Vietnam's accession to the WTO on January 11, 2007, was viewed as a significant step towards strengthening and stabilising the nation's business climate. However, concerns have been raised that these expectations have not been met in the five months since accession.
A draft decree being circulated to the public by the Viet Nam Business Forum would go some way toward erasing this perception by formally regulating the nation's compliance with many of its commitments made to the WTO and WTO trading partners.
The draft is still rough, however. Many of the detailed provisions for implementing WTO commitments to be spelled out in an annex to the decree has yet to be drafted or circulated.
Some WTO commitments are also not fully and or correctly expressed in the draft. For instance, trading rights and the ENT (Economic Needs Test) are expressed differently between the WTO Accession Report and the draft decree.
Phrases such as "Vietnamese enterprise" and "foreign-invested enterprise" are not used consistently between the two. Definitions of the latter in the draft decree includes a domestic Vietnamese company with only a minority foreign shareholding.
Under the unified Enterprise Law, both foreign-invested and domestic companies are organised under the same business forms. Over time, the controlling stake in a company could shift between foreign and domestic shareholders as stocks change hands.
The draft decree also needs to make clear that full trading rights include the right to sell imported products to any individual or enterprise having the right to distribute such products in Vietnam. This is in order to avoid local officials restricting trading rights on the basis of the wording of the draft decree.
Conflicts with the WTO Accession Report, the Schedule for Commitments on Services and other provisions of Vietnamese law regarding implementation of WTO commitments abound.
For example, if a service is "unbound" according to the Schedule, it means that there is no commitment by Vietnam to an agreed level of restriction. In the draft decree, however, "unbound" is defined as "the application of market access restriction measures and national treatment in accordance with Vietnamese law (if any) with respect to the establishment or operations of a commercial presence in service sectors/sub-sectors stipulated in the Schedule."
If Vietnamese law is silent on an "unbound" service sector, i.e., there are no domestic regulations concerning market access and national treatment for that sector, the authorities are obliged to allow business registration or to issue a certificate of investment.
This is because, without restrictions applying to the registration or certification of an enterprise in that service sector, there is no basis for the authorities to deny registration or certification.
In reality, though, the authorities may well refuse to issue registration or a licence on the basis that there are no requirements set forth in the Schedule, the draft decree or other Vietnamese laws. Ideally, the draft decree should be worded to forestall such confusion.
The draft decree should also make it clear that a company licensed before January 1, 2007, that applies to adjust its investment licence to take into account the Schedule for Commitments on Services, the Ministry of Planning and Investment must not treat this as an application for a separate investment licence.
Another example of a potential conflict between domestic laws implementing WTO commitment and the original WTO commitment documents arises where the draft decree purports to import by reference certain paragraphs of the Accession Report and Schedule.
The draft Decree does not interpret those provisions but attempts to summarise them and thus runs the risk of Inadvertently changing the meaning of certain provisions.
Despite the draft Decree containing a provision stating that the original WTO commitment takes precedence over such summaries, this could lead to unnecessary confusion.
Another concern arising out of such incorporation by reference is that Vietnam's commitments contained in the report and schedule are quite general and require more specific implementation for them to be realised.
Source: VNE
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