Press Release

Israel Hernandez, Assistant Secretary for Trade Promotion, U.S. Department of Commerce

Press Conference
On the Record
June 16, 2008

Assistant Secretary Hernandez: Good afternoon, everyone. It’s good to be back in Vietnam. I was here in late 2006 for a ministerial meeting with APEC.

I think I’d like to start off the conference first by giving my condolences to Vietnam and the people of Vietnam for the passing of a former Prime Minister. Mr. Vo Van Kiet. This is a gentleman who really paid great attention to trying to move Vietnam into the 21st Century, and this is a man who had great vision about moving forward. What you see today, many people working on economic stability, moving forward on the WTO, moving the relationship with the United States, can be traced back to a lot of effort from this gentleman, so I wanted to start off with that.

I also wanted to make note that the President, President George W. Bush, had a great visit here to Vietnam and in turn welcomed your President to the United States. In turn we also had the Secretary lead a trade mission this last November and that’s why I’m here. I am here to follow up with a second trade mission of American countries to try to partner up and support the growth that’s going on here in Vietnam.

The relationship between Vietnam and the United States is multi-faceted, but it’s also moving forward quite aggressively into the 21st Century with respect to commerce and trade. Of course you know with the bilateral trade agreement in 2001, you moving into the WTO, being the 150th member, and now our discussions with the Trade Investment Framework Agreement which is why I come with companies in different sectors to try to figure out how we can come and support the growth that’s going on. We have companies with manufacturing, with energy, with mining, health care, transportation, tourism, telecommunications, hospitality, education and environmental companies.

So I look forward to having our American companies meet with Vietnamese companies, but I also look forward to having my meetings with the ministries to make sure that we continue our economic dialogue, to making sure that we implement a move forward on the agreements that we have been focusing on for the past few years.

I think with that, I’ll be open to answer any questions you have.

Press: Vietnamese Prime Minister is going to visit the United States in the coming days and recently you have mentioned about the agreement on trade and investment. So is there any arrangement in this mission for the two countries to sign on the opportunity of our Prime Minister to visit the United States in the coming time? Thank you.

Assistant Secretary Hernandez: The Prime Minister is welcome to visit the United States. We are great friends, the two countries. But I think it’s probably best that we wait for the formal announcements. I’ve yet to hear one yet about dates or anything in particular. But again, if the Prime Minister chooses to visit I think he will be greeted as a friend.

Press: Brian McCool from Reuters. The discussions on TIFA have been going on for a while. Could you tell us whether this is, the agreement is imminent or it will take a while longer yet?

Assistant Secretary Hernandez: The TIFA discussions started last year basically round this time, June of last year. It is something that even with other countries it takes time to evolve, so just to make the point to your question directly, it is ongoing. But I think more important what we do is we welcome the fact that we’ve started that discussion and we look to kind of move forward on it. At this point there’s nothing that’s formal that can be announced but there’s dialogue that’s taking place. There’s an extension from the BTA so it’s actually a very positive development that we’re at this stage of discussion. But there’s nothing at this point that can be announced.

Press: My question focused on the trade mission expectations this time when you visit Vietnam, in quite troubled times of economy and politics and society. I’m sure you’ve heard of [inaudible] about the trouble. So here at this moment, at the beginning of 2008, so what are your expectations?

Assistant Secretary Hernandez: I think a lot of companies on this trade mission have been impressed with the growth that Vietnam has been experiencing these past few years, so they have come to want to visit and take a very serious look at the developments that are going on here. I think a lot of companies are going to look for a long term perspective about how they want to be positioned here within Southeast Asia. Coming here for the week, visiting Hanoi and then going on to Ho Chi Minh, we’re really provided an opportunity by the fact that we’re here, the fact that every company came who wanted to come is a good signal. This is a follow-up to the trade mission that the Secretary led in November, and the fact is a lot of these companies are looking for a long term position, so I think they were really wanting to make that commitment and make the investment to come for the week and look for themselves.

Press: Matt Steinblass, DPA. A number of seafood export companies in Vietnam have received special loans recently in order to make sure that their catfish harvest will be moved to market. Does the U.S. need to review that in terms of the antidumping tariffs on catfish?

Assistant Secretary Hernandez: I did not realize, I’m new to the fact about the new loans. I’ll probably have to get back to you about how that would be in compliance with the issue related to the seafood and the issue with Vietnam. We can get back to you after this.

Press: My name is Hang Pho, [inaudible]. Will you please name some companies that go with you to Vietnam this time? And the second question is do you have any feedback from the companies that visited Vietnam [inaudible] last year? Thank you.

Assistant Secretary Hernandez: What we can do is give you a list of all the companies that are on the trade mission so that we have an extensive background as to what it is they produce, but I can just go over a few. I just want to make sure you get the correct spelling, so we can leave some behind for you.

One of them is called Capstone Turbine Corporation. They are out of California. They produce low emission micro turbine systems.

Another one is Coventa Energy from New Jersey. They convert waste to renewable energy.

A third one is Gala Industries from Virginia. They specialist in pellet processes and technologies for plastics.

But we’ll give you a list of all the companies and what exactly they do because there’s a wide number of sectors that they specialize in.

The feedback from the companies, there’s actually --

Press: You said the companies had long term engagement here, so I’d like to know do you have any plans to [inaudible] Vietnam after [inaudible]?

Assistant Secretary Hernandez: You’re talking about the group that is here right now?

Voice: No, the group in November.

Assistant Secretary Hernandez: We know for a fact that some of the companies that came in November are in discussions with companies here in Vietnam on creating a partnership, but oftentimes these take a little bit of time, so I would expect it to take six to eight months, even within a year. But we have heard back from a lot of companies that they found it very promising. We just are waiting for them to let us know at this point where they are. But we’re still letting them be in negotiations. I think our officers here can maybe follow up with you to give you an idea of the results from that trade mission.

Press: I’m from Bloomberg. I want to continue with the question from my colleague in [inaudible] newspaper about the economic situation in Vietnam.

I want to ask you a question [inaudible]. What do you think about the Vietnam investment environment now, and do you have any concerns with that environment, why the [inaudible] in Vietnam, has fallen as much as 60 percent this year, and inflation is reaching more than 25 percent.

Assistant Secretary Hernandez: I think that Vietnam finds itself today in a very interesting and new situation in the sense of the government has taken some very significant steps to move toward a market-oriented economy and with the signal of moving forward on a BTA with the United States. Moving into the WTO you have seen significant growth in investment and trade, not only within the United States but other countries around the world. So now there are conditions and such that it’s not only endemic to Vietnam, but you’re starting to find commodity prices putting pressure on a lot of countries where inflation is now a concern. Not just for Vietnam, but for other countries as well.

I think that the government of Vietnam is paying very serious attention to this issue. We in the United States are also having to pay attention to growth and inflation as well. So you're finding not only the United States and Vietnam, but also countries like China and even countries in Europe, you’re going to find governments and central banks trying to find a delicate balance between moving forward on a somewhat up-growth, and also keeping inflation in check. You see already some signals that the government of Vietnam has taken, and I think they will continue to pay great attention, much like we will in the United States.

In addition to that, in order to maintain economic stability moving forward, I would hope that the government of Vietnam would come to understand that a lot of investment has come to this country and in order to bring additional investment moving forward they will also have to pay great attention in implementing still today those agreements of the BTA and the WTO which will create long term foundations to move forward, which will be a great signal for investors who want to continue to invest in what they’ve seen here within the country of Vietnam.

More specifically, it would be issues related to the rule of law, related to transparency, making sure there is clarity in the system so that those who want to invest capital have a very good understanding about how it is to do business. So these are issues that I will continue to work with as friends between both our governments.

But make no mistake about it, the fact that I am here with a group of companies is a very strong signal that even small and medium sized companies from the United States are very curious and very anxious about doing business here, supporting the growth that’s taking place in this country with very innovative products, new technologies, a different way of doing things, and really want to support that growth and possibly partner with companies here in Vietnam.

Press: I’m from People Newspapers. Besides the difficulties in the Vietnamese economy, what do you think about the long term perspective, prospects of development for Vietnam? The second question is what comment do you have about the opportunities for American companies to come and invest and who visit us here in Vietnam as well as what can you comment about the future of the trade relations between Vietnam and the U.S.?

Assistant Secretary Hernandez: If the past seven to eight years are any indication about the future, the fact is Vietnam has a great opportunity moving forward in the 21st Century.

With respect to our relations between the United States, I think that it continues to grow. Especially in the commercial dialogue. I think the TIFA discussions which started last year hopefully will move forward in a very aggressive schedule and come to finality and come to an agreement. I think that would be something that would be of great benefit to both our countries. I think that moving forward on the trade and investment framework gives real clarity and substance that builds on BTA.

So I think that when we come I think we’re very much in a more developed and mature relationship with Vietnam as friends. It’s quite dramatic and significant just within the past eight years, and I think people are very much optimistic about the future too.

I don’t think I can say this enough, that the decisions that have been made in the past eight years are so significant that you have to put it in perspective to the region. There are some countries here today in the region who have not taken those steps. So you have changed a mindset and a way of doing business in a way that other countries have not done so in this region. So the decisions that have been made are dramatic and they’re substantial. Now the next step is implementation.

So when I say if the last eight years are an indication of the big decisions they made, the next step is the implementation side of it. We hope to see really development in the next eight years as well.

Press: [Inaudible]. Two questions for you. U.S. textile [buyers] are moving their orders from China to Vietnam. Can you make clear about this information? And the second question is that [inaudible] Vietnam, [inaudible] is big, but [inaudible]. So [inaudible] from the [inaudible] or from the U.S. company side.

Assistant Secretary Hernandez: I’m sorry can you repeat the last question?

Press: The [inaudible] of the U.S. in Vietnam relays more [inaudible] to other countries. So where is the problem? Are they from the U.S. side or from the Vietnam side?

Assistant Secretary Hernandez: Are you saying there should be more U.S. investment in this country?

Voice: I think the question is U.S. companies reduced [inaudible] when they [inaudible] Vietnam. But the implementation, the real number that has been implemented is small. So what is the problem?

Assistant Secretary Hernandez: They’re making a commitment to invest but you don’t see the full amount realized.

Press: Yes.

Assistant Secretary Hernandez: That’s interesting, because I think if you look at the numbers of investment from the United States starting from 2001 to today, every single year it has grown and there has been a significant increase in investment of American companies in Vietnam.

One of the things I’m trying to do in my visit here as well is that the United States is the largest exporting market for Vietnam. You send more product to the United States than any other country. What I in turn would like to do is for Vietnam to buy a lot from the United States, because right now there is a trade imbalance. We would like for more of Vietnam to buy American products so we can have more of a trade balance. So this is also a component to my visit here to Vietnam, is that we’re buying a lot from you. We’re consuming a lot from Vietnam. And in turn we’d like to see if we can sell more American products.

But as far as investment, I think every year you are seeing significant amounts of investment from American companies into Vietnam.

Press: I have two questions for you. Whether or not the U.S. Department of Commerce is considering giving [GSP] for Vietnamese exporters, that’s the first question. The second question is your companies coming with you today consider or show any interest in buying out some Vietnamese companies? Now the Vietnamese companies [inaudible] and some are going to [inaudible]. Do you see any signals from the U.S. companies to buy out Vietnamese companies?

Assistant Secretary Hernandez: With respect to the first question on GSP, we have been in dialogue with officials from Vietnam about this particular initiative. We have also informed Vietnam what is required for that, and the dialogue and the questions moving back and forth are still in discussion, so there’s no announcement on GSP to date. But it’s something that we offer to many developing countries. It is something that we take very seriously, but it’s also something that is required for the government to work through. So I do expect for Vietnam to pay great attention to the details, which is implementing and adhering to a few of the agreements that we’ve discussed. Once that’s concluded I think there will be a decision, but I think at this point it’s still ongoing.

With respect to your second question, are American companies here to buy out Vietnamese companies? Their purpose here is to really come and get a good look at the market and see it for themselves with their own eyes and get an idea of the environment, how easy it is to do business, look at the review about how their property is protected, a good view about the experience of other American companies and talking to Vietnamese companies. They’re going to have one on one meeting starting tomorrow morning. We’ll be here until Wednesday, and then we’re off to Ho Chi Minh.

So the whole point is this will be a whole week of questions, observations, meetings. But I can assure you that at this point it is an opportunity to maybe find a partner or find an opportunity to do business in Vietnam.

Press: What kind of Vietnamese companies are the U.S. companies going to meet tomorrow and all week in Ho Chi Minh City?

Assistant Secretary Hernandez: As you know, the trade mission has a lot of different companies with different sectors and different expertise, so at this point each company has been set up with a lot of other Vietnamese companies to have one on one meetings throughout the day tomorrow to talk about what the landscape is, what opportunities may exist, and talk about maybe if they could do business, how would they do business. And so there is a lot of discussion in that. So I think they’re going to meet with several Vietnamese companies from Hanoi tomorrow. But it would depend based on the need or what they see as a fit for that particular.

I think the ones related to renewable energy, the ones related to education, I think you would think that those who are focused on education would have a wide variety of meetings tomorrow. I think those with renewable energy, going from waste to renewable energy is very dynamic and different. I think there is a potential there to meet with different companies, possibly investors, possibly meeting to figure out what the situation is here. There’s a great opportunity to meet with a lot of different people, so it depends.

One of the companies that’s here with us, it’s very unique, but it’s for the ladies, is Mary Kay Cosmetics. Have you ever heard of Mary Kay Cosmetics? Mary Kay Cosmetics is hugely popular for women. I know because I have two sisters and my mother, and this is very popular with ladies in the United States. So they’re here to see if there’s a market. Hopefully it works out. They are very successful, but we’ll see. But that’s different. It’s not energy, it’s not health care, it’s not education. It is women’s cosmetics.

I think we’ve answered all the questions.

Voice: We have books here we can hand out to all of you with information on companies that are part of the trade mission as well as other information.

Assistant Secretary Hernandez: Thank you all for coming. I wish you and your family good health and best wishes.

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