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17 Ngo Quyen, 7^th^ Floor, Hanoi, Vietnam, Tel: (04) 934-9814, Fax: (04)
934-9813

## THE STAR-VIETNAM PROJECT AT A GLANCE 

(April 10, 2003)

**1. Project Background and Objectives**

The U.S. - Vietnam Bilateral Trade Agreement (BTA) is the most
comprehensive bilateral trade agreement ever signed by Vietnam or the
United States. The BTA, much like the WTO, is a modern "trade and
investment" agreement, in the sense that it includes extensive
obligations related not just to import tariffs and quotas, but also to
transparency, dispute settlement, investment, intellectual property
protection, market access for services, and business facilitation.

The commitments made under the BTA are mutual for both countries, but
because the U.S. is a long-time member of WTO, its laws and institutions
already had been adjusted to meet the BTA commitments upon entry into
force. Thus, the principal change by the U.S. was granting Vietnam MFN
(NTR) status, thereby, dramatically reducing U.S. tariffs on Vietnam's
imports on average from around 40% to 3-4%. On its part, Vietnam
committed under the BTA to change numerous laws, regulations, procedures
and institutions according to a specific time schedule. Many of the
commitments in the BTA reflect the internationally recognized rules and
procedures under the WTO and other international conventions that govern
global trade and investment relations. Therefore, if completed fully,
these reforms will foster stronger trade and investment flows between
Vietnam, the United States and the rest of the world, and will bring
Vietnam much closer to WTO and best international practices. This, in
turn, should result in growth in employment, domestic investment,
private sector development, income and productivity, raising standards
of living and reducing poverty levels as have been the case in its
East-Asian neighbors.

Given the diverse and complex issues covered by the BTA, the
STAR-Vietnam Project was developed by USAID at the request of the
Government of Vietnam (GVN) to assist the GVN to implement the BTA and
to accede to the WTO.[^1] STAR, initially a three-year Project, is the
largest U.S. technical assistance contract in post-war Vietnam and the
first USAID-contract designed in coordination with the USTR to assist in
implementing a trade agreement. In response to the urgency to provide
timely and effective technical assistance before entry into force of the
BTA, STAR began operations in Hanoi in mid-October, 2001, about
two-months before the entry into force of the BTA on December 10, 2001.

**2. The STAR Team and Technical Assistance Strategy**

Assisting counterparts to make required changes in laws and institutions
to comply with the BTA is the focus of most of STAR's technical
assistance work, which typically include a mix of:

a)  legal and economic analysis and recommendations regarding changes in
    the laws and policies needed to comply with the BTA and, as
    relevant, with related WTO requirements and international best
    practices;

b)  training workshops and policy seminars to advance understanding of
    the technical issues underpinning such changes, to build public
    support for such reforms, and to help train those involved in
    implementation of the Agreement;

c)  study tours carefully targeted to advance priority reforms; and,

d)  publication and translation of key reference materials.

STAR is made up of a team of local and international experts with
extensive experience and knowledge of Vietnam as well as a strong
understanding of international standards and institutions. The mix of
long-term and short-term technical advisors has been put together to
respond to the wide range of diverse and often technically complex
issues covered by the BTA. In response to a stronger than expected
demand for STAR's technical assistance by the Vietnamese, USAID
increased the level of funding in December 2002 to enable STAR to expand
its staff to include four full-time expatriate lawyers and economists,
seven full-time Vietnamese professional and administrative staff, and a
group of expatriate and Vietnamese lawyers and economists who work on a
permanent but part-time basis.

**3. STAR Operation and Priorities**

The two Governments decided at the beginning of the Project to run STAR
as a demand-driven project. That is, all of STAR's assistance responds
directly to requests of state agencies responsible for implementing the
BTA, helping to encourage partnerships and a strong buy-in by
counterparts. In addition to normal USAID supervision, STAR is
supervised by an innovative Government Steering Committee established
under the Office of the Government to approve program activities and
designate counterparts to work with STAR.

Over the first year of operation, STAR has been asked to develop
technical assistance programs to support the BTA implementation efforts
of 42 state agencies, including 32 central level agencies and 10
provincial People's Committees. This unprecedented list of technical
counterparts reflects both the comprehensive nature of the BTA and the
credibility that STAR has gained over its first year of operations.
Although managing requests from such a large and diverse set of
counterparts requires a careful process for establishing priorities, it
also provides STAR with the unique opportunity to provide consistent and
systematic technical assistance among almost all key economic and legal
policy agencies and dealing with most of the critical laws, regulations
and administrative procedures that underpin Vietnam's commercial
environment. A key guiding factor for establishing priorities is the
scheduled deadlines for meeting obligations in the BTA. STAR's focus in
2002 was on the most important obligations due upon entry into force of
the Agreement, shifting in 2003 toward new obligations that become due
in 2003 and 2004.

**4. Results and Plans for the Future**

Over just the first full year of its operation, in addition to
completing the many steps required to start up a new project, STAR has
helped conduct 23 training workshops and policy seminars, organized 4
study tours and reviewed in detail more than 9 laws and regulations.
Each activity was carefully crafted to provide strategic support for
efforts to implement the BTA. These activities have reached directly
more than 2,000 government officials and private-sector leaders,
especially targeting those key senior and mid-level government officials
responsible for moving forward the reforms needed to implement the BTA.

In 2002, STAR focused on supporting efforts to amend/adopt those laws,
regulations and administrative procedures that were "due upon entry into
force" of the BTA in the following areas:

a\) transparency;

b\) commercial dispute settlement;

c\) enforcement of the current laws on intellectual property rights;

d\) key administrative and court procedures; and,

e\) several market access issues, such as for legal services.

STAR's Workplan for 2003[^2] builds upon the already extensive set of
program activities conducted in 2002, providing follow-up support to
finalize the approval and implementation of key "due upon entry into
force" obligations and developing new support activities for obligations
that will become due over the course of 2003 and 2004. In particular,
key obligations coming due in this period include:

a\) bringing Customs into conformance with WTO Standards;

> b\) bringing Vietnam into conformance with key international
> conventions for intellectual property protection and with most
> elements of the WTO Agreement on Trade-Related Aspects of Intellectual
> Property Rights (TRIPS);
>
> c\) establishing a registration system for investment licensing
> procedures; and
>
> d\) expanding market access and related reforms for a number of
> service sectors, including value-added telecommunications, accounting,
> architectural, engineering, computer and banking services.

STAR will also continue to work in 2003 to enhance understanding among
key policy and business communities of the importance of implementing
the BTA, with a particular focus on the National Assembly and other
political and business leadership at the national and provincial levels,
many of whom play a critical role in approving and implementing
BTA-related reforms. STAR will also complete an annual report of the
economic impact of the BTA, supplemented by economic analysis of
specific issues of greatest concern for policy makers.

[^1]: Based on a competitive bidding process, USAID awarded the STAR
    contract on September 27, 2001 to a consulting team headed by
    PricewaterhouseCoopers (PWC) with technical leadership by
    Development Alternatives, Inc (DAI). On October 1, 2002,
    PricewaterhouseCoopers' consulting division was purchased by IBM
    Global Services. Accordingly as of that date, "IBM Business
    Consulting Services" is the prime contractor for the STAR-Vietnam
    Project.

[^2]: For a detailed description of STAR's workplan for 2003 and
    achievements in 2002, please contact the STAR office at the above
    address.