Vietnam committed to remove quantitative restriction measures of imports including tariff quota right after joining WTO.
 
The commitment has a significant effect on Vietnamese economy in general and the industry in particular. As the result, agricultural enterprises and farmers of this country face great challenges which are hard to overcome.

In order to join WTO, Vietnam committed to open its agricultural market through cutting and reducing the agricultural tax of 20% and to eliminate non-tariff barriers except for the tariff quotas measure to 4 categories of sugar, poultry eggs, leaves of tobacco and salt.

As to these four categories, the tax levels in quotas are the same as the current levels of the Most Favorable Nation (MFN) (eggs 40%, raw sugar 25%, refined sugar 50-60%, tobacco 30% and salt 30%) which are much lower than that out of quotas.

There are unequal tax reduction level between sections: low tax of 0-10% for agricultural materials (input processing material, food); the average tax of 15-30% for fresh agricultural products (fruits and vegetables, milk, meat); and the high of 40-50% to the very high of 60-100% for processed products (meat, instant coffee, wine and beer, cigarettes, and soft drink). It can be seen that not farmers but processed industry is protected.

The worry of removing quotas

Due to the specialists’ judgment of Ministry of Trade and Industry, removing tariff quotas for some kinds of agricultural products which are lack of competitiveness will make bad effects on farmers who produce directly, especially in the theme that Vietnamese agricultural production is still small and dispersive. In addition, the productivity and quality are very low whilst the average agricultural land per capita is few, and the value of agricultural production per one cultivated hectare gains 30 billion VND per one.

In particular, the quality of Vietnamese sugar and salt are low in contrast with the high production cost. As the result, it is increasing number of smuggled goods from neighbor countries with considerable lower price. In the year of 2006, Vietnam had to import about 185,000 tonnes of sugar and 118,515 tonnes of salt while the quotas was committed when the country joined WTO were 55,000 tonnes of sugar and 150,000 tonnes of salt.

These show clearly that applying tariff quotas to those goods has significant influence on the ability to penetrate into the market of importers, as well as the farmers’ life.

According to the representative of National Commission of International Economic Cooperation, Ms Ngo Hong Diep, if the agreement on widening tariff quota for sensitive and special goods, in the future, in Doha round is reached, Vietnam, as an official member of WTO, has to enlarge its quotas for four goods categories which have been applied tariff quotas inherently under WTO accession commitment.

Directly producing farmers, as the result, will be influenced firstly and greatly most, which leads to the bad impacts on not only the economy but also some aspects of social life and the goal of removing poverty of the government.

Widening tariff quotas, however, at some point of view, bring big opportunities for Vietnam in penetrating market more easily, especially in some cases of widening tariff quotas for goods which Vietnam has comparative advantage and export potential such as rice, coffee, pepper, fruit and vegetable and so on.

Government’s intervention

The economists of National Commission of International Economic Cooperation say that the government should have micro and macro measures to push the movement of economic structure. Proposed measures include economic structure in agriculture and rural, massive transfer of most agricultural labor to industrial and service industry step by step, broadened labor export market coincidence with increasing investment and supports for agriculture and rural by suitable measures under WTO’s regulations such as investment to develop irrigational infrastructure, rural transport, to support farmers to apply technologies and science on the manufacturing process, storage, exposure and dry.

In addition, the government should invest in seeds with high productivity and quality in order to provide for farmers with favorable price, develop the encouraging agricultural system; reduce the participation of farmers in company with organize to consume agricultural products for them, take part in improving the competitiveness of some kinds of products that will be removed tariff quotas under WTO joining commitment.

Furthermore, information and warning mechanism should be improved so that the state can cope with the changes in the world and domestic market as well more actively.

For some sensitive categories of goods which some countries should improve to penetrate market by broadening tariff quotas as the result may happen in the Doha round, Vietnam is able to use favor, special and different treat for developing countries in order to lengthen the time of implementing commitments or maintaining a certain number of quotas for those goods.

On the other hand, Vietnam should coordinate with other developing countries which have the same view in regard to call developed countries eliminate unpermitted subsidies under WTO’s regulations to high sensitive agricultural products soon in order to ensure justice and equality in international trade, and help agricultural products of poor countries be able to access rich ones more easily.

In sphere of enterprises and farmers, there is no other way to choose but overcome themselves. According the economist Pham Chi Lan, enterprises should firstly concern about increasing the quality of agricultural articles to strengthen competitiveness regarding 4 criterias of “clean, good taste, cheap price, and large quantity”. To achieve those targets, combination between four groups (enterprises combine with state, scientists and farmers) should be established.

In which, the roles of enterprises are to meet the demand of the market, consumers and the quality requirement of the products, to fulfill the regulations on food safety, etc. so that they can guide, order farmers to produce goods complying with requirements; and coordinate with the government, scientists, banks, etc to apply support instruments, guide and supervised tools for agriculture, farmers; to organize buying and selling, maintaining, processing, packaging, delivering products before launching to the market; to establish sales system, network of marketing, provide after- sales services and build brand name for Vietnamese products; to monitor the reaction of the market and consumers to modify the production of farmers and other phases in the production line and its trading plan.