Business
UPDATED: 09:01, June 01, 2006
Roundup: Vietnam to open up services market to U.S. companies http://english.peopledaily.com.cn/200606/01/eng20060601_270180.html
Under a deal on concluding bilateral negotiations between Vietnam and the United States on the former's entry to the World Trade Organization (WTO) officially signed here Wednesday, it will offer wider doors to U.S. firms to different services, and ax tariffs on most U.S. agricultural products.
According to documents, which contain statements and figures of the Office of the U.S. Trade Representative, released by the U.S. Consulate General in southern Ho Chi Minh City during the signing ceremony held in the city on Wednesday, when Vietnam becomes a WTO members, U.S. services providers will benefit from enhanced market access to such Vietnamese sectors as banking and securities, insurance, telecommunications, and the services of energy, express delivery, transport, business and distribution.
Under the deal, as of April 2007, U.S banks will be able to establish 100-percent foreign-invested subsidiaries, and take unlimited local currency deposits from legal entities. As of the date of Vietnam's accession to the WTO, foreign securities companies will be able to set up joint ventures with up to 49 percent foreign ownership. After five years, foreigners will be able to own 100 percent of securities firms.
Now, Vietnam limits foreign banks to a minority shareholding position of 49 percent, but allows bank branches. Vietnam only allows foreign securities companies to open representative offices.
Regarding insurance, Vietnam, after its accession, will permit foreign insurers to operate via 100-percent foreign-owned subsidiaries. It will also allow them to open direct branches offering non-life insurance after five years from the date of its accession.
Foreign insurance companies are currently allowed to operate in Vietnam through joint ventures with a Vietnamese partner. Direct branching is not permitted in the insurance sector.
Besides, Vietnam will open its telecommunications markets and permit majority-owned foreign supply in four areas reflecting U.S. commercial priorities: basic public telecommunications services offered on a non-facilities basis, private data networks, satellite services, and submarine cable services.
The country will also allow U.S. energy services providers to compete for energy services projects associated with oil and gas exploration and development, management consulting, technical testing and analysis, and repair and maintenance of equipment.
Vietnam will permit foreign express delivery firms to operate as majority shareholders in joint ventures with Vietnamese partners upon accession and as 100-percent foreign-owned enterprises after five years. The country's WTO membership will ensure the unrestricted delivery of documents, parcels, packages, goods and other items through all relevant modes of supply. With regard to transport services, Vietnam will open its market for maintenance and repair of aircraft, permitting foreign companies to form joint ventures with Vietnamese partners upon accession, and to operate as 100-percent foreign-owned enterprises after five years.
Vietnam will offer improved market access for professional and business services providers, including lawyers, accountants, architects, engineers, consultants, advertising and marketing executives. U.S. services providers will be allowed to operate as 100-percent foreign-owned enterprises in most of these sectors, either upon accession or after a brief phase-in period. Vietnam will also improve access in the computer and related services sector, including allowing 100-percent foreign equity investment in this rapidly growing sector. It will liberalize the wholesale, retail and franchise sectors.
Regarding distributions services, upon accession, U.S. providers will be permitted to set up joint ventures with Vietnamese partners, and by January 2009, they will be operate as 100-percent foreign-owned enterprises. Foreign-invested distributors will also be allowed to distribute both imported and domestically produced goods.
Also under the deal, Vietnam will further expand market access for U.S. exports by considerably slashing tariffs on many manufactured and agricultural goods.
Upon accession, Vietnam will join the Information Technology Agreement, which removes tariffs on information technology products, including computers, cell phones and modems. U.S. exports to Vietnam in these products exceeded 40 million U.S. dollars in 2005, according to the Office of the U.S. Trade Representative.
Pharmaceutical tariffs will average 2.5 percent within five years after accession. Vietnam's tariff on airplanes and engines will be eliminated within seven years following accession. Its average tariff on all aircraft parts will fall to less than 9 percent in the same timeframe.
Tariffs on priority U.S. vehicles will be axed by 50 percent after full implementation. Tariffs on auto parts will be 19 percent to an average of 13 percent. Vietnam will also reduce its tariffs on large motorcycles by 56 percent and motorcycle parts by 32 percent after full implementation. Vietnam will eliminate its ban on imports of large motorcycles (those with engines with capacities greater than 175 cubic centimeters).
The country will bind tariffs at zero on 91 percent of medical equipment products within five years of accession. The average tariff rate for this entire sector will be less than 1 percent. Its average tariffs on wood products will be roughly 4 percent upon accession.
On agricultural goods, approximately three-fourths of U.S. agricultural exports to Vietnam will face bound duty rates of 15 percent or less. Products subject to these reduced tariffs include cotton, selected beef, pork, and variety meats, whey, grapes, apples and pears, and soybeans. The country's current average applied tariff on the products is 27 percent. U.S. agricultural exports to Vietnam exceeded 192 million dollars in 2005, almost 17 percent of total U.S. exports to Vietnam, according to the office.
Source: Xinhua
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