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€U,ROCHAMEuropean Chamber of Comme~ In Vletn8m

September 16,2010

To: H.E. Mr. Vu Huy HoangMinister, Ministry of Industry and TradeSocialist Republic of Vietnam54 Hai Sa Trung StreetHa Noi

Your Excellency Mr. Hoang,

The European Chamber of Commerce Vietnam (EuroCham) would like to convey itscompliments to Your Excellency,

We write to respectfully offer the views and recommendations of the European BusinessCommunity in Vietnam in relation to the issuance of the Circular 24/2010/TT-BCT on 28thMay 2010 by the Ministry of Industry and Trade.

We would hereby like to send you attached recommendations for your reference.

We hope that our recommendations will be useful and we are looking forward to furthersupport you in reviewing the new law.

With kind regards,

For and on behalf of

~ The E~f c=ce in Vietnam

Alain CanyChairman

HO CHI MiNHCITY info-hcm@eurochamvn.org

EuroCenter, 5th Floor, 49 Mac Dinh Chi Street,Da Kao Ward, District 1, HCMC.Tel: ++84-8-38272715 Fax: ++84-8-3827 2743

HA NOI info-hn@eurochamvn.org

Sofitel Plaza Hanoi, Ground Floor,1 Thanh Nien Road, Hanoi. -

Tel: ++84-4-3715 2228 Fax: ++84-4-3715 2218

www.eurochamvn.org

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€U,ROCHAMEuropean Chamber of Comme"", In Vietnam

EuroCham Vietnam

Position on "Automatic Import Licensing" / Circular 24/2010/TT-BCT

On 28th May 2010, Circular 24/2010ITT-BCT (Circular 24) has been issued by the Ministry

of Industry and Trade (MOlT), stipulating the application of "automatic import licensing" for

a large number of commodity items (and repealing Circular 17/2008fTT -BCT) not included

under the old Circular 17: Circular 24 applies to a broad variety of products and items from

Chapters 2 (fully included), 3, 16-21 (20 fully included), 33, 39, 61-64, 69, 70, 73, 76, 84, 85,

87,94 and 95 of the "Harmonized System" (HS): Products include - amongst many others-

various furniture products; iron-, steel-, and aluminum items; vehicles; computers items; and

particularly food products such as meat and edible meat offal; various sorts of fresh, frozen,

chilled, dried, salted or in brine fish-, crab- and caviar products; (processed) meat products;

confectio nary items including sugar; chocolate or items including cocoa; preparatory items for

pastries; pastas; tapioca and its derivatives; cereal goods (corn flakes); breads, pastries, cakes,

and biscuits; extracts, essences, and concentrates of coffee or tea; sauces and seasonings;

soups and broths; ice cream and other edible ice; bottled water; beer; wine; vermouth; all

fermented beverages; all spirits; and all vinegars.

Circular 24 entered into effect on July 12th, 2010. Accordingly, since that day, the above

imports items are required to submit the "automatic" import license on customs clearance under

Circular 24. The time limit for the issuance of the automatic import license has been lengthened

to 7 days. Both the application and the issuance of the automatic import license are prescribed

to be done by regular mailing through the postal system. Therefore, applications may be

delayed or lost, and on average an application is likely to take an estimate of 10 days, a triple

of the average time required for the existing declaration requirement. Circular 24 further

introduces that the "automatic" license will only be valid for 30 days. Accordingly, reapplication

is a must for any logistic changes regarding the same items and products, and at least another

7 days is required for issuance of a new license. Based on the extension of administrative

burdens and uncertainties to obtain the "automatic" import license, Article 1 of Circular 24

seems to us more of a "non-automatic" import licensing procedure.

In assessing Vietnam's international trade law obligations, articles 1, 2 and 4 of Circular 24

may also be in breach of Vietnam's obligations under the relevant WTO-commitments

fk-HOCHI MiNHCITY info-hcm@eurochamvn.org

EuroCenter, 5th Floor, 49 Mac Dinh Chi Street,Da Kao Ward, District 1, HCMC.Tel: ++84-8-3827 2715 Fax: ++84-8-3827 2743

HA NOI info-hn@eurochamvn.org

Sofitel Plaza Hanoi, Ground Floor,1 Thanh Nien Road, Hanoi.Tel: ++84-4-3715 2228 Fax: ++84-4-37152218

www.eurochamvn.org

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€U,ROCHAMEuropean Cha of CornmcIrcIIi1ftVIetnam

dealing with import licensing, namely the "Agreement on Import Licensing Procedures",

which is located within Annex 1A of the WTO Agreement: Under these rules, WTO member

countries are obliged to follow the "Agreement on Import Licensing Procedures" when

implementing local import licensing laws, regulations and administrative procedures (see Article

XVI (4) of the Marrakesh Agreement Establishing the WTO). According to experts, Articles 1, 2

and 4 of Circular 24 may be in breach of the "Agreement on Import Licensing Procedures" as

they currently represent an unnecessary barrier to trade for importers into Vietnam.

From a business perspective, we believe that these application requirements are adding

unnecessary administrative burdens, and will increase the uncertainty and thereby the cost of

doing business in Vietnam. As a result, the "automatic" import license will have restrictive

effect on the import of many ordinary commodity items: Under Circular 24, importers may

be discouraged to consider Vietnam as a key market for investment. This will eventually

jeopardize consumers' and business operators' accessibility and choices to imported goods of

high quality. Moreover, the lengthy time I effort required for each single importation transaction

and the related increase in the logistic costs is likely to be shifted to consumers or

business operators. Hence, the heightened costs for imported commodity items and the

greater costs for services as a result would be detrimental to the local economy, which the

government has taken every endeavor to build for years.

In this context we also note that that Circular 24 is against the spirit and objectives of the

government's ambitious and successful Administrative Procedures Simplification Project

(Project 30) to simplify administrative burdens by 30% by the end of 2010: Contrary to Project

30, Circular 24 will add unnecessary administrative burdens and uncertainty to the private

sector doing business in Vietnam. We strongly believe that simplifying rather than increasing

administrative burdens would attract more foreign investment, and therefore, create opportunity

costs for the growth of the local economy in Vietnam.

Recommendation: Eurocham recommends repealing or at least adjusting Circular 24 so it

improves the efficiency of the existing application requirements and procedures rather than

adding uncertainty and additional costs to the existing import formalities. EuroCham is

committed to support both the MOlT and the domestic and foreign industries in finding solutions

to reduce administrative burdens for the benefit of Vietnam!

11<

HO CHI MiNHCITY info-hcm@eurochamvn.org

EuroCenter, 5th Floor, 49 Mac Dinh Chi Street,Da Kao Ward, District 1, HeMC.Tel: ++84-8-38272715 Fax: ++84-8-3827 2743

HA Nor info-hn@eurochamvn.org

Sofitel Plaza Hanoi, Ground Floor,1 Thanh Nien Road, Hanoi.Tel: ++84-4-3715 2228 Fax: ++84-4-37152218

www.eurochamvn.org