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3. Barriers to trade
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3.1 Tariff and tariff administrative measures

3.1.1 Tariff peak

As is indicated in the amended and supplemented commodity catalog in the preferential import tariff schedule published by the Vietnamese Ministry of Finance on 13 October 2005, Vietnam still maintains high import tariff for many goods, for example, 30 percent for certain ceramic tiles, 30 percent for paint, 50 percent for salt, 40 percent for educational equipment, 40 percent for office equipment, 65 percent for alcoholic beverages, 40 percent to 50 percent for some paper, 40 percent for cement, 50 percent for certain air conditioners, 40 percent for gloves, 40 percent for raincoats, 40 percent for leather belts, 40 percent for some garment accessories, 80 percent for tricycles with a carrying capacity of over 350 kilograms and trucks with a carrying capacity of less than 5 tons.

3.1.2 Tariff escalation

Tariff escalation is most prominent for food, tobacco, textile, and leather products in Vietnam. For example, the import rate for soybean oil is 5 percent, refined oil 50 percent; unprocessed tobacco leaves 30 percent, cigarettes and cigars 100 percent; fur materials 0, fur products 30 percent to 50 percent; cotton and cotton yarn 0 to 20 percent, cotton fabrics 40 percent; fiber flax and synthetic silk 0, linen and synthetic silk textiles 40 percent.

3.1.3 Tariff quotas

Import quotas applicable to cotton, condensed milk, non-condensed milk, and maize have been abolished in Vietnam as of 1 April 2005, but commodities including tobacco raw materials, salt, and eggs remain subject to import quotas.

3.2 Import restrictions

Currently, 7 key items – petrol, glass, iron, vegetable oil, sugar, motorbikes, and nine-seat motorized vehicles – remain on the mandatory import license list in Vietnam.

Vietnam still keeps some imports under quantitative restrictions: sugar, cement and clinker, tobacco, and in particular goods that can be domestically produced, such as some common chemicals, chemical fertilizer, paint, tubes and tires, paper, silk, ceramics, construction glass, construction steel, certain engines, certain automobiles, motorcycles, bicycles and parts, ships and vessels.

3.3 Discriminatory taxes and fees on imported goods

In November 2005, the Vietnamese National Assembly passed an act, aiming at unifying excise taxes on domestic and foreign automobiles. According to the newly enacted bill, the Vietnamese government will levy the same excise tax on automobiles, be they domestically produced or imported: 50 percent for automobiles with fewer than 5 seats, 30 percent for automobiles with 6 to 15 seats, and 15 percent for automobiles with 16 to 24 seats.

However, Vietnam currently applies discriminatory excise taxes to automobiles: the excise taxes for imported automobiles are 80 percent, 50 percent and 25 percent respectively for the above three categories of automobiles, while the excise taxes for domestic automobiles stand at 40 percent, 25 percent and 12.5 percent respectively.

Vietnam also plans to unify excise taxes for domestic and foreign cigarettes and draft beer in the 2006-2007 fiscal year. The uniform excise tax for cigarettes will be 55 percent and is to be increased to 65 percent in 2008. The uniform excise tax for draft beer will be 30 percent and is to be raised to 40 percent in 2008.

The current excise taxes for homemade and imported cigarettes are 25 percent to 45 percent and 65 percent respectively. The current excise taxes for domestic and foreign draft beer are 30 percent and 75 percent respectively.

3.4 Technical barriers to trade

Vietnam's Ministry of Science and Technology publishes a list of imports and exports requiring mandatory quality inspection. Importers and exporters of the products on the list must subject their products to inspection and obtain a permit from the relevant government agencies (such as the Ministry of Public Health, the Ministry of Agriculture and Rural Development, the Ministry of Industry, the Ministry of Fishery, and the Ministry of Science and Technology) at the time they go through customs. In the inspection, some products are subject to national standards, some are subject to regulations of the functional agencies, and some are subject to both. China is very concerned with the transparency of Vietnam's mandatory quality inspection system.

3.5 Export restrictions

On 25 January 2005, the General Customs Bureau of Vietnam's Financial Ministry issued a document, announcing that the processing of customs clearance for the export of primary minerals would be temporarily suspended. On 2 August 2005, the Vietnamese Ministry of Industry issued a circular, only allowing the export of processed ores up to a specified standard.

In addition, the Ministry of Trade demanded that all enterprises dealing in rice should register their export contracts of rice at the Vietnam Food Association.

3.6 Subsidies

In line with the strategy to develop the export market in 2004-2005, the Vietnamese government has reduced and limited its direct financial support and export incentives, and replaced the old policy with long-term credit for suppliers of raw materials and with export credit to importers of Vietnamese goods.

In 2005, the Vietnamese government provided financial support to exporters of 12 major items, because exporters suffered from a lack of funds and an unfavorable market. These items are aquatic products, rice, tea, coffee, black pepper, pork, processed fruits and vegetables, processed cashew nuts, timber (excluding timber-work), handicraft, rubber products, and plastic products.

3.7 Barriers to trade in services

3.7.1 Securities

Foreign investors may purchase shares of listed domestic shareholding companies in securities companies; however, foreign capital may not exceed 49 percent for a particular share, fund or bond. The cap on foreign shareholdings in securities companies and fund management companies is also 49 percent.

3.7.2 Law practices

Foreign law firms are now permitted to provide legal consultancy services and other legal services in Vietnam, but with some restrictions. For example, to provide consultancy on Vietnamese law, a foreign law practice must employ a Vietnamese lawyer or employ a foreign lawyer who has been issued with a certificate to practice in Vietnam, possesses a Vietnamese university law degree, and has been issued with a certificate of satisfaction of conditions for providing consultancy on Vietnamese law. In addition, foreign lawyers and Vietnamese lawyers employed by foreign law firms cannot, it is prescribed, participate in Vietnamese court proceedings.

3.7.3 Construction

Vietnam has not agreed to provide market access for the cross-border supply of construction and related engineering services, and branches of foreign construction companies are not permitted to be set up in Vietnam.

According to the relevant Vietnamese regulations, foreign bidders can participate in the tender for a construction project in Vietnam only if they submit a joint bid with a Vietnamese partner or commit to sub-contract the project to local firms. The bid-winning foreign company must give priority to employing local technicians and workers, and can only send a small team of managerial and technical staff from abroad to operate the project. In addition, priority should be given to the Vietnamese market regarding the purchase of raw materials, equipment and machinery necessary for the construction project.

3.7.4 Post and telecommunications

Foreign telecommunications companies are not allowed to provide network infrastructure services in Vietnam. Cross-border supply and foreign invested commercial presence for provision of basic telecom services is currently restricted to Business Cooperation Contracts (BCCs) with Vietnam's gateway operators. Likewise, foreign investment in the provision of value added telecom services is currently restricted to BCCs with Vietnamese partners. In addition, Vietnam Post (VNP) retains its monopoly over the public post network throughout Vietnam, but other enterprises are permitted to engage in domestic and international post delivery. Foreign invested enterprises, however, are excluded from engaging in domestic post delivery.

3.7.5 Shipping

Vietnam has eliminated the licensing requirements for foreign shipping lines to operate to and from Vietnam, but it still requires foreign shipping lines to enter Vietnam using Vietnamese agents, which means a higher freight cost for foreign importers. In addition, discrimination between domestic and foreign commercial ships in fees and charges relating to docking, warehousing, piloting and cargo handling has not been put to an end.

3.8 Inadequate intellectual property right protection

Enforcement of intellectual property rights (IPR) protection in Vietnam still remains rather weak. Trademark registration in Vietnam is relatively straightforward, and infringement is widespread. Although Vietnam's IPR Bureau is working with a number of foreign patent and trademark agencies to strengthen its IPR protection mechanism, obtaining expeditious adjudication and administrative enforcement of IPR violations remains difficult. In 2004, the trademark of China's Chongqing Longxing Motorcycle Company was viciously registered in Vietnam.

Infringement upon copyright is also no rare occurrence in Vietnam. The Vietnam Office of Literary and Artistic Copyright under the Ministry of Culture and Information administers copyright protection in the country. Vietnam has made significant progress in putting in place the legal framework required to protect copyrights, but there are many problems in enforcement. Piracy rates for PC software, music, and video CDs, VCDs and DVDs run high.

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