Koizumi vows to maintain Vietnam aid, but no movement on trade

Koizumi vows to maintain Vietnam aid, but no movement on trade

Steve Kirby, Agence France-Presse, Hanoi

Japanese Prime Minister Junichiro Koizumi has wrapped up a weekend visit to Vietnam, pledging to protect Tokyo's large aid program here from budget cuts, but rebuffing Hanoi's calls for early trade talks.

Koizumi insisted the two governments should complete an investment agreement safeguarding Japan's commercial interests here before tackling the thorny issue of access for Vietnamese goods, a senior aide told reporters.

Vietnamese Prime Minister Phan Van Khai agreed to complete the investment talks launched last month by the end of the year, the official said.

"The Vietnamese prime minister wished to have a bilateral agreement not only on investment but also on trade.

"We said first it was better to conclude our negotiations for an investment treaty, and then maybe after that there would be a wider range of fields in which we would be able to cooperate.

"(Khai) said Vietnam wishes to conclude negotiations within this year."

Like the European Union, Japan has been keen to ensure that its firms suffer no disadvantage as a result of a landmark 2000 trade deal between Vietnam and former foe the United States.

But it has been reluctant to follow Washington down the trade agreement path because of the thorny issue of agriculture.

Vietnam is the world's second biggest exporter of rice and a significant supplier of other agricultural commodities, creating a direct conflict with Japan's highly protected domestic farm sector.

The Japanese official insisted Koizumi's rejection of early talks did not imply any principled objection to a trade deal with any southeast Asian country.

"It is true that generally speaking we have very large problems in the agricultural field... We have to surmount the difficulties which we face."

In its agenda for the visit, Tokyo had touted the Vietnam investment deal as the "first concrete step" towards a "comprehensive economic partnership" with southeast Asia which Koizumi launched in a five-nation tour of the region in January.

But so far Japan has signed a trade agreement only with non- farming Singapore. Negotiations with Thailand are still at an early stage, the official acknowledged.

Koizumi even gave "no response" to a request from Khai for greater interim access for Vietnam's three most important staples -- rice, coffee and shrimps, the official said.

But he promised Tokyo would "continue or even increase" its aid program here which accounts for more than 40 percent of all official development assistance (ODA) to the communist state.

Already last year, Tokyo insulated Vietnam from a 10 percent cut to its overall aid budget, actually increasing its pledge for 2002 by eight percent.

"(But) Mr. Koizumi did not forget to insist on our government's wish that Japanese ODA money be used effectively," the official said.

Japan is also Vietnam's biggest trade partner with two-way exchanges totaling US$4.72 billion in 2001. Total registered capital of $5 billion made Japan Vietnam's third largest foreign investor after Singapore and Taiwan.