VietNamNet Bridge – Vietnam’s entry into the WTO has helped boost agricultural exports, however it has also worsened the national trade deficit and may lower agricultural export surpluses in the future.

Farmers find it hard to keep up with fast integration.   Deputy Minister of Agriculture and Rural Development Nguyen Thi Xuan Thu speaking at the seminar.     Dr. Dang Kim Son, IPSARD’s Director answering interview by the press.

Since Vietnam entered the World Trade Organisation (WTO) on January 11, 2007 the country has had to comply with many agriculture-related regulations. A total of 1,118 tariffs pertaining to farm produce were pledged for implementation between three and five years with an average cost of 23.5% at the moment of the entry.

Vietnam has pledged to cut tariffs on 69 goods from 15 forestry product groups. It also committed adjusting 159 tariff lines of nine fishery products with an average cut from 32.2% on the entry to only 20.1%. The country has also pledged to abrogate the government’s subsidy on agricultural exports right from its accession to WTO.

Potential yet to be fully tapped

“Six years after Vietnam’s entry into the WTO, the country has gained a higher status in the world’s agricultural market with several major commodities, such as rice, seafood, coffee, pepper, cashew nuts and rubber. Despite the impact of the global economic downturn, Vietnam has continued to see surplus in agricultural exports, which has benefited the country's trade balance,” said Deputy Minister of Agriculture and Rural Development Nguyen Thi Xuan Thu.

Thu made the statement at a seminar to review the impacts of the implementation of the country’s regional and WTO entry commitments on agriculture and rural development, held in Hanoi on October 30.

According to Thu, benefits from the country’s entry into the WTO, in terms of agriculture, were much lower than expected, even though there has been modest improvements in competitiveness and added values.

This is a result lack of careful preparation before entry and insufficient adjustments in government policies as well as a lack of legal assistance, standard and quality improvement support, she assessed. 

The review study showed that the country saw continued agricultural growth in the 2006-2012 period, however, the growth rates were tending to slightly decrease from 3.81% per year for the 2006-2008 period to 3.26% per year for the 2007-2012 period.

Agricultural export revenues sharply increased during the 2000-2012 period, but growth rates in agricultural export revenue during the five years before WTO accession were higher than the figure during the five-year post WTO entry period, 18.4% per year and 15.6% per year, respectively.

“We entered the WTO with the hope of boosting trade turnover. However, the results are still lower than expectations, due to a lack of careful preparation before the entry and the slow change in industry structure post-entry,” said Dr. Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD).

Is Vietnam’s integrating too fast?

The review indicated that entry into the WTO has brought Vietnam both opportunities and challenges. Markets opening means that producers and traders encounter risks and variations imposed by the world market.

After Vietnam’s accession to the WTO, domestic fuel and fertilizer prices were on the increase, which has slowed down agricultural growth rate and lowered investment as well. Only the mineral industry benefited from the fuel price hikes, while aquaculture was the hardest hit by the price increase.

When taking into account climate change scenarios given by the Ministry of Natural Resources and Environment, it appears that only agriculture benefits from the application of climate change adaptation, while other sectors would be badly affected, with industry being hardest hit.

“This once again proves the role of agriculture as a buffer, both economically and ecologically,” Son commented.

Several experts agreed that the entry into the WTO was an unavoidable and helped boost Vietnam’s agricultural exports over the past years.

Dr. Dao The Anh, Deputy Director of Vietnam Rural Development Science Association, said that integration would bring about more opportunities for Vietnam’s agriculture, especially in terms of negotiating for the Trans-Pacific Partnership and adapting to climate change.

However, Do Thanh Liem, a representative of Vietnam Sugar Association, said Vietnam was optimistic in assessing the benefits of WTO entry. Even though integration has reduced poverty, sugar growers have become poorer. The rapid migration of population from rural areas to big cities has caused some alarm, leaving only the elderly, untrained workers and hindering the application of new cultivation methods. Cumbersome bureaucratic mechanisms of market regulation have also impeded the sales and export of farm produce.

“The speed of integration is getting faster than the capacity for adaptation of the economy and farmers themselves. China and many other countries have found in their assessments of joining the WTO, as they were prepared for the process. The government should negotiate to slacken the WTO integration process so as to give us more time to improve our faults,” Liem proposed.

Dr. Son emphasised the necessity of developing agriculture for export and building up will for restructuring.

 Source: DTriNews