Statement of Andre Sauvageot, Chief Representative, General Electric Company, Hanoi, Vietnam

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Hearing on Renewal of the President's Waiver for Vietnam
from the Jackson-Vanik Freedom of Emigration Requirements

July 18, 2002

I am Andre Sauvageot, residing in Hanoi as the Chief Representative for General Electric in Vietnam.  I have held this position for over 9 years.  As I have for several years, I am again submitting the following updated information to assist the Committee in its decision regarding the renewal of the Jackson-Vanik waiver for Vietnam. 

My 38 years of involvement in Vietnam began in 1964 with a US Army assignment in South Vietnam and continues as General Electric’s Chief Representative resident in Vietnam.

Reasons for supporting the President’s Jackson-Vanik Waiver

1. Vietnam continues its development of a market economy

Vietnam continues its steady development of a market economy, notwithstanding the difficulties in moving from feudalism through Soviet-style state socialism after years of fighting for independence and national unity.  Some of the milestones on this road include:

1. Sixth Party Congress – (December 1986) Committed Vietnam to begin economic reform—every Party Congress since has augmented and strengthened this process.
2. Agricultural reform – (1989) Made Vietnam a rice exporter (after importing since the 1930’s).  Vietnam is currently the second largest rice exporter in the world after Thailand.
3. Constitution of Socialist Republic of Vietnam – (1992)

1. Commits Vietnam (Article 15) to develop a diversified market economy.
2. Provides constitutional guarantee (Article 25) against nationalization of foreign invested enterprises.

4. Investment Law passed by National Assembly – (1997) Improved incentives/protections for investors.
5. Enterprise Law – (2000)

1. Helps level playing field between state and privately held companies—more private companies now being licensed.
2. Achievements acknowledged by World Bank, UNDP during donor meeting in Ho Chi Minh City in June 2002.

6. US-Vietnam Bilateral Trade Agreement – (2001) Ratification committed Vietnam to extensive, measurable reform.

2. Vietnam provides stable, friendly, predictable environment

The Vietnamese have forged a society in which 80 million people of some 54 different ethnic groups with a wide variety of religions all live peacefully together, free of the ethnic and religious strife with which so many other countries are afflicted.

After the September 11, 2001 attacks on the World Trade Center and the Pentagon, the Political and Economic Research Company (PERC) based in Hong Kong upgraded its assessment of the security among 14 Asian Pacific countries to reflect the changing post-9/11 perceptions of entrepreneurs.  The new assessment ranks Vietnam as the most secure of those 14 countries.

3. American business needs Jackson-Vanik waiver to compete

1. GE was one of first American companies to enter Vietnam GE was among the first ten American companies to establish a representative office, obtaining a license on June 18, 1993.  Several of GE’s 11 major businesses, each with its own separate headquarters in the United States, have already successfully entered the Vietnamese market.
2. GE businesses in Vietnam and effect of the waiver:

GE Power Systems (GEPS)

GE Power Systems (headquartered in Atlanta, Georgia) manufactures steam turbines and generators in New York; gas turbines in Greenville, South Carolina; and turbine and generator control equipment in Salem, Virginia.  During tough international bidding, GEPS won the following contracts in Vietnam:

• First ever gas compressors for the White Tiger field transporting gas from off-shore (1995);
• Two hydro turbines for Song Hinh 72MW hydro plant—plant already commissioned (March 2000);
• Two generators, govenors, exciter units for Ham Thuan 300MW hydro plant—generators commissioned and handed over (May 2002);
• Two steam turbines and two hydrogen-cooled generators for Pha Lai 2 600MW thermal, coal fired power plant—nearing completion;
• Two gas turbines for the Phu My 2.2 combined cycle power plant.

Many more bidding opportunities lie just ahead.

GEPS field engineers from many countries (including the United States, Canada, Norway and Sweden) with great experience installing turbines, generators and other GE equipment in power plants praise the positive attitude, intelligence and work ethic of Vietnamese workers, as well as the eagerness of Vietnamese managers to improve productivity.  Many have volunteered to return to Vietnam whenever we have a project.

Immediate Project Opportunity and need for Jackson-Vanik Waiver

Ca Mau is a 720MW combined cycle power plant on which GE is preparing to bid by the end of this year (2002). The Vietnamese are expected to restrict the bidding to manufactures of high (“F” level) gas turbine technology (i.e., Alstom-France; Siemens-Germany and Mitsubishi Heavy Industries-Japan).  Although GE enjoys many technical advantages and hopes to provide its giant Frame 9A gas turbines from Greenville, South Carolina, the supplier may have to provide a financing package.  If the Congress were not to support the President’s Waiver for Vietnam from the Jackson-Vanik Amendment, GE and many of its American suppliers would lose this opportunity to foreign competition.

Depending on specific sourcing arrangements, if GE were to win the contract to provide two Frame 9A gas turbines, three generators, and a steam turbine for the Ca Mau power plant, as many as 190 American companies could benefit as suppliers to GE. These companies are located in the following 38 states:  Alabama, Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin. 

GE Aircraft Engines (GEAE)

GE Aircraft Engines (headquartered in Cincinnati, Ohio) regards Vietnam Airlines (VNA) as a strategic customer with significant growth potential. GE engines power three Boeing B767 aircraft and a GE joint venture’s engines power ten Airbus A320 aircraft in Vietnam Airlines current small fleet. These engines represent an aggregate value of some $162 million. 

Earlier this year, the Vietnam Airlines selected the GE90-94B engine to power two Boeing B777-200ER aircraft, which it will lease from another American company, the International Lease Finance Corporation (ILFC). The US Trade Development Agency (TDA) offered Vietnam Airlines funds for training on the GE90 engine if it were to be selected.  We believe this played an important supporting role in the selection of the GE90 for these two aircraft. 

GE Capital Aviation Services (GECAS)

GE Capital Aviation Services (headquartered in Stamford, Connecticut) has dry-leased three new Boeing 767-300ER aircraft to Vietnam Airlines (VNA) for a period of nine years. Now, over six years into the lease, GECAS is very favorably impressed with the management of VNA, a customer that has always paid its lease obligations on time, even after the currency crisis hit the Pacific nations in the late 1990s.  We attach a high value to the commitment our Vietnamese customers bring to the implementation of their contractual obligations to GE. 

GE Transportation Systems (GETS)

Headquartered in Erie, Pennsylvania, GETS manufactures locomotives, as well as parts and components. In Vietnam, GETS has won two international bids (1996, 1997) to provide parts/components to the Vietnam Railways (VR). 

Immediate opportunity and possible need for Jackson-Vanik waiver

GETS recently submitted a technical proposal to VR to upgrade 25 old GE locomotives in VR's current inventory. If GE's current technical proposal is accepted but the financing proposal is not, the US Eximbank could become the principal source for another financing proposal.

GE Medical Systems (GEMS)

Medical Systems, a global Business (headquartered in Milwaukee, Wisconsin) was the first of GE’s 11 major businesses to enter the Vietnamese market because medical equipment was included among certain humanitarian items exempted from the Trade Embargo by President George H.W. Bush in April 1992.  Since 1993, GEMS has sold ultrasound and x-ray equipment in Vietnam against stiff foreign competition from long established companies.

Vietnam’s leadership devotes considerable resources to upgrading the health of the people, with special attention to children, ethnic minorities and people living in remote areas.  Vietnam is the leading Southeast Asian country in the number of eye specialists per capita, with one eye specialist for every 87,000 people. This far exceeds the United Nations standard of one doctor per 250,000 persons.  Skilled Vietnamese eye surgeons traveled regularly to remote areas in a continuous campaign to prevent blindness and to restore sight to the blind.  

GE has for a number of years contributed funding towards “Operation Smile” (headquartered in Norfolk, Virginia) to bring American doctors to countries like Vietnam to operate on children with facial deformities such as harelips and cleft palates.

We believe that GEMS can contribute significantly to the upgrade of healthcare in Vietnam.

GE Lighting (GEL)

GE Lighting (headquartered in Cleveland, Ohio) has gained a modest presence in Vietnam with annual sales running over $1 million.

GE Appliances (GEA)

GE Appliances (headquartered in Louisville, Kentucky) has contracted with a private company to sell American (GE) manufactured appliances (refrigerators, air conditioners, washing machines, etc.) to the Vietnamese market.

4. Conclusion

The Vietnamese leadership’s commitment to economic reform and to the diversification of Vietnam’s international relationships, coupled with a strong national work ethic far outweighs the country’s well known difficulties like the weak banking system, underdeveloped body of law, and lack of infrastructure.  

Vietnam is using its strengths to effectively address its shortcomings and successfully integrate into the global economy.  The ultimate question is which companies from which countries will grow their businesses in Vietnam, and in turn, will grow with Vietnam by their engagement.

We deeply appreciate the support of your sub-committee and ultimately of the entire Congress for renewing waiver of the Jackson-Vanik Amendment for the past several years.  Because of this, General Electric is better positioned than ever to meet foreign competition and thereby create opportunities for our American workers to produce equipment for sale into Vietnam's growing market. 

We will continue to work closely with the US Government and we greatly appreciate the active support received from Ambassador Burghardt and his fine staff in Hanoi for American business and workers.  We will also continue our active involvement with such organizations as the US-Vietnam Trade Council and AMCHAM.  

Clearly, as the US-Vietnam relationship continues to improve on the basis of mutual respect and mutual benefit, progress will continue on all fronts.