (Item 28):
Conditions of extension (Item 28.1):
 To have his/ her Protection Title of extended, within 6 months prior to the date of validity
expiry of the Protection Title, the owner of the Protection Title must file an application
thereof to the National Office of Industrial Property.
The application for extension of validity can be  filed later than the above-said time limit, but
not later than 6 months from the expiry date of validity of Certificates of the Right to Use an
appellation of origin of goods. Failing this, the applicant must pay a fee for extension of
validity and an additional 10% for each month of delayed payment.WT/ACC/VNM/6
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Extension  Dossier  (Item 28.2):
The dossier of application for extension of validity of Certificates of the Right of Use an
appellation of origin of goods must include the following documents:
(i) The declaration to request for the extension of validity of Certificates of the Right of
Use an appellation of origin of goods, made in the form set out by the National Office
of Industrial Property, 2 copies;
(ii) The original copy of the title of protection;
(iii) The voucher of payment of fee for extension;
(iv) power of  attorney (if required).
Considering requests for extension (Item 28.3):
The National Office of Industrial Property shall have to examine the application for extension
within 2 months from the date of receiving the application. The National Office of Industrial
Property shall issue a decision on extension, note down such extension in the Certificates ofthe Right of Use an appellation of origin of goods, register and publicise such extension on
the Industrial Property Official Gazette, except for the following cases:
- The extension application is invalid, or filed not in accordance with the prescribed
procedures;
- There is ground to confirm that the owner of the certificate of the right to use the
appellation of origin of goods does not use such  appellation of origin of goods or has
not used such object for the last 5 consecutive years prior to the expiry date of
Certificates of the Right to Use an appellation of origin of goods  without justifiable
reasons;
- The applicant for extension is not the owner of the corresponding Certificates of the
Right to Use an appellation of origin of goods.
If the application falls into one of the above-said cases, the National Office of Industrial
Property shall issue a notification of refusal of extension together with justified grounds for
refusal.
Appeals (Item 31):
If the applicant disagrees with the decision related to the handling of the application, as well
as the approval and registration of contract fo r the transfer of industrial property rights,
consideration of application for grant of non-voluntary license, the extension of the ProtectionTitle, grant of representative license, he/she shall be entitled to lodge a complaint or protest in
accordance with the order and procedures prescribed in Sections 27(2), 27(3), 27(4) of the
Decree.
At present, Vietnam is drafting a Government Decree on the Protection against Unfair
Competition, including provisions on the protection of geographical indications according to
the TRIPS standards. The Decree is scheduled to be promulgated in 1999.
(d) Industrial designs
Question 396.
Article 26.1 of the TRIPS Agreement requires that “the owner of a protected industrial design
shall have the right to prevent third parties not having the owner’s consent from making, sellingWT/ACC/VNM/6
Page 157
or importing articles bearing or embodying a design which is a copy, or substantially a copy, of
the protected design, when such acts are undertaken for commercial purposes”.
The right described in paragraph 7 of section VI.2.(d) in WT/ACC/VNM/2  does not appear to
be consistent with this right.  Please elaborat e on the design right that is granted and how that
right comports with the above req uirements of the TRIPS Agreement.
Answer:
Article 796 Civil Code provides that the owner of an industrial design have the right to
exclusively use the industrial design, to licence other persons to use the industrial design, to request
injunction and damage order from the State authority.
Section 34 Decree No. 63/CP provid es in details that the use of industrial design includes the
production of, putting into circulation, advertising, offering or storing for sale, importing, a product on
which a protected industrial design has been applied.
According to Article 804 Civil Code "Any person who uses another person's protected object
of industrial property without permission shall be considered to infringe the industrial property
right…". Article 805 Civil Code provides clearly th at infringement of industrial designs includes
"making products embodying industrial designs protected in Vietnam; importing, selling, advertising
or using of the products embodying industrial design protected in Vietnam for commercial purpose".
Therefore, the current laws and regulations of Vietnam on the right of industrial design
owners are already in compliance with the requirement of Article 26.1 of the TRIPS Agreement.
Question 397.
Article 26.2 of the TRIPS Agreement mandates th at only certain limited exceptions to the
protection of industrial designs are permitted.
The right described in paragraph 8 of section VI.2(d) in WT/ACC/VNM/2  does not appear to
be consistent with this provision.  Please elaborate on the manner in which the prior user right
and compulsory licensing, permitted by Vietname se law, comports with the above referenced
TRIPS provision.
Answer:
Regarding  industrial designs, Vietnamese laws a nd regulations on non-voluntary licence and
right of prior users are in compliance with the Article 26.2 of the TRIPS Agreement.  In particular, the
right of prior users with regard to industrial designs as provided for in Article 801 of the 1995 Civil
Code is to be understood as follows:
If before the filing date of an application for an industrial design patent, a natural or legal
person or another entity has used the industrial de sign independently from its owner, the former shall,
after the grant of the patent, have the right to continue such use while not being allowed to extend the
scope or volume of use or transfer the right to other persons.
The provisions on non-voluntary with regard to industrial designs as provided for in
Article 802 Civil Code and Section 51 Decree No. 63/CP is to be understood as follows:
Upon request of persons having the need of using industrial design, the competent authority
may issue a decision ordering its owner to grant, in return for a remuneration, a licence in case the
following conditions are met:WT/ACC/VNM/6
Page 158
"1. The owner fails to use the industrial design or his use fails to satisfy the needs of
social-economic development of the country;
2. The person having the need of use has tried to negotiate with the owner but failed to
reach an agreement on a contractual licence, even with a reasonable royalty offer; and
3. The use of the industrial design satisfying the need of national defence, national
security, human health and other urgent needs of the society".
The party to which a non-voluntary licence is granted shall not transfer the right to use the
industrial design to the other.
(e) Patents/invention
Question 398.
Please describe how Vietnam intends to provide product patent protection for pharmaceuticals.
Answer:
Pharmaceutical products and processes to manufacture pharmaceutical products are
protectable under the current Vietnamese laws as they do not fall under the list of the objects excluded
from invention protection under Section 4(4) of Decree No. 63/CP.
Question 399.
Please describe how Vietnam’s compulsory licensi ng regime, including a fuller definition of the
concept of  “working” a patent, will be brought up to TRIPS-consistent levels.
Answer:
The current laws and regulations of Vietnam  on the non-voluntary licence with regard to
inventions are in compliance with the Articles 30 and 31 TRIPS Agreement.  In particular, theconditions for granting of a non-voluntary licence as provided in Article 802 of Civil Code are to be
understood as follows:
Upon request of persons having the need of using a protected invention, the competent
authority may issue a decision ordering its owner to grant, in return for a remuneration, a licence in
case the following conditions are met:
"1. The owner fails to use the invention or his use fails to satisfy the needs of social-
economic development of the country;
2. The person having the need of use has tried to negotiate with the owner but failed to
reach an agreement on a contractual licence, even with a reasonable royalty offer; and
3. The use of the invention at satisfaction of the need of national defence, national
security, human health and other urgent needs of the society".
The non-voluntary licence is granted in accord ance with the procedures provided for in
section 51 Decree No. 63/CP.WT/ACC/VNM/6
Page 159
The party to which a non-voluntary licence is granted shall not transfer the right to use the
invention to the others.
Under the Vietnamese laws, there is no special provision on, or definition of, the obligation of
"working a patent" in the normal sense of "working it industrially", (i.e. manufacture of a "patentedproduct" or "application of a patented industrial process"), as it is interpreted in the "Guidance to the
Application of the Paris Convention for the Protec tion of Industrial Property" published by WIPO in
1991.
The owner of a patented invention is under the obligation of "using" the invention, i.e.
engaging in one or more of the acts defined in  section 34(1) of Decree No. 63/CP, as follows:
- producing the protected product;
- applying the protected process;
- exploiting the protected product;
- advertising, offering, circulating, or stocking for sale of the protected product or a
product manufactured by the protected process;
- importing the protected product or a product manufactured by the protected process.
Question 400.
What is the duration for patent protection under Vietnamese law?  The Civil Code does not
specify.  The previous regulations provided for 15 years and the 1996 Decree provides for
20 years.  Is a circular necessary?
Answer:
According to section 9 Decree No. 63/CP, the te rm of patent protection is 20 years counted
from the official filing date.  The previous provision for 15 year-term has been abolished from
1 July 1996.
Question 401.
Certain exclusions from patent protection are discussed in section VI.2(e), paragraph 4, in
WT/ACC/VNM/2.  These exclusions go well beyond those permitted by Article 27.3 of the
TRIPS Agreement.
Please explain how the exclusions relating to , among others, economic management methods
and systems; educational, teaching, training method and system; computer programs;microorganisms; and methods for the prevention, diagnoses, treatment of diseases in plants will
be revised to comport with the requirement s of the above-referenced TRIPS provision.
Answer:
The current laws and regulations of Vietnam on the subject matters excluded from patent
protection, are in compliance with the requirement of Article 27 of the TRIPS Agreement.  In
particular, section 4(4) Decree No. 63/CP lists the subject matters not protected by the State as
inventions, which are not technical solutions, or not i ndustrially applicable or falling under the list of
permitted exclusions in Article 27(3) of the TRIPS Agreement:
- scientific concepts, principles and discoveries;
- methods and systems for economic organization and management;
- methods and systems for education, teaching and training;
- methods for the training of animals;WT/ACC/VNM/6
Page 160
- systems in regard of linguistics, information, classifications and compiling of
documents;
- designs and planning schemes for construction works, projects for regional
development and planning;
- solutions concerning only the shape of articles and being of an aesthetic nature only;
- conventional signs, timetables, rules and regulations and symbols;
- computer software, layout designs of integr ated circuits, mathematical models, graphs
and the like;
- plant or animal varieties;
- methods for the prevention, diagnosis or treatment of diseases".
Question 402.
The right conferred by a patent in Vietnam is described in section VI.2(e), paragraph 9 in
WT/ACC/VNM/2.  This right does not appear to be fully consistent with that set forth in
Article 28 of the TRIPS Agreement.
Please describe how you intend to meet this obligation.
Answer:
The laws and regulations of Vietnam on the right of patent owners are in compliance with
Article 28 of the TRIPS Agreement as follows:
According to Article 789 of the Civil Code, th e owner of a patent shall have the following
rights:
(a) to exclusively use the patented invention;
(b) to grant licences to other persons to use the patented invention;(c) to request injunction and damage order from the competent State authority.According to section 34 Decree No. 63/CP, the use of an invention provided for in item
(a) Article 796 of the Civil Code are undertaking of the following acts with regard to the protected
invention for commercial purpose:
- making the protected product;
- utilising the protected process;
- exploiting the protected product;
- putting into circulation, advertising, offering or storing for sale a protected product or
a product manufactured by a protected process;
- importing a protected product or a product made by the protected process.
Moreover, according to Article 804 of the Civil Code, within the term of patent protection,
any person who uses a patented invention without  permission of its owner is considered to infringe
the right to the protected invention.
Question 403.
The prior user right and compulsory licensing provisions described in paragraphs 10, 11 and 12
in section VI.2(e) in WT/ACC/VNM/2 do not appear to include all of the safeguards required in
Articles 30 and 31 of the TRIPS Agreement.WT/ACC/VNM/6
Page 161
Please describe how you intend to meet this obligation.
Answer:
The current laws and regulations of Vietnam  on the non-voluntary licence with regard to the
invention has already complied with the Articles 30 and 31 TRIPS Agreement.  Please see the answer
to question 399 above.
Regarding inventions, Vietnamese laws and regulations on non-voluntary licence and right of
prior users are in compliance with the Article 26.2 TRIPS Agreement.  In particular, the right of prior
users with regard to invention as provided for in Article 801 of the 1995 Civil Code is to be
understood as follows:
If before the filing date of an application for an invention patent, a natural or legal person or
another entity has used the invention independently fr om its owner, the former shall, after the grant of
the patent, have the right to continue such use while not being allowed to extend the scope or volume
of use or transfer the right to other persons.
If after the publication date of an application for a Protection Title mentioned in (1) of this
section, such natural or legal person or other entity has increased the scope or volume of use of the
invention in comparison with the scope or volume of use before such date, the increase shall not be
covered by the right of prior use.
Question 404.
The term of patent protection provided is described in paragraph 14 of section VI.2(e) in
WT/ACC/VNM/2 as being “20 years from the priority date”.  Article 33 of the TRIPSAgreement, however, states that the term of pr otection should be measured from the date of
filing, not the priority date.
Please describe how Vietnam intends to meet this obligation.
Answer:
According to section 9 Decree No. 63/CP, term of patent protection is 20 years counted from
the official filing date, and is in compliance with Article 33 TRIPS Agreement.
Question 405.
Article 34 of the TRIPS Agreement provides for a reversal of the burden of proof in certain
circumstances.
Please describe how Vietnam intends to meet this obligation.
Answer:
According to the current laws and regulations of Vietnam, in a civil case, the burden of proof
belongs to the plaintiff.  In order to comply with the requirement provided for in Article 34 of the
TRIPS Agreement, Vietnam intends to introduce the provision to a circular of the Supreme Courtguiding the judgement of cases relating to industrial property rights.  This plan is scheduled to be
completed by the year 2000.WT/ACC/VNM/6
Page 162
(g) Layout designs of integrated circuits
Question 406.The TRIPS Agreement requires that Members provide protection to the layout-designs
(topographies) of integrated circuits for at least 10 years.  Please describe how you intend to
meet this obligation to protect layout designs of integrated circuits.
Answer:
Vietnam does not yet have legislation on the protection of layout designs of integrated
circuits.  The promulgation of relevant laws and regulations in order to comply with requirements ofthe TRIPS Agreement is being considered and scheduled to be completed by the year 2000.
Question 407.
Could Vietnam advise why it has not yet considered the issue of accession to the treaty on
intellectual property in respect of integrated circuits" (Question 531, WT/ACC/VNM/3/Add.2)?
Answer:
Please see answer to question 343 herein.
3. Measures to Control Abuse of Intellectual Property Rights
Question 408.
Are there criminal penalties for wilful trademark counterfeiting?
Answer:
Article 167 Criminal Code of Vietnam provides for crimes of counterfeiting and applicable
penalties as follows:
“1. Any person involved in the production of, or the trade in, counterfeit goods shall be
sentenced to imprisonment of one to seven years.
2. Any person having committed a crime shall be sentenced to imprisonment from five
to fifteen years in the following cases:
(a) Counterfeit goods are foodstuffs; medicines, prophylactics, construction materials,
fertilizers, pesticides;
(b) The crime has been committed organisationally or professionally;
(c) The crime has been committed  by taking advantage of his or her position, power or
of the name of State authorities, social organisations;
(d) Counterfeit goods are of great quantity and result in unlawful profits;
(e) The crime is seriously repeated.
3. Commitment of the crime with special seriousness shall be sentenced to
imprisonment from 12 to 20 years, life imprisonment or death.”
Question 409.
In the response to question 494 (WT/ACC/VNM/3/Add.2), Vietnam states that its TRIPS
enforcement legislation will be in force by 1 January 2000.WT/ACC/VNM/6
Page 163
- Could Vietnam supply more detailed information about the timetable for such
legislation?
- Please outline and describe a timeline for legislative action.- Is this the minimum timeframe possible needed to pass the legislation?- Will the legislation be passed in several small laws or in a few major pieces of
legislation?
Answer:
The Government, the People Supreme Court, Ministry of Commerce, Ministry of Finance,
Ministry of Science, Technology and Environment, Ministry of Culture and Information, General
Department of Customs are going to promulgate re gulations on the settlement of civil disputes, on
administrative measures against IP violations, infringements. Such regulations on IPR enforcementare to be promulgated by the year 2000. The tentative timing is minimum timeframe possible needed
to pass the legislation and is subject to possible change due to the reasons explained in section
Intellectual Property Policy above. Please see answer to the first question of section 1. General, (a)
Intellectual Property Policy.
Question 410.
In its response to question 496 (WT/ACC/VNM/3/Add.2), Vietnam states that it is still in the
process of drafting regulations to deal with IPR violations.  Currently, there are currently only
procedures for administrative violations.
- Could Vietnam supply more information co ncerning the coordination between the three
agencies?  Is there any degree of overlap betw een the functions of the different agencies?
Is there any area that is not covered?
- How do agencies responsible for attracting  foreign investment interface with these
agencies?  What agency grants production licences?  What criteria does theGovernment use when it processes a manufacturing licence?
Answer:
Please see answer to question 361 herein.
Regarding information about foreign investment activities, in general, administrative
authorities of industrial property have no direct relation with those of investment.
Question 411.
Vietnam has outlined many of the provisions of its existing intellectual property regime which
do not conform with the TRIPS Agreement.  Extensive changes to the existing legal framework
need to be made to provide adequate protection for trademarks, copyright, patents and other
intellectual property rights.  Of concern is the acknowledgement that regarding, enforcement,
"there are no special provisions on procedures and remedies against infringement of intellectual
property rights" (Question 495, WT/ACC/VNM/3/Add.2).
- Can Vietnam provide details of the steps to it needs to take to address these
shortcomings?WT/ACC/VNM/6
Page 164
- Furthermore, could Vietnam detail the steps it  will take to ensure  that the enforcement
measures are transparent and accessible to foreign companies?  That is, IPRs provided
for under legislation are only valuable if IPR holders can effectively access the
enforcement procedures.  How will Vietnam make this information available to foreignfirms?
Answer:
- The Government is going to promulgate a number of Decrees providing in details the
protection of certain new objects, namely (i) undisclosed information, (ii)
geographical indications of origin, (iii) repression of unfair competition, (iv) plantvarieties, (v) layout designs of integrated circuits, (vi) trade names;
- The Government is going to make amendments to the Decree 63/CP (of October 24,
1996) on industrial property, which would include the following: (i) additional
provisions on the protection of well known trademarks and broadening of the scope
of trademark protection, (ii) broadening of the scope of industrial design protection,
(iii) broadening of the protection term to 20 years for patents granted under the
former protection regime;
- The Government is going to make amendments to the Decree 76/CP (of November
29, 1997) on copyrights, which would include (i) additional provisions on the
application of international treaties on copyrights and other matters;
- The People Supreme Court, the Ministry of Commerce, the Ministry of Finance, the
Ministry of Science, Technology and Environment, The General Department of
Customs are going to promulgate regulations relating to civil litigation and
administrative measures against violations, infringements of intellectual property
rights.
The majority of the above-mentioned legislation would be promulgated in 1999 and the rest
in 2000.
The legislative action plan might be modified in terms of its contents as well as of timetable
because of the following:
The plan was set out based on Vietnam’s objective viewpoint on its national legal system and
the requirements of the TRIPS Agreement;
There is a great deal of laws and regulations to be promulgated or amended, including
legislation towards meeting the WTO’s requirements in the field of intellectual property and otherfields, which result in a big burden to the State’s legislative plan.
It should be understood that the above-mentioned legislative action plan is just confined to the
aim of upgrading the legal system so as to comply with the TRIPS Agreement standards. Vietnam is
also to prepare a range of other necessary conditions to ensure effective enforcement of new laws andregulations, including the organization of administrative mechanism, the improvement of in
infrastructure, human resource development, the awareness campaign of laws and regulations to the
public.
Being a poor country among the developing world, with an intellectual property protection
system having been developed for just over a decad e, Vietnam is facing many difficulties. Therefore,
in order to complete the action plan of legislation and enforcement preparation, it needs and desires to
receive technical assistance from other countries, particularly from the WTO member developed
countries.WT/ACC/VNM/6
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To ensure the transparency of, and accessibility to, enforcement measures for both the
Vietnamese and foreign IPR owners, all laws and regulations on enforcement procedures of
intellectual property rights, including the planned legal documents mentioned above when
promulgated, will be published in accordance with Section 10 of the Law on the promulgation of laws
and regulations and Section 5 of the Government’s Decree No. 101/CP A of 23 September 1998detailing some provisions of that Law as follows:
“ Laws and regulations other than that of State secrets shall be published on Official Gazette,
placard, or announced on mass media.
Regulations of the State authorities under the Central Government shall be published on the
Official Gazette of Socialist Republic of Vi etnam within fifteen days from the date of
announcement or promulgation.”
“Official Gazette is publicly issued and widely distributed to the State authorities, social
organisations, economic organisations, armed forces and the people, including foreign
individual, organisations ... ”
4. Enforcement
Question 412.Based on earlier comments regarding Chapter III-15(2) and 16, are the civil/administrative,
criminal and border enforcement remedies of TRIPS Articles 41-61 available in the Civil or
Criminal Code or in the Customs Law or ot her codes applicable to the protection of
trademarks?
- Do judicial/quasi-judicial/administrative entities of have power to require the
production of evidence?
- Do judicial/quasi-judicial/administrative entities have the authority to order a party to
desist from infringing activity, e.g., prevent import, entry into the stream of commerce?
- Do judicial/quasi-judicial/administrative entities have the authority to order the
payment of damages as compensation to the right owner and the payment of expenses?
Answer:
Please see answers in the Trademark section.
Question 413.
- Do judicial/quasi-judicial/administrative entities have the authority to order that
infringing goods be disposed of outsid e the channels of commerce, without
compensation?  Can such authorities also order the disposal of the materials and
implements, whose predominant use is to produce infringing goods?
- Do judicial/quasi-judicial/administrative entities have the authority to order a right
owner to compensate a suspected infring er if enforcement measures are abused?
- Who is the competent authority for bord er measures against the importation of
infringing articles?  (Articles 51-60)WT/ACC/VNM/6
Page 166
Answer:
Please see answers in the Trademark section.
Question 414.
Regarding the response to question 493 in WT/ACC/VNM/3/Add.2, we would appreciate more
detailed information regarding the structure and functioning of Vietnam's enforcement regime.
For example, what government agencies have the lead in enforcement?
Answer:
The course of enforcement of IPR is entrusted to no special agency other than judicial and
administrative authorities responsible for enforcement of law in general.
The judicial authorities responsible for enforcement of IPR include the People Supreme Court
and provincial People courts, having, as legal basis for their activities, Ordinance on civil procedures
and Criminal Code.
The administrative authorities responsible for enforcement of IPR include People Committees
of all levels, market control agencies, economic police, customs agencies, inspectorate of Science,Technology and Environment. The legal basis of their activities includes Ordinance on measures
against administrative violations of 1995. Each of the agencies functions independently in the
principle of jurisdiction provided for in Article 37 Ordinance on measures against administrative
violations as follows:
- “People Committees of all levels have jurisdiction over violations in the fields falling
under local administrations.
- State administrative specialised authorities have jurisdiction over violations in the
fields falling under their management.
- In case an administrative violation over which different authorities have jurisdiction
shall be handled by the authority who receives the case first.”
The administrative system plays an important role in the enforcement. Compared to judicial
procedures, administrative procedures have a disadvantage of limit to damages under one million
Vietnamese dongs, but they have an advantage of being fast, simple and cheap. Therefore, in the
situation  that almost infringements are minor and unintentional, and injunctions are powerful enough
to prevent further infringement, right owners rely heavily on administrative authorities, especiallymarket control agencies.
Question 415.
How many staff are/will be devoted to IPR crime?  If no staff are devoted to IPR crimes, are
regular enforcement officials provided incentives to go after IPR crimes?
Answer:
The course of preventing and combating IPR crimes is entrusted to no specialised staffs other
than the staffs responsible for the enforcement of law in general. There are no special measures as
incentives for the activities either.WT/ACC/VNM/6
Page 167
Question 416.
How do the different enforcement agencies communi cate with each other and coordinate their
efforts?
Answer:
Please see answer to question 414 herein.
5. Laws, Decrees, Regulations and other Legal Acts Related to Intellectual Property Rights
The response to question 532 (WT/ACC/VNM/3/Add.2) is not helpful, in that the Working
Party would be willing to review draft legislation, even  if only on an informal basis, to assist Vietnam
in establishing a TRIPS consistent IPR regime.
Question 417.
Would Vietnam please provide details on which provisions in the intellectual property chapters
of the 1995 Civil Code or other implementing regulations would require amendment to bring
them into compliance wi th the Berne Convention (Questions 498 and 499,
WT/ACC/(VNM/3/Add.2).  Similarly, there are no details on the changes to the Copyright Law
which would be necessary to comply with the Geneva Phonogram Convention (Question 501,WT/ACC/VNM/3/Add.2).
Answer:
In relation to the Berne Convention: See Answer to Question 494 WT/ACC/VNM/3/Add.2.
In relation to the Geneva Convention: S ee Answer to Question 501 WT/ACC/VNM/3/Add.2.
However, there would be no need of amendment to the laws or regulations to comply with provisions
of the Geneva Convention, as the TRIPS Agreement does not so require.
Question 418.
Is there a separate law to protect against unfair competition?
Answer:
Vietnam has no separate law on the protection against unfair competition.  The promulgation
of a legal document on the protection against unfair competition in compliance with the requirement
of TRIPS Agreement is being considered and scheduled to be completed by the year 2000.
Question 419.
Who is the minister responsible for undertaking amendments to the copyright ordinance?
Answer:
The question is in the "Ordinance on Copyright Protection", which was published on July 1,
1996.WT/ACC/VNM/6
Page 168
VI. TRADE-RELATED SERVICES REGIME (WT/ACC/VNM/3/Add.2)
1. General
This delegation appreciates the work carried out by the Government of Vietnam to provide
additional materials on its trade in services regime, including WT/ACC/VNM/5 - Information on the
Existing Regime in the Area of Services a nd WT/ACC/VNM/3/Add.2 - Replies to Questions on
Vietnam’s Trade in Services Regime.
The information contained in these documents, as well as earlier documents submitted to
Working Party members, provides a useful basis for continuing discussions with Vietnam on how its
services regime compares with requirements under the General Agreement on Trade in Services.
We look forward to additional updates on how Vietnam’s services regime is evolving.  This
would include copies of any new  laws and regula tions which have an impact on trade in services.
We urge Vietnam to continue its internal work to review the obligations of the GATS
framework, including those provisions relating to transparency, MFN treatment and application of
domestic regulations, and make any changes necessary to its laws, regulations or practices to meet
those requirements.
For Vietnam’s accession to advance, Vietnam must give serious consideration  to how to
establish more predictability and transparency in its regime.  The  information submitted by Vietnam
indicates that one or many approvals may be required to establish commercial presence to supply
services.  These approvals often are required or duplicated  at many levels of Government.  This is not
the type of predictability or transparency required of WTO Members and would not seem to
contribute to the growth and diversity of the Vietnamese economy.
We urge Vietnam to review the requirements of the GATS regarding domestic regulation and
make any changes necessary to its regime to meet th ese requirements.  This includes ensuring that all
measures affecting trade in services are administered in a reasonable, objective and impartial manner.
This also includes establishment of judicial, arbitral or administrative tribunals or procedures allowing
for prompt review of administrative decisions affecting trade in services.
Vietnam’s response to WT/ACC/5 provides a useful snapshot of current services laws and
regulations applied by the Government of Vietnam and usefully includes reference to a number of
sectors.  However, as Vietnam continues discussi ons with Working Party members, it should keep in
mind the benefits of a forward looking package of liberalization commitments, including: additional
sectors not included in WT/ACC/5; allowing a full range of commercial presence (subsidiaries, jointventures, branches, representative offices, etc.); eliminating quantitative restrictions on number of
services suppliers;  and allowing service suppliers to provide services to all business and consumers
within Vietnamese market.
Vietnam also should keep in mind the importance of liberalising certain services sectors to
infrastructure and human resource development.  These key sectors include distribution services
(wholesaling, retailing, franchising), telecommunications services (both basic and value-added
telecom), transportation services, financial services (insurance, banking, securities), other
communications services (audio-visual services; land-based courier services) and environmental
services.  Liberalization of these sectors will contribute to the continued and diversified growth of theVietnamese economy.
We look forward to continuing our discussions with Vietnam on the benefits of liberalising
and establishing more transparency and predictability of its trade in services regime.WT/ACC/VNM/6
Page 169
Specific Service Sectors
1. Business Services
(a) Professional Services
(i) Legal services
Question 420.Are foreign lawyers who have certificates issued by other countries allowed to render legal
services in Vietnam?  The requirements and restrictions for foreign lawyer's legal services inVietnam should be clearly explained.  We would particularly like Vietnam to specify the scope
of the services which foreign lawyers are allowed to provide in Vietnam.
Answer:
According to the Decree No. 42/CP dated 8 July 1995 issued by the Government
promulgating regulations on Foreign Law Firms' Practices in Vietnam, foreign lawyers having foreign
licences of certificates are able to practice as th e legal consultant in Vietnam provided that the
following requirements are to be satisfied:
(a) previous experience in providing legal consultancy services for 5 or more years in a
foreign law firm;
(b) not be subject to criminal prosecution, serving a sentence, or have a current criminal
conviction;
(c) be of goodwill towards the State of Vietnam.
Foreign lawyers in Vietnam are permitted to advise on foreign laws and international laws in
the fields of business, investment, and commerce only.
Foreign lawyers are not permitted to advise on Vietnam laws such as: explaining the
Vietnam's legal regulations; giving advise on application of Vietnam's laws; drafting contracts and
other documents applying Vietnam's laws.
Foreign lawyers are not permitted to participate in the capacity of legal counsel or
representative of any client in any proceedings before the courts of Vietnam.
Question 421.
We note that subject to certain conditions, forei gn law firms may be present in Vietnam in the
form of a branch.  Are these branches allowed to practice Vietnam law or are they only allowed
to practice the law of their host countries?
Answer:
Pursuant to the Decree 92/ 1998/ND-CP of the government dated 10 November 1998 on Legal
Constancy Activities of Foreign Lawyers Organization in Vietnam, foreign lawyers of a branch of
foreign law firm in Vietnam are allowed to advise on foreign laws and international laws in business,
investment and trade; and are not allowed to directly participate in the capacity of legal counsel and
representative of any client in any proceeding before the court of Vietnam. However, branch of a
foreign law firm may sign a legal consulting cooperation contract with a Vietnamese legal service
supplier to receive advice on Vietnamese laws.WT/ACC/VNM/6
Page 170
Question 422.
We note that the licence duration of a foreign law firm branch is five years, and may be
extended for a period of not more than 3 years p er extension.  For greater transparency, would
the Vietnamese Government list the criteria on which the applications for extension areconsidered.  Furthermore, does the Vietnamese Government have any plans to relax this
restriction since the prescribed duration of licence creates uncertainty for foreign law firms
which intend to set up offices and provide services in Vietnam?
Answer:
Pursuant to the Decree 92/ 1998/ND-CP of the government dated 10 November 1998 on Legal
Consultancy of Foreign Lawyers Organization in Vietnam, the duration of a licence is 5 year and
subject to be extended for not more than 5 year per each extension.
The extension for branch of a foreign law firm in Vietnam shall be considered on a basis of
application for extension and the operation report of the branch of foreign law firm in Vietnam.
Question 423.
Vietnam has indicated that no law firm may establish more than two branches in Vietnam.  Are
there also geographic restrictions?
Answer:
Pursuant to the Decree 92/1998/ND-CP by  the Government dated 10 November 1998 on
Legal Consultancy of Foreign Lawyers Organizati on in Vietnam and the previous Decree 42/CP of
the Government dated 8 July 1995, a foreign law firm is allowed to establish up to 2 branches in
Vietnam. These branches may be located anywhere through out of Vietnam. In case a foreign law
firm establishes two branches in a province or ci ty under central authority, names of the two branches
must be followed by number II or I. This regulation is not a geographical restriction to foreign
lawyers foreign law firms in provision of legal consulting services but a result of previous opinions
exchange between foreign law firms and competen t authorities of Vietnam in the development of
legal framework for activities of foreign lawyers in Vietnam.
Question 424.
Restrictions also apply to the forms of business which foreign law firms can undertake.
Vietnam has indicated that "direct Vietnamese participation in the branch is not permitted"(Question 541, WT/ACC/VNM/3/Add.2).  Are there any plans to ease this requirement?
Answer:
Pursuant to the Decree 92/ 1998/ND-CP of the government dated 10 November 1998 on Legal
Consultancy of Foreign Lawyers Organization in Vietnam, foreign law firms are not permitted to
employ Vietnamese lawyers working for their branches. However, they may come into a legal
consulting cooperation contract with a Vietnamese legal service supplier to receive advice on
Vietnamese laws and to advise on international laws and laws of a third country.WT/ACC/VNM/6
Page 171
(ii-iii) Accounting, auditing and bookkeeping services; taxation services
Question 425.It is mentioned that only up to five firms with foreign capital are licensed.  What are the criteria
for the granting of a licence?  What are the cri teria for selection if more than five firms with
foreign capital apply for the licence?
Answer:
Previously, licensing has been considered on a case-by-case basis. As informed, Vietnam
intends to maintain the number of 5 existing fo reign accountancy firms from now on to the year 2000.
After that year, Vietnam will consider to relax this restriction.
Question 426.
Is it possible for foreign and local accountancy firms to establish partnerships?
Answer:
Vietnam does not have regulations on the establishment of partnership accountancy firms in
Vietnam
Question 427.
Are there limitations on the number of licences granted to foreign accountancy firms?
Answer:
From now up to the year 2000, the number of licenses for wholly owned foreign accountancy
firm establishment shall be maintained at 5. After the year 2000, depending on development of the
market demand and the accountancy activities in Vietnam, Vietnam will consider the possibility of
granting more licenses for foreign accountancy firms to operate in Vietnam.
(iv-vii) Architectural services; Engineering serv ices; Integrated engineering services; Urban
planning
Question 428.
We note that foreigners who wish to provide a rchitectural, engineering, integrated engineering
and urban planning services under mode 4 must be 'permanent residents' of Vietnam.  What is
the definition of a permanent resident?  Does the requirement apply to those employed by firms
which gain access under mode 3 (i.e. commercial presence)?
Answer:
Pursuant to the Ordinance on Migration and Immigration, Residence and Movement of
Foreigners in Vietnam in 1992, permanent foreign re sident is a foreigner residing in Vietnam with
unspecific and unlimited duration of stay in Vietnam.
Article 7 of the Decree 07/1998 ND-CP dated 15 January 1998 by the Government on
Guidance of the Implementation of Law on the Encouragement of Domestic Investment (revised)
stipulates that “ foreign permanent resident in Vietnam is a foreigner who was granted certificate of
local residence in Vietnam”.WT/ACC/VNM/6
Page 172
This requirement is applicable to foreign employees working in companies which are
permitted to have access to the market through commercial presence (mode 3).
Question 429.
We note that foreign services suppliers have to apply for a permit on a case-by-case basis to
implement the project after gaining award or bein g selected for contract implementation.  What
is the basis for granting the permit?  Are th e foreign suppliers required to employ Vietnamese
or foreigners with permanent residency in executing the projects?
Answer:
Please refer to answer 434 herein.
(f) Other Business Services
(viii) Mineral exploration services
Question 430.It is stated that five exploration licences are granted to each company.  Is there a limit on the
number of companies that are allowed to provide such services?
Answer:
Article 24 of the Decree 68/CP dated 1 November 1996 stipulates that individuals and
organisations may be granted up to 5 exploration licenses.
There is no limitation on the number of companies to be licensed. However, on the same
exploration area, the number of license to be granted is not more than one (exclusive right of
exploration). New license may only be  issued after the previous license is expired or the investment
is withdrawn.
2. Communication Services
Question 431.Foreign capital contribution is limited to 49 pe r cent of the total registered capital of the
business co-operation contract project.  Are there any plans to relax this restriction?
Answer:
At present, Vietnam is developing a master plan for the telecommunications sector that will
be linked to Vietnam's integration process. The work, however, will take certain time.
Question 432.
Please provide more information on how the busin ess cooperation contracts operate in practice.
Do foreign companies maintain any ownership of facilities (e.g., switches, transmission
equipment) which are used in the services?WT/ACC/VNM/6
Page 173
Answer:
Business cooperation contract (BCC) is a contractual document signed by two or more parties
defining obligations and resulted in the sharing of business operation without the need to establish a
new legal entity.
In BCC, equipment or facilities which are purchased by foreign investment capital  belong to
foreign ownership. In BCC, Vietnamese partners can hold and use the facilities while foreign partners
have final decision on them in conformity with prov isions mutually agreed by parties to the contract.
Question 433.
Please provide information on any existing plans to further liberalize this sector, i.e., to allow
the establishment of commercial presence to supply services (not just as a business cooperation
contract).
Answer:
Vietnam will consider the possibility of permitting other forms of investment whenever it is
appropriate .
3. Construction and Related Engineering Services
Question 434.We note that foreign construction subcontractors are allowed to provide services only after
winning a bid or being chosen in a particular project.  We would like to know the conditions forbidding and the selection criteria.
Answer:
A participating tenderer must satisfy all the following conditions:
- Having a business licence or practising licence.
- Being technically and financially eligible to satisfy the requirements set out in the
tender invitation documents.
- Submission of properly prepared tender do cuments. A tenderer may, either as an
individual tenderer or in partnership, submit only one tender in respect of each tender
package.
 Main Selection Criteria:
- Technical and quality requirements.
- Capability and experiences of tenderer.
- Financial matters and price of the contract.
- Time schedule for implementing the contract.
A foreign tenderer participating in an international tender organised in Vietnam must
undertake to enter into a partnership with a Vietnamese contractor, or to use Vietnamese sub-contractors for construction and installation and to procure suitable materials and equipment
manufactured or produced in Vietnam.WT/ACC/VNM/6
Page 174
Question 435.
Vietnam has indicated that there is conditional licensing for foreign construction firms
(Question 541, WT/ACC/VNM/3/Add.2 refers).  Furthermore, "in certain special cases, the
Government may allow a 100 per cent foreign invested capital company to be setup"(Question 571, WT/ACC/VNM/3/Add.2 refers), although operations can usually only be
implemented through joint ventures.  What are these certain special cases?
Answer:
These special cases are:
- Application for investments by overseas Vietnamese residing abroad; or
- Establishment on the basis of bilateral agreement .
4. Distribution Services
Question 436.
At the last Working Party meeting, Vietnam indi cated that foreign enterprises had rights to
import and export goods serving their production requirements, but they had no right to import
and distribute goods and services in Vietnam.  How will Vietnam address Members' concerns inthis area?
Answer:
Foreign investors are allowed to sell the products which they produce in Vietnam.
The rights to distribute other products (that also include imports) will be subject to
commitments in the distribution service sector which will be addressed later in the accession process.
The government of Vietnam does not encourage foreign invested companies to involve in
distribution services, especially in whole sale, retail and commission agent. Vietnam only permits
foreign participation in the forms of business cooperation contract (BCC) and joint venture in duty-free shops at border gates and airports.
Enterprises with foreign owned capital are permitted to be commission agents for products
and services produced by domestic economic organisations and foreign invested companies in
Vietnam . These products and services are subject to the following conditions:
- legally produced in Vietnam;
- permitted to be commercialised in the Vietnamese market by the competent
authorities;
- corresponding to the business lines of companies as specified in the investment
licence.
When a foreign invested company wants to become a commission agent, he may sign contract
with economic organisations concerned. After signing the commission agent contract, the foreign
invested company must inform the Ministry of Planning and Investment and the provincial People’sCommittees where the company or his branches are located.WT/ACC/VNM/6
Page 175
Question 437.
Re. Distribution services, environmental services, audio-visual services:  These sectors were not
included in the recently submitted information, including WT/ACC/5.
Please provide information on the legal regime, any regulatory regime and current market
access for foreign service suppliers in Vietnam for these sectors.
Answer:
Vietnam economy is under the transitional period. Many legal documents are needed to be
amended and supplemented including regulations on the above service sectors. Therefore, Vietnamhad not included these sectors in the document WT/ACC/VNM/5 which was circulated among
members of the Working Party. However, Vietnam is considering the possibility of offering initial
commitments in these services in due course.
7. Financial Services
(a) All Insurance and Insurance-Related Services
Question 438.
It is stated that Vietnamese individuals and organisations are not allowed to purchase insurance
abroad for risks arise in Vietnam.  We would like to know whether there are plans to relax the
restriction.
Answer:
Vietnam does not have plan to relax this restriction.
Question 439.
It is stated that foreign invest ed insurance enterprises may be su bject to limitations on scope of
clients and operations.  What are the specific limitations?
Answer:
Please refer to the document WT/ACC/VNM/5.
Question 440.
The legal capital required for foreign wholly-o wned companies and joint venture enterprises
are specified in the schedule.  What are the corresponding requirements for domestic
enterprises?
Answer:
The legal capital required for domestic companies is as follows:
- For Vietnamese insurance companies: 20 billion Vietnamese Dongs or 2 million US
dollars.
- For Vietnamese insurance brokers: 1 billion Vietnamese Dongs or 100,000 USD
dollars.WT/ACC/VNM/6
Page 176
Question 441.
Vietnam has indicated that "the application for establishment of joint venture, 100 per cent
foreign owned and branches of foreign insurance companies are approved on a case by case
basis with due consideration to the level of  development of the Vietnamese insurance
market"(Question 586, WT/ACC/VNM/3/Add.2 refers).  What criteria are used to determine
the level of development of the insurance market?
Answer:
The criteria used to determine the development of insurance market include:
- The development of insurance market based on assessment of social-economic
situations, geographical scope of supply and kinds of insurance activities.
- Capacity of insurance and reinsurance companies of Vietnam (which include, inter
alia, the amount of capital, qualifications, technical professional and management
skills and  local and international transaction network).
- Financial capacity of domestic insurance companies.
- International competitiveness of Vietnam insurance industry.
- Number and forms of insurance companies.
Question 442.
What limitations are in place on operatio ns of life, general and reinsurance firms?
Answer:
Please refer to the document WT/ACC/VNM/5.
Question 443.
Does Vietnam have any plans to further liberalize this sector (including removal of limitations
on number of suppliers)?
Answer:
Vietnam consider that further liberalisation of insurance services will depend on the level of
economic development and the needs of insurance market of Vietnam. At the time being, Vietnam has
no additional plan to further liberalize this sector.
Question 444.
Please provide more information on how the insurance sector is regulated.  Can Vietnam
confirm that these regulations meet the requirements of the GATS, including GATS Article VI?
Answer:
Recently, regulations on issuance of certificate of qualification to operate in insurance
business are stipulated in Decree on Insurance Business Activities of the Government. The Law onInsurance Business, which is under drafting, wi ll meet requirements of GATS, including GATS
Article VI.WT/ACC/VNM/6
Page 177
(b) Banking and Other Financial Services
Question 445.We note that non-State-owned commercial banks may apply for the "ceiling borrowing"
approved by the State Bank.  We would like to know the definition of "ceiling borrowing".
Answer:
Article 79 of the  Law on credits institutions, which approved by the National Assembly on
12 December, 1997 stipulates the maximum lending limit to a single customer as follows:
Total outstanding loans extended to a single customer shall not exceed 15% of the own capital
of a credit institution except in the case of loans to be financed from trust funds of the Government,
other organisations or individuals or where borrower is another credit institution.
In cases where the loan required by a single customer exceeds 15% of the own capital of a
credit institution or if customers wish to be fina nced from various sources, credit institutions may
arrange a syndicated loan in accordance with the regulations of the Governor of State Bank of
Vietnam.
In special case, if the loan is required for the implementation of socio-economic task but the
syndicated loans of credit institutions can not meet the borrowing requirement of a customer, the
Prime Minister shall decide on the maximum lending limit on case-by-case basis.
Question 446.
We note that State-owned enterprises can rece ive foreign loan only if they, among other
conditions, have profitable and sound operation.  We would like to know with whom the
judgement will be vested, the lender, the St ate-owned enterprises or certain Vietnamese
authorities.
Answer:
Decree No 90/1998/ND-CP of the Govern ment dated 7 November, 1998 stipulates:
Medium and long-term  external borrowings of enterprises shall have to be within the annual
total ceiling of foreign loans  approved by the Prime Minister and meet the conditions on medium and
long-term external borrowings regulated by the  Stat e Bank of Vietnam from time to time; loans shall
have to be registered with the State Bank of Vietnam and certified by the State Bank; periodical report
on loan disbursement and debt service shall be sent to State Bank of Vietnam in accordance with
reporting regime issued by State Bank of Vietnam.
For state-owned enterprises: Prior to signing ex ternal borrowing agreements, opinions of the
State Bank of Vietnam on such agreements shall have to be obtained. In case of having guarantee by
the Government, it  shall be subject to stipulations  on guarantee by the Government in the Regulations
on management of external borrowing and repayment.
Short-term foreign loans of enterprises shall meet conditions on short-term borrowings
stipulated by the Governor of State Bank from time to time. The Governor of State Bank of Vietnam
shall submit to the Prime Minister for approval the total annual ceiling on short-term foreign loans,
including deferred L/C for banks.WT/ACC/VNM/6
Page 178
Question 447.
We noted that licences for foreign credit institutions is decided by the State Bank Governor.
We would like to know the criteria for granting  licence and whether there is a limit on the
number of licences to be granted.
Answer:
Based on the need of economic and financial market development, the Governor of State
Bank of Vietnam may consider and make decisions on granting license to foreign credit institutions
operating in Vietnam.
The conditions for issuance of license for establishment and operation are:
Representative office in Vietnam:- The foreign credit institution is a legal entity permitted to carry out banking activities
outside its home country;
- The foreign credit institution is permitted by the relevant authorities of its home
country to set up a representative office in Vietnam;
- The foreign credit institution maintains cooperative relationship with Vietnamese
economic organisations.
Foreign bank branch in Vietnam:- There is a demand for banking activities in the area(s) where such operations are
applied for;
- The executives and directors shall possess full capacity of civil acts and appropriate
professional qualifications;
- Having feasible business plan;
- The legal capital is US$ 15 (fifteen) million;
- The foreign bank is permitted by the relevant authorities of its home country to set up
a branch in Vietnam;
- The relevant authorities of its home country ensure in writing their capacity to
supervise all operations of that branch;
- The foreign bank undertakes in writing to be liable for all obligations and
commitments of its branch in Vietnam.
The establishment of joint-venture bank, joint-venture finance leasing company, 100%
foreign owned finance leasing company:
- There is a demand for banking activities in the area(s) where such operations are
applied for;
- The founding members are organisations which, or individual who, have financial
capability and prestige;
- The executives and directors shall possess full capacity for civil acts and appropriate
professional qualification;
- Having a charter for organization and operation in conformity with the provisions of
the Law on credit institutions and other applicable provisions of the relevant Laws;
- Having feasible the business plan;
- The foreign credit institution is permitted by the relevant authorities of its home
country to carry out banking activities;
- The legal capital of joint-venture bank is US$ 10 (ten) million;WT/ACC/VNM/6
Page 179
- Capital contribution by foreign partner in joint-venture finance leasing company shall
not be less than 30% of the charter capital;
- The legal capital of joint-venture finance leasing company and 100% foreign owned
finance leasing company shall not be less than US$ 5 (five) million.
Question 448.
We note from page 17 (WT/ACC/VNM/5) that the Governor of the State Bank "shall decide on
the establishment of financing and banking service companies in Vietnam".  What is the
relationship between this limitation and the other commitments in the "Banking and Financial
Services Sector".  Does the former override other terms and conditions stated in this section?
Answer:
At present, the State Bank of Vietnam has tabled its existing regime on banking services to
WTO but no commitment in banking services has been made.
The Governor of State Bank of Vietnam shall be the one who considers and decides on the
establishment of credit institutions operating in Vietnam. The activities and scope of operations of
credit institutions in Vietnam are subject to license issued by the Governor  and other regulations of
the State Bank and concerned agencies.
Question 449.
It is stated on page 14 (WT/ACC/VNM/5) that the licence duration of a branch of foreign bank
or a joint -venture bank in Vietnam is not more than 20 years; and the licence may be extended
by the State Bank for a period not more than th e initial licence.  Would like to know under what
conditions will the State Bank's approval be gi ven; and whether there are plans to relax the
restriction in order to provide greater certainty and incentives to foreign investors.
Answer:
The foreign credit institution wishing to extend the duration of operation shall submit
application and dossier  asking for extension to the State bank of Vietnam at least 180 days and 30days prior to the termination of their operations  as  stipulated in Operation licenses for foreign credit
institutions and representative offices of foreign credit institutions, respectively. The State Bank of
Vietnam shall decide on the extension based on the need of economic  and financial market
development  in Vietnam.
At present, State Bank of Vietnam is considering to extend the operation period of joint-
venture banks from 20 years to 30 years.
Question 450.
Are subsidiaries permitted?
Answer:
Article 32 of  the Law on Credit institutions, which came into effect as of 1 October, 1998
stipulates that credit institutions are permitted to establish a subsidiary company of separate juridical
person and independent accounting status by using its own capital to engage in some financial,
banking and insurance businesses in accordance with Government’s regulations. However, specific
guidelines have not yet been issued.WT/ACC/VNM/6
Page 180
Question 451.
Is it possible for a foreign bank to acquire partial or whole ownership of a local bank?
Answer:
Under Decision No 228/QD-NHNN5 dated 2 Decembe r, 1993 of the Governor of State Bank
of Vietnam, Vietnamese joint-stock commercial banks, joint-stock finance companies are permitted to
mobilise equity capital from foreign shareholders in following proportions:
The maximum of equity capital contribution by a foreign legal entity or natural person is 10%
of the charter capital.
The maximum of aggregate equity capital contribution by all foreign shareholders is 30% of
the charter capital.
Question 452.
Are there restrictions on bank branching rights, for example, numerical and geographic
limitations (Questions 547 and 549, WT/ACC/VNM/3/Add.2 refer)?
Answer:
The conditions  for  establishment of foreign bank branch in Vietnam are as follows:
- There is a demand for banking activities in the area(s) where such operations are
applied for;
- The executives and directors shall possess full capacity of civil acts and appropriate
professional qualifications;
- Having feasible business plan;
- The legal capital is US$ 15 (fifteen) million;
- The foreign bank is permitted by the relevant authorities of its home country to set up
a branch in Vietnam;
- The relevant authorities of its home country ensure in writing their capacity to
supervise all operations of that branch;
- The foreign bank undertakes in writing to be liable for all obligations and
commitments of its branch in Vietnam.
Licensing for establishment of a foreign bank branch in Vietnam is based on the needs of
economic and financial market development in Vietnam
Question 453.
Is it necessary for a representative office to be established before a branch licence can be
granted?  If so, must the representative office be in operation for a certain period of time before
this can occur?
Answer:
It’s not necessary for a foreign credit institution willing to establish branches in Vietnam, to
set up representative office for certain period of time prior to receiving the license for branch’sWT/ACC/VNM/6
Page 181
establishment. When foreign credit institution wants to establish a branch in Vietnam, an application
shall have to be submitted to the State bank of Vietnam for approval.
Question 454.
We note that for insurance comp anies the representative office must be in operation for 3 years
before a branch licence can be granted.
Are there any additional regulations applying to the employment of foreign staff (other than
indicating the relevant experience and qualifications of foreign staff employed, page 41,
WT/ACC/VNM/3/Add.2 refers)?  For example, are there regulations affecting the transfer of
staff between operations within Vietnam?
Answer:
Vietnam does not have additional regulations on foreign employees other than appropriate
qualifications and skills criteria and procedures. At present, Vietnam does not have any regulations ontransfer of staff between operations within Vietnam.
Question 455.
What limitations exist in relation to the provision of funds management and pension funds
services?
Answer:
According to the existing regulations, the social security funds are uniformly created by the
State from the centre to local level. Pension funds, as like other social security funds, are self
accounting entities, secured and uniformly managed by the State in accordance with the State's
financial regulations.
Question 456.
Does Vietnam have plans to allow wholly foreign owned bank subsidiaries in the future?
Answer:
Article 32 of the Law on credit institutions, which came into effect as of 1 October, 1998
stipulates that credit institution is permitted to establish a subsidiary company of separate juridicalperson and independent accounting status by using its own capital to engage in some financial,
banking and insurance businesses  in accordance with regulations of the Government.
Question 457.
What measurement of “capital” and “reserves” is used to determine lending limits and limits on
deposit liabilities for foreign bank branches?  What is it for Vietnamese banks?
Answer:
Decision No 300/QD-NHNN5 dated 13 November, 1996 issued by the Governor of State
Bank of Vietnam stipulates that a foreign bank branch operating in Vietnam shall be permitted to
accept demand deposits in Vietnamese Dong from Vietnamese individuals and organisations which
do not have credit relation with the foreign bank branch, not more than 25% of their capital
appropriated by the original bank.WT/ACC/VNM/6
Page 182
Pursuant to Article 79 of the Law on credit institutions: For all credit institutions operating in
Vietnam, total outstanding loans extended to a single customer shall not exceed 15% of own capital of
the credit institution,  except in the case of loans to be financed from trust funds of the Government or
other organisations and individuals or where the borrower is another credit institution.
Question 458.
What does it mean in WT/ACC/VNM/5 that foreign banks are required to cope with "the
economic development requirements of Vietnam"?
Answer:
Please refer to the answer 447 herein.
Question 459.
WT/ACC/VNM/5 indicates that, in a few instances, prudential regulations and limitations are
“specified in the licence” of each company.  (Examples are guarantees and trading for own
account or for account of customers)
- What types of limitations are “specifi ed in the licence” of each company?
- Do the criterion on which these limitations are based vary among companies?
Answer:
Foreign bank branches and joint-venture banks are permitted to carry out partly or fully some
or all operations in compliance with those stated in the licenses issued by the  State Bank of Vietnam:
Foreign currency operations:
– Accepting deposits in foreign currency;
– Foreign currency lending;
– Foreign currency investments;
– Trading of bonds in foreign currency;
– Import - export payments;
– Guarantee relating to operations in foreign currency;
– Conversion of foreign currency;
– Trading of foreign currency for their own account or for the account of their clients;
– Discounting valuable papers in foreign currency;
– Acting as  agent in converting foreign currency and valuable papers in foreign
currency;
– Acting as agent in payment of credit cards in foreign currency;
– Other operations authorized by the State Bank of Vietnam.
Foreign bank branches, joint-venture banks shall have to comply with regulations on foreign
exchange management issued by State Bank of Vietnam in their foreign exchange operations.
Vietnamese Dong operations:
– Accepting short, medium and long-term deposits;
– Making short, medium and long-term loans;
– Discounting valuable papers;WT/ACC/VNM/6
Page 183
– Trading of bonds;
– Payments;
– Other operations authorized by the State Bank of Vietnam.
Criteria for limitations which are specified in the license for each credit institution will be
stipulated in guidelines for implementation of the Law on credit institutions.
Question 460.
Concerning the response to question 564 (WT/ACC/VNM/3/Add.2), part 2:- What does “mobilise capital” mean?  Does this relate to banks’ ability to fund itself in
Dong (acceptance of deposits, borrowing from  the interbank market, etc) or to lending
limits? How are the limits on “mobilising capi tal” set?  Is there a uniform, transparent
formula?  Are foreign banks given national treatment?
Answer:
"Mobilised capital" is  the liability  that cr edit institutions obtained by accepting deposits,
issuance of valuable papers, borrowing from other cr edit institutions and loans from the State Bank of
Vietnam.....
A foreign bank branch operating in Vietnam shall be permitted to accept demand deposits in
Vietnamese Dong from Vietnamese individuals and organisations, which do not have credit relation
with the foreign bank branch, not more than 25% of their capital appropriated by the original bank.
A Joint-venture bank operating in Vietnam are permitted to accept demand deposits in
Vietnamese Dong from Vietnamese individuals and organisations, which do not have credit relation
with the joint-venture bank, not exceeding 100% of  charter capital of the joint-venture bank, and
accept time deposits in Vietnamese Dong from above mentioned customers, not exceeding 50% of
charter capital of the joint-venture bank.
Question 461.
Concerning the response to question 590 (WT/ACC/VNM/3/Add.2):  The answer Vietnam
provided to part (b) was insufficient.
Is national treatment provided to foreign banks  that apply for a foreign exchange licence?
Answer:
Conditions applicable for carrying out foreign exchange operations by credit institutions are:
- Having sufficient equipment and other material conditions to conduct foreign
exchange transactions;
- Having manager and staffs knowledgeable in foreign exchange activities and capable
of conducting foreign exchange activities;
- Having capability of conducting international payments and credits.
The State Bank of Vietnam shall consider granting foreign exchange trading licenses to
foreign bank branches on case-by-case basis.WT/ACC/VNM/6
Page 184
Question 462.
Documents WT/ACC/VNM/2, WT/ACC/VNM/3/Add .2, and WT/ACC/VNM/5 do not describe
the securities and non-bank financial sectors (sub-sectors d, f, g-l of Annex on Financial
Services).
Please describe the current status of these se ctors in Vietnam or plans for their development,
particularly:
- What securities and financial instruments are allowed to trade in Vietnam?  (Bills,
derivatives, shares, bonds, etc.?)
- What is the regulatory and legal regime governing establishment of foreign securities
firms and other non-bank institutions (excluding insurance and leasing companies) in
Vietnam?
- Can Vietnamese legal and natural persons consume the following banking and security
services  via modes 1 and 2:  issuance and/or purchase of securities overseas; asset
management, such as buying shares in foreign mutual funds; financial information
services; and advisory services?
Answer:
Securities and financial instruments which are allowed to be traded in Vietnam include:
- Six and nine months treasury bills and 1-year bonds issued in forms of booking bills,
unregistered certificates or registered certificates;
- Two-year treasury bonds directly sold at the State Treasury;
- Bonds issued by commercial banks; municipal bonds;
- Certificates of deposit and bills issued by commercial banks;
- Decree No.48/CP on Securities and Securities Markets stipulates that stocks and
bonds, trust units and others are allowed to trade in the centrally organised markets --
which in the near future will be the two Securities Trading Centres in Hanoi and Ho
Chi Minh City.
- Foreign securities companies wishing to trad e securities in Vietnam have to set up
joint-ventures with Vietnamese partners and operate in conformity with Corporate
Law and Government's Decree No. 48/CP.
So far, Vietnam has not promulgated any legal documents defining in detail the consumption
of the following banking and security services via modes 1 and 2 by the Vietnamese legal and natural
persons: issuance and/or purchase of securities overseas; assets management such as buying shares in
foreign mutual funds; financial information services; and advisory services. Those who wish to
conduct these activities shall be subject to the approval by the Prime Minister.
Foreign Currency Regulations
Question 463.Vietnam has indicated that "a foreign bank branch or a joint venture bank shall be permitted
to mobilise capital in Vietnamese currency in accordance with the level and scope stipulated in
the operating licence by the State Bank" (Question 564, WT/ACC/VNM/3/Add.2 refers).  Could
Vietnam please clarify what specific limitations apply to operating licences?WT/ACC/VNM/6
Page 185
Answer:
The proportion of capital mobilisation in Vietnamese Dong is stipulated in the Operation
licenses granted to foreign bank branches, joint-venture banks by the State Bank of Vietnam, in
particular:
Decision No 300/QD-NH5 dated 13 November , 1996 of the Governor of State Bank
stipulates that foreign bank branch operating in Vietnam shall be permitted to receive demand
deposits in Vietnamese Dong from Vietnamese individuals and organisations, which do not have
credit relation with the foreign bank branch, not more than 25% of  capital appropriated by the
original bank.
Decision No 415/1998/QD-NH5 dated 8 December, 1998 of the Governor of State Bank
stipulates that joint-venture bank operating in Vietnam are permitted to accept demand deposits in
Vietnamese Dong from Vietnamese individuals and organisations, which do not have credit relation
with the joint-venture bank, not exceeding 100% of the charter capital of the joint-venture bank, and
accept time deposits in Vietnamese Dong from such customers, not exceeding 50% of charter capitalof the joint-venture bank.
Question 464.
Vietnam has stated that "differences in treatmen t in terms of regulation on deposits and lending
in Vietnamese currency between foreign and domestic banking operations" (Question 606,
WT/ACC/VNM/3/Add.2 refers).  Could Vietnam please define more clearly the limitations
which exist on local currency business?
Answer:
Decision No 300/QD-NH5 dated 13 November , 1996 of the Governor of State Bank
stipulates that a foreign bank branch operating in Vietnam shall be permitted to accept demand
deposits in Vietnamese Dong from Vietnamese individuals and organisations, which do not have
credit relation with the foreign bank branch, not more than 25% of their capital appropriated by the
original bank.
Decision No 415/1998/QD-NH5 dated 8 December, 1998 of Governor of State Bank
stipulates that a joint-venture bank operating in Vietnam are permitted to accept demand deposits in
Vietnamese Dong from Vietnamese individuals and organisations, which do not have credit relation
with the joint-venture bank, not exceeding 100% of charter capital of joint-venture bank, and accept
time deposits in Vietnamese Dong from such customers, not exceeding 50% of charter capital of  thejoint-venture bank.
Decision No 20/1998/QD-NHNN1 dated 10 January of the Governor of State Bank amending
the regulation on Vietnamese Dong position for foreign bank branches operating in Vietnam,
stipulates as follows:
Foreign bank branches operating in Vietnam are permitted to maintain the Vietnamese Dong
position within the limit of 15% of appropriated capital and reserve funds.
Question 465.
Vietnam's response to Question 596 (WT/ACC/VNM/3/Add.2) on regulations applying to
international payments says to refer to responses to Questions 582 and 583WT/ACC/VNM/6
Page 186
(WT/ACC/VNM/3/Add.2), however, these questions are about membership of professional
services organisations.  Could Vietnam please provide the answer to Question 596?
Answer:
The question 596 has been fully responded in answer 598 of WT/ACC/VNM/3/add2 and
answer 466 herein.
Question 466.
New rules on foreign exchange introduced late this year are a large administrative burden and
we are concerned at the increasingly difficu lt regulatory environment for foreign banks in
Vietnam.  Decision No. 173 of the State Bank of Vietnam which came into effect on
12 September (and Circular No. 8 of 30 September) require that foreign exchange held by
banks after 12 September must be sold to the banks unless customers can present the necessary
documentation proving that they do not have to sell.  Organisations caught by Decision No. 173
will no longer be able to place their United States ' dollars in term deposits since they will have
to be sold after 15 days.  Consequently Decision No. 173 will ultimately result in a loss of
business and foreign exchange for Vietnam.  It is disappointing that Decision No. 173 has been
implemented despite the fact that senior Vietna mese officials have recognised the necessity of
improving the climate for foreign investors.  Ho w does Vietnam plan to address this situation?
Answer:
In order to concentrate foreign exchange in banking system, to  improve the capital flows in
foreign currency in the economy and to prevent foreign exchange hoarding at the accounts of
enterprises, the Prime Minister has issued the Decision No 173/1998/QD-TTg on 12 September, 1998on obligations to sell and rights to buy foreign currency of organisations and on 1 December, 1998,
Decision No 232/1998/QD-TTg was promulgated to amend paragraphs 1 and 2 of Article 1 of
Decision No 173/1998/QD-TTg. Pursuant to the above Decisions "Residents who are Vietnamese
organisations, foreign invested enterprises, foreign partners in business cooperation contracts assured
by the Vietnamese Government’s support for foreign exchange balancing shall sell at least 80% of the
amount in foreign exchange received from current transactions to banks". Therefore, only revenue
from current transactions shall be sold to banks and pursuant to the Article 2 of the Decision No173/1998/QD-TTg, the entities, who sold foreign exchange in accordance with this regulations are
permitted to purchase foreign exchange in banks in order to pay for  import or service external debt.
Pursuant to existing regulations on foreign exchange management, foreign invested
enterprises are divided into 2 categories: (i) foreign invested enterprises and foreign partners tobusiness cooperation contracts, that are assured by the Vietnamese Government in balancing foreign
exchange; (ii) foreign invested enterprises and foreign partners to business cooperation contracts, that
are not assured by the Vietnamese Government in balancing foreign exchange. Under the Decision No
173/1998/QD-TTg, only the enterprises in the first cate gory shall sell foreign exchange received from
current transactions, the other  shall not have such obligations . Though enterprises in the first category
has to sell foreign exchange in accordance with the regulation but they are assured by  the Vietnamese
Government in balancing foreign exchange, thus, in any case they are permitted to purchase foreign
exchange in banks  to meet their needs.
The issuance of Decisions No 173 and 232 of the Prime Minister therefore not only prevents
the hoarding of foreign exchange but also harmonises the supply and demand of foreign currency in
the market, bringing the idle foreign exchange in to the circulation, meeting the need of foreign
exchange for enterprises lacking foreign exchange (including foreign invested enterprises). However,
this is only temporary measure on foreign exchange management, it will be abolished, once the supplyWT/ACC/VNM/6
Page 187
and demand of foreign exchange becomes normal and Vietnam's foreign exchange reserves are at
appropriate level.
Question 467.
Reporting requirements should not be an unnecessary burden on trade.  Vietnam has indicated
that foreign firms should "report on thei r operations in accord ance with the Law of
Vietnam"(Question 549, WT/ACC/VNM/3/Add.2 refers).  The requirement to report each day,
and to operate separate trust accounts to hold customers' foreign exchange is an overly
burdensome administrative requirement.  Numerous legal instruments continue to be issued,
often contradicting and overlapping with existing provisions.  For example Decision No. 173
says that it repeals "all previous provisions in relation to the obligations to sell foreign currency... which are inconsistent with this decision".  Ho wever, it is difficult to determine which existing
provisions, apart from cases of clear inconsistency, are covered by this Article.  What plans does
Vietnam have to eliminate such unnecessary administrative burdens on commerce?
Answer:
Vietnam would take note of the comments referred in the question. Recently, a review of
legal documents related to banking has been undertaken. On the basis of result of such review,
Vietnam will classify legal texts to find out whether different legal documents are still in effect, in
void or overlapped. By so doing, Vietnam may gradually improve its legal framework in general andbanking activities in particularly.
8. Health-Related and Social Services
Question 468.It is not clear whether the minimum registered capital requirement is also applicable  to local
medical services providers.  If not, what are the corresponding requirements?
Answer:
Yes, local medical services providers also have to satisfy minimum capital requirements and
other qualification criteria for infrastructure such as houses and residences, professional equipment
and capacity of staff.
Question 469.
We note that under Mode 3, the number of patient beds in hospitals are subject to an "economic
needs requirement".  We would like to know th e meaning of the requirement and how it is
being enforced.
Answer:
Economic needs requirements mean the investment licensing must be based on health care
demands, levels of technical development in medicine, plan of health-care network, environmental
aspects, etc.WT/ACC/VNM/6
Page 188
9. Tourism and Trade-Related Services
Question 470.Vietnam's response to Question 541 (WT/ACC/VNM/3/Add.2) indicates that licensing of
investment in this sector is conditional.  Wh at are the conditions which apply?  Could Vietnam
please confirm that there ,ire no differences in  the procedures of registration as stated in
response to Question 547 (WT/ACC/VNM/3/Add.2)?
Answer:
Please refer to Vietnam's existing services regime in (WT/ACC/VNM/5) which has been
circulated to the Working Party. The procedures of registrations are generally applied to all investors
in tourism.
2. Policies Affecting Trade in Services
Question 471.
We request that the duration of the driver's licence and visa be extended.
Answer:
Vietnam's present regulations regarding the duration of visa granted to foreigners are as
follows:
- the duration of entry visas, and multiple entry visas into Vietnam granted to
foreigners is decided in accordance with the purpose of their entry into Vietnam but
will not exceed 3 months (90 days). It can be extended for other periods of 3 months
each after each expiry date;
- the duration of entry-exit visas granted to  foreigners coming to Vietnam for the
purpose of carrying out investment projects or under economic, cultural and
technological cooperation contracts is decided according to the duration of their
contracts or projects in Vietnam but will not exceed 1 year (12 months).  Such visascan be renewed each year;
- officials and employees working in diplomat ic missions, and offices of international
organisations in Vietnam, foreign experts as well as foreigners coming to Vietnam for
the purpose of study, health treatment that requires them to stay in Vietnam for more
than 2 years can be granted a visa with a longer duration according to the periodneeded for their study, work or health treatment;
- at present, Vietnam is examining the possibility of granting visas to foreigners with
duration in conformity with the duration of their labour contracts for the
implementation of investment projects in Vietnam and 3-year multiple visa to foreign
contractors who are not based permanently in Vietnam.
In Decision No. 909/QDDTCCB issued by the Ministry of Transport dated 2 May 1996, the
time period the driving licence for different means of transport has been specified as follows:
- licence of categories A1 and A2: no duration;
- licence of category B1: 5 years;
- licence of categories A3, A4, b2, C, D, E and F: 3 years.
The above regulation is based on the Prime Minister's Decision No. 70/TTg dated 6 July 1962
(Decree 21, Chapter III) on health condition of drivers (C, B, 26+07) which stipulates as follows:WT/ACC/VNM/6
Page 189
health certificates must be rechecked every three years and five years for professional and non-
professional drivers respectively.
After 3 years, professional drivers have to recheck their health condition to ensure the quality
of their driving.  Therefore, A3, A4, B2, C, D, E and F licences are valid for 3 years.
Non-professional drivers are those who drive th eir own means of transport with less time
engaged in driving.  For such drivers, health certificates must be rechecked every five years.
The licences of categories A1 and A2 are issued for driving motors and popular means of
transport . Therefore there is no time limits to be imposed on them.
Such regulations applied by the Ministry of Transport on the duration of driving licence is in
conformity with many other countries' practices.  Only the Ministry of Transport can extend this
duration. Information exchanges with other countries with regard to driver's certificates and driving
licences revealed that other ASEAN countries impose a duration of from 1 to 3 years, except in
Malaysia, where the duration is from 1 to 10 years (1 year for bus-drivers).
In the case of driving licence for foreigners working in Vietnam, the duration depends on the
time they are allowed to reside in Vietnam as against the document No. 50/PTNL issued by Vietnam
Road Administration dated 12 January 1996.
Question 472.
Vietnam has indicated that it is considering privatization of certain service sectors.Please provide a brief update of these plans.
Answer:
The Directive 20/1998/CT-TTg of the Prime Minister on plan for state-owned enterprise
equitization in 1998-1999 stipulates that provinces and localities, national corporations must select at
least 20% of independent accounting or dependent accounting member companies in which 100%
state ownership is not required for equitization.
The Government's Decree No. 44/CP (which replaces Decree No. 28/CP dated 7 May 1996
and Decree 25/CP dated 26 March 1997) on transforming a number of SOEs into joint-stock
companies has accelerate the equitization process of Vietnam. Up to 1 January 1999, 120 SOEs have
completed this process. At present, these enterprises are in the process of restructuring and stabilizingtheir management and business activities. Some of the equitized enterprises have recorded initial
positive progress. In 1999, the Vietnamese Government plans to further equities 400 SOEs.
Question 473.
Are foreign investors allowed to participate in the privatization of State-owned firms?  If so, are
there equity limits on foreign ownership?  If not, when will such investment be allowed?
Answer:
Under the Government's Decree No. 44/CP, foreign investors are allowed to buy shares in
equitized SOEs. Equity limits on foreign institutions and individuals will be stipulated by the Prime
Minister. Chapter VII on Foreign Participation, Decree 48/CP on securities and securities markets,
specifies:WT/ACC/VNM/6
Page 190
Article 67. Investment and joint-venture
1. Foreign organisations and individuals shall be entitled to buy and sell securities in the
securities market in Vietnam. Foreign securities institutions wishing to engage in
securities businesses in Vietnam must establish a joint-venture company with aVietnamese partner in accordance with a license issued by the State Securities
Commission.
2. The Prime Minister of the Government shall prescribe percentages of shareholding by
foreign organisations and individuals and the proportions of capital contribution by a
foreign institution in a joint venture company with a Vietnamese partner.
3. A foreign investment fund wishing to invest in the securities market in Vietnam must
be licensed by the State Securities Commission upon the approval of the PrimeMinister of the Government.
Question 474.
Are foreign banking and security services providers (securities firms, investment banks, etc)
permitted to underwrite such privatisation's?
Answer:
Foreign banking and security services providers (securities firms, investment banks, etc.)
wishing to carry out the underwriting services in the equitization process in Vietnam shall have to
establish joint ventures with Vietnamese partners. The establishment and operation of these joint
ventures must be in conformity with the Law on Foreign Investment and the Government's Decree
No.48 /1998/ND-CP on Securities and Securities Markets.
Vietnam is drafting regulations on selling shares to foreign investors by which the foreign
investors can not hold more than 30% of total value of the company.
Question 475.
Vietnam has provided extensive documentation on its system of price controls applying to many
services sector.
Given Vietnam’s interest in liberalization of its economy, we urge Vietnam to review the
extensive list of services activities currently subject to controls and indicate which sectors might
be removed from the list.
Most of these price controls seem to apply when  the Government is the purchaser of the service.
Do the price controls also apply to private sector services activities?
Answer:
Please refer to answer 483.
Question 476.
We understand that a new land law is under consideration.  Will it allow foreign banks to
accept land use rights for mortgages?WT/ACC/VNM/6
Page 191
Answer:
Decision No 217/QD/NH1 of the Governor of State Bank of Vietnam dated 17 August, 1996
promulgating regulations on collateral and guarantee for bank loans is still in effect. The paragraph
3.2 of Article 3 of these regulations stipulates that  foreign bank branches and joint-venture banks arenot permitted to receive land use right as collateral  pursuant to stipulations of the Land Law.
Question 477.
Please clarify the difference between 'legal capital' and 'registered capital' on pages 2, 10, 11, 15,
16 (WT/ACC/VNM/5).
Answer:
Under the Law on Foreign investment in Vietnam, " Legal capital" of an enterprise with
foreign owned capital means the capital required to establish the enterprise as stated in its charter;
"Investment capital"  means the capital required to implement an investment project, including legal
capital and loan capital. The term " Registered capital " is not defined in the Law on Foreign
Investment. However, it is normally used in practice to mean “ Investment capital ".
Question 478.
Under the "National Treatment" column, it is stated that foreign services suppliers must
comply with provisions of legislation, which may be exclusively applicable to them, including
taxation, certain service prices, etc.  We would like to know the specific provisions that amount
to restrictions on National Treatment.
Answer:
Please refer to WT/ACC/VNM/3/Add.2 about pr icing control mechanism and the answers
483 herein .
Question 479.
It is stated in Mode 4 of the Market Access colu mn that "the initial terms of employment of a
foreign employee shall not exceed a maximum of three years".  We would like to know under
what circumstances will the foreign employees be allowed 'to stay beyond the three-year period.
Answer:
Foreign employees are allowed to stay beyond three years when they have special
technological skills or expertise which the company needs and cannot be substituted by local workers.
In case of signing a new contract with another enterprise, they will be granted a new working
permit with new term of employment..
Question 480.
Foreign employees working on Vietnam have to pa y income tax at the special rates.  What are
the rates and how different are they from those applicable to Vietnamese employees?
Answer:
Pursuant to the Ordinance on Income Tax on High Income Earners, tax rates on irregular
income are equally applied to both Vietnamese and foreigners. However, with respect to regularWT/ACC/VNM/6
Page 192
incomes of the Vietnamese and foreigners,  due to the different levels of income earned, income tariff
is divided into 2 sub-class tariffs ( by which preferential income tax rates are applicable to foreigners).
Progressive income tax rates applicable to the Vi etnamese are from 10% to 60% with the minimum
(threshold) income to be taxed is 2 million VND. Progressive income rates applicable to foreigners
range from 10 to 50% with the minimum income to be taxed is 5 million VND.
In 1999, it is planned to increase the minimum income to be taxed of the Vietnamese and
foreign employees. However, preferential treatment granted to foreigner will be remained.
Question 481.
It is stated that "the general director or the first deputy general director of a joint venture
enterprise should be a Vietnamese citizen".  Is this requirement applicable irrespective of
whether foreign capital contribution is  more than 50 per cent of the total?
Answer:
The Article 230 in the Law on Foreign Investment in Vietnam states:
"The general director or the first deputy general director shall be a Vietnamese citizen".  This
provision is still applied in cases where contribution capital made by foreign party represents more
than 50% of legal capital of the foreign invested enterprise.
Question 482.
It is stated that "training of Vietnamese citizens as replacements must be undertaken".  Does
this imply that it is intention of the Vietnamese Government that a foreign firm must over timephase out foreign workers and replace them with Vietnamese citizens?
Answer:
Foreign employees are allowed to stay beyond three years when they have special technical
skills or expertise which are still in need by the company and can not be substituted by local workers.
 “ Training of Vietnamese citizen as replacement must be undertaken” statement does not mean toforce foreign firms to fire foreign workers. This limitation originates from the redundancy of labour
forces in Vietnam so that jobs should be preferentially given to Vietnamese labourers if  possible. If
Vietnam does not have enough experienced, expertise or high skilled workers to fulfil the job, the
company may recruit foreign employees. During the employment of foreigners, training of
Vietnamese citizen must be undertaken for substitution.
Price Controls
Question 483.
At the last Working Party meeting Vietnam indi cated that a two-tier pricing system (which
discriminated against foreigners) applied in, fo r example, the transport sector.  We understand
that price controls also exist in the following sectors (Question 26, WT/ACC/VNM/3/Add.2
refers): compulsory and personal insurance are subject to controls on premiums; accounting
and auditing - although fees are presently dete rmined by market forces, fee ranges are about to
be issued by the Ministry of Finance;  fee st ructures exist for legal and banking services;  in
answer to Question 599 (WT/ACC/VNM/3/Add.2) Vietnam also indicated that differences in
price and fees apply to certain telecom services.  In what other sectors do price controls apply?
Do these price controls discriminate against forei gners?  Are there any intentions to liberalise
price controls?WT/ACC/VNM/6
Page 193
Answer:
For insurance services: Pricing control (on insurance premium) is only applied to compulsory
insurance. Insurance company must follow premium tariff or premium frame that are set by the
Ministry of Finance.
For insurance related to person, insurance companies must register premium tariff to be
applied at the Ministry of Finance before implementation.
Discrimination treatment policies between domestic and foreign consumers applied in
electricity, air-fare, international port freight, telephone installation, telephone fees etc. will bereviewed by the Government with a view to applying the same prices for both domestic and foreign
consumers. The adjustment will begin from the year 2000.
Government Monopolies
Question 484.
In response to Question 569 (WT/ACC/VNM/3/Add.2) Vietnam states that it "does not plan to
maintain monopolies in the national econom y in general and in the services sector in
particular".  There has only been very limited movement in this direction.  What plans does
Vietnam have in relation to State monopolies in  the services sector?  Vietnam also claims that
"private investment is encouraged" in area s not subject to State monopolies.  However,
Vietnam continues to give preference to State-owned enterprises e.g. through preferential access
to credit and lower input prices.  Could Vietnam indicate in what other ways State-owned
enterprises are given favourable treatment?
Answer:
Vietnam is under process of drafting regulations to control monopolies and to encourage fair
competition for all forms of businesses. Please refer to export subsidies in the WT/ACC/4 format to
be provided in due course.
Question 485.
Although the answer to Question 451 (WT/ACC/VNM/3/Add.2) asserts that "the government
will gradually bring the aforesaid principles into effect by standardising, and further refining
specific procurement procedures for particular government agencies", we are not aware of anysuch steps and would appreciate clarification.
Answer:
Vietnam is gradually standardising and further improving procurement procedures of
government agencies through different forms of tenders for purchasing goods and services related to
capital construction works and other procurement transactions.
Foreign Investment Regulation
Question 486.
Vietnam has indicated that although there is no  maximum limit on capital amounts contributed
by foreign partners, "in reality, when granting in vestment licences, the authority may adjust the
percentage of foreign participation consistent with existing directions and policies"WT/ACC/VNM/6
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(Question 540, WT/ACC/VNM/3/Add.2 refers).  Could Vietnam please explain what this means
and to which sectors it applies?
Answer:
The Law on Foreign Investment in Vietnam permits  foreign investors to invest in the form of
100% foreign owned capital. However, there are some sectors where investment in the form of 100%
foreign owned capital is not allowed and investment therefore may only be carried out in the form of
joint venture or business cooperation contracts. These sectors include construction, international
telecommunications, BOT projects, travel tourism, etc. (Please see also the answer to question 65
herein).
Question 487.
Vietnam has also indicated exceptions from the general rule, specifying joint venture
requirements and foreign equity limitations in the following sectors (Question 540,
WT/ACC/VNM/3/Add.2 refers):
- Tourism:  49% limit;  insurance: 50%;  banking:  total share capital of foreign
shareholders is limited to 30%, and restriction of total share capital of a foreign legal
entity or an individual is 10%.  Does Vi etnam plan to allow greater foreign equity
participation in these sectors?
- Telecommunications:  Foreign companies are not permitted to provide telecom services
in Vietnam (Question 544 refers).  Vietnam has indicated that "foreign participation via
business co-operation contracts (BCC) ire permitted" (Question 569 refers).  What are
the restrictions that apply to mobile telephone networks?
- Auditing and accountancy:  70%.  Are there limitations in relation to commercial
establishment of partnerships between foreign and local firms?  For auditing, Vietnam
has indicated there is no discrimination between Vietnamese and foreigners in term of
right of establishment, but different "provisions" are set (Question 579 refers).  What
are these provisions and how are they different?
- In what other sectors do limitations exist?   For example, in relation to foreign
investment in the Vietnamese stock market?
Answer:
With respect to foreign investment in insura nce service and accountancy service, Vietnam is
still applying regulations in the Law on Foreign Direct Investment and other specialised legal
documents related to both sectors. For specific details, please refer to the document WT/ACC/VNM/5
which has been circulated among members.
With respect to telecommunications services , foreign companies are allowed to supply
services in the form of Business Cooperation Contract. This regulation is also applied to mobile
telephone network services.
For security related services, under the Government's Decree No. 48/CP, there are limitations
on foreign investment in the Vietnamese stock market, namely, foreign securities institutions wishing
to trade securities in Vietnam shall have to establish joint-ventures with Vietnamese partners and the
foreign ownership ratio in these joint-ventures shall be approved on a case by case basis.WT/ACC/VNM/6
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Recently, in the above mentioned service sectors, Vietnam does not have any plans to issue
regulations other than as indicated in WT/ACC/VNM/5.
Licensing requirements:
Question 488.
In answer to Question 162 (WT/ACC/VNM/3/Add.2) Vietnam asserts that in general, once a
foreign enterprise receives its investment licence  it can "start the enterprise operation at once
without further application for a business licence".  However., in practice there are a number of
other requirements which must be completed before operations can begin, e.g. registration with
the head office of the local People's Committee, registration of the company seal with the police
department, registration of the plan of labour recruitment, and registration with an
employment service agent to obtain employees .  Although we have read this question in
conjunction with the response to Question 547 (WT/ACC/VNM/3/Add.2), we request that
Vietnam list the full range of requirements faced by foreign enterprises wishing to operate in
Vietnam.
Answer:
The issue of the investment license only m eans that, from such time onward, a foreign
investor is legally permitted to operate and do business in Vietnam. In order to actually startoperation, the enterprise must have staff, organisational structure, office and so forth. Therefore, after
obtaining the investment license, foreign invested enterprises and parties to business cooperation
contracts must carry out the following activities:
- To convene a Board of Management meeting to organize its apparatus and to elect
key positions such as Chairman and Vice Chairman of the Board, General Director,
Deputy General Director, Chief Accountant etc. and register with the province where
its head office is based.
- To register the office with the provincial administration where it is based.
- To carry out due procedures of seal registration
- To open bank account(s).
- To register the accounting system with the Ministry of Finance.
- To recruit employees.
- To publish announcements on newspapers regarding the content of the investment
license, representative, office and scope of business.
- To apply for the certificate of the right to use land.
- To apply for the construction permit.
- To register the business or practising in respect of a number of special fields such as
health care, cultural activities (movie showing, dancing, karaoke, etc.). Foreign
invested enterprises and parties to business cooperation contracts shall only be
required to register with the State body in charge of the line business and are not
required to apply for permits (domestic enterprises are required to apply for permits).
- To register entry and exit of foreigners.
- To register the use of communication services
- To register quality, trademarks etc.WT/ACC/VNM/6
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3. Market Access and National Treatment
Movement of Natural Persons
Question 489.Foreigners working in Vietnam for over six months  are only granted certificates of residence for
twelve months (Question 574, WT/ACC/VNM/3/Add.2 refers).  What procedures are followed
in determining whether this period can be extend ed?  Is it automatically extended in accordance
with the duration of investment licences or work contracts?
Answer:
 A foreign temporary resident in Vietnam wishing to extend Certificate of Temporary
Residence must submit Application or note of the host organization in Vietnam along with his/her
passport 3 days before expiry date to the Migration and Immigration Control Department (Ministry of
Public Security) or Migration and Immigration Control Office in the province where he/she residestemporarily.
 
 Pursuant to Article 11 and 14 of the Ordina nce on Immigration, Migration, Residence and
Movement of Foreigners in Vietnam, Certificate of Temporary Residence may be cancelled when
registered purpose of residence no longer exist or temporary residents belong to one of the following
subjects:
 
- Conducting activities that jeopardise national security.
- Being charged with criminal offences by Vietnamese courts and already having
served penalty or having no further obligation to fulfil.
- Being a threat to life, health of others in Vietnam.
Related Government agencies are examining the possibility of drafting a new Decree on
immigration, migration in which validity of certificate of residence granted to foreign investors and
foreigners entering Vietnam to carry out business corporation contracts or long-term cooperation may
be extended up to 3 years.
Foreigners enjoying privileges or diplomatic immunity shall be granted by the Ministry of
Affairs a certificate of residence valid for 12 months from the date of issuance and may be extended
not more than 12 months each time. For staff of diplomatic representative offices, consular offices,
international organization offices in Vietnam, the validity of certificate of residence may be 36
months in accordance with their working term and may be extended for not more than 12 months eachtime.
Procedures of extending their residence certificates provided by the Protocol Department of
the Ministry of Foreign Affairs include: a note from diplomatic representative offices, consular
offices, international organization offices clearly specifying reasons or purposes of extension;
passport enclosed with photograph of the bearer.
4. Most-Favoured-Nation Treatment
List of Article II (MFN) Exemptions
Question 490.
We note that the bilateral agreement with Thai land on international maritime freight transport
and that with Singapore on sea transport are intended for 10 years.  We would like to know the
end dates of the "10-year" periods.WT/ACC/VNM/6
Page 197
Answer:
The duration of 10 years commences from the date of the accession of Vietnam to the WTO.
However, the Maritime Freight Transport Agreement between Thailand and Vietnam on cargo-sharing could not be implemented. Therefore, this agreement is being revised by both countries with a
view to removing this cargo-sharing provision.
Question 491.
Are the three sea transport sub-sectors covere d by the Maritime Agreement between Vietnam
and Singapore pertained to international shipping, auxiliary services and access to and use ofport facility?  If not. would the Vietnamese G overnment extend the preferential treatment to all
WTO Members on an MFN basis after its accession , given the provisions in the OATS Annex on
Maritime Transport Services?
Answer:
Three sea transport sub-sectors covered by the Maritime Agreement between Vietnam and
Singapore pertained to international shipping onl y. The Paragraph 2, Article 5 of the Agreement
stipulates: “ The most – favoured - nation treatment provided for in this Article applies to customs
formalities, the levying of charges and port dues, freedom of access to and the use of ports as well asfacilities afforded to shipping services such as trucking, warehousing, container freight stations,
allocation of berths at piers, loading and unloading facilities and other related services in respect of
vessels and cargoes”.
Question 492
Is Vietnam involved in negotiation of any regional agreements that would cover trade in
services?  Are services suppliers from the ASEAN countries given any preferences in Vietnam’s
market?
Answer:
Vietnam is a member of Association of Sout heast Asia Nations (ASEAN) and Asia-Pacific
Economic Cooperation Forum (APEC). Under the fram ework of these organisations, negotiations on
services liberalization are being implemented. Particularly, Vietnam has offered certain commitments
in services under ASEAN Framework Agreement on Services (AFAS). Therefore, ASEAN members
will be granted preferential treatments in the service sectors where commitments have beenundertaken.
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH
THIRD COUNTRIES
2. Economic Integration, Customs Union and Free Trade Area AgreementsQuestion 493
In WT/ACC/VNM/3 reply 220, Vietnam lays out the details of preferential treatment under
ASEAN and CEPT.  Vietnam states that they do not have the list of highly sensitive products
which is category 5 under ASEAN preferential treatment.WT/ACC/VNM/6
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Does Vietnam not have any products on this list or was Vietnam not able to produce the list?  If
Vietnam does have items in this category, could Vietnam provide the tariff lines of those
products on the list?
Answer:
Please refer to the answer to question 92 herein.
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