Luong Van Tu

Communist Review, No.108/2006

To join the WTO, countries have to conclude multilateral negotiations on commitments relating to official transparency, develop legal programs to implement WTO agreements, commit to keep macro-economic according to WTO regulations and conclude of bilateral negotiations on agricultural issues. At the same time, they should conclude bilateral negotiations on opening their goods and service markets with all partners who request this. The WTO also pursues a principle of consensus. An applicant needs the agreement of at least two thirds of negotiation-requesting partners including big partners, like the EU, the US, Canada, Japan and China. However, in reality, it needs the agreement of all members of the Working Group to join the WTO. The experiences of partners that joined the WTO in recent years like China, Taiwan, Nepal and Cambodia, showed that the most hard-nosed and decisive bilateral negotiator is the US. A country can hardly join the WTO without concluding its bilateral negotiations with the EU and the US. The EU consists of 25 countries. However, 60% of their commercial policies concentrate on the European Council so they are more flexible than the US and they often conclude negotiation with the applying country before the US. It often takes an applying country another one year to conclude its bilateral negotiations with the US after coming to an agreement with the EU. It was the same for Vietnam. We ended bilateral negotiations with the EU in September 2004. But not until May 13, 2006 did we conclude bilateral negotiations in principle with the US.

We had to sit at 12 rounds of bilateral negotiations to get that result. After the Vietnam-US Bilateral Trade Agreement (BTA) was signed, it was said that 70% of the negotiation process with the US for accession to the WTO were finished. However, the US considered BTA the "corner stone" for Vietnam to negotiate with them before holding further negotiations and joining the WTO. Before signing the BTA, Vietnam and the US negotiated rates for about 300 tariffs. But to accessing the WTO, the US requested that Vietnam negotiate 10,000 tariffs excluding tariffs by branch, special consumption taxes, services, law-making, and policy transparency. At the 11^th round of negotiations in March 2006 in Geneva, Vietnam and the US made remarkable progress. There was not much left to discuss at the 12^th round from May 9-13, 2006. In terms of goods tariffs, negotiations for tariffs of agricultural and most industrial goods were completed in Geneva. Tariffs on car and spare parts and waste exports were negotiated at the final round. Telecommunications, oil and gas service, distribution, the environment, some aspects of financial service, banking, sensitive and politically influential issues such as agricultural subsidies, transitional period to stop subsidies contrary to WTO regulations, the textile and apparel sector, non market economy and lifting of bone-in beef import prohibitions were still on the table. As these issues were sensitive for both sides, negotiations were extended to 4 days and three nights from the 2 days previously planned. Negotiations began on May 9 and went through the nights of May 11 and 12 to early in the morning. They were high level negotiations. Representing the US was the Deputy US Trade Representative and his assistant. For the Vietnamese sides, in May 11 and 12, negotiators were minister and vice minister of trade. US Trade Representative Rob Portman did not directly join the negotiations but spent half an hour discussing the issues with Minister Truong Dinh Tuyen on radio. He said the negotiations were of historical significance in economic and trade relations between Vietnam and the US. Prolonged and continuous negotiations and 11-hours jet lag negatively impacted on negotiators. At times, negotiations would have broken if it were not for the patience of those involved. Eventually, both sides made necessary concessions to conclude the negotiations in principle. The Vietnamese side persisted that the distribution of cultural products such as publications was an issue under UNESCO regulation, thus it should be removed from negotiations for WTO accession. As far as the textile and apparel sector is concerned, the US agreed to remove quotas for Vietnamese exports to the US when Vietnam accedes to the WTO. Vietnam will end subsidies to the textile and apparel sector no matter how small, if they are contrary to WTO regulations when it joins the WTO. For the beef issue, the US proved that 56 countries lifted sanctions on bone-in beef, including ASEM member countries. So we had to approve. The non market economy issue was extremely difficult. We demanded that the US remove this problem, but they said that it was a sensitive problem for the American Parliament. In reality, only China recognize Vietnam as a market economy while South Korea recognises Vietnam as a market driven economy. The EU recognises Vietnam as a market economy in some disputes. We are negotiating with the EU for its recognition of our market economy. The EU has finally accepted thus a 3 years reduction on the time it will take to regcognise our economy in comparison to other socialist countries. In short, we concluded bilateral negotiations in principle with the US. The two sides are finalising the wordings of the Agreement and negotiating for the official signing at the APEC Ministerial Meeting from May 31 to June 2, 2006. The US side maintained if there is a package agreement including the full implementation of the BTA, bilateral negotiations on Vietnam’s accession to the WTO and settlement of bilateral issues, they will ask the US Congress to approve permanent normal trade relations status for Vietnam

Advantages and difficulties after Vietnam access to the WTO

Advantages:

Firstly, our prestige in the international arena will heighten. Currently in APEC, Russia and Vietnam are the remaining countries which are not WTO members. IN ASEM and ASEAN, only Vietnam and Laos are yet members of the WTO.

Secondly, our goods and services share global markets. This will increase trade and especially boost export growth. We should strive in the coming decade to achieve US$100 billion and more. The Vietnamese population is currently higher than those of Thailand and the Philippines, but our export turnover is just one-third of that Thailand and two-thirds of that the Philippines. As a member of the WTO, our goods and services will be treated more equally. Our interests will be more secure in law suits on dumping filed at the WTO.

Thirdly, by having a transparent and stable legal system will attract more foreign and domestic investors to bring Vietnam out of its status as an

Underdevelopment country earlier.

Fourthly, we are pro-actively participating in global trade policies for developing trade and economy and ensuring our interests.

Difficulties

Firstly, to gain access to the global market, we should open the domestic market to countries according to a road map. Competition between domestic and foreign businesses will be more fierce, while most of our businesses are small and medium size businesses. Most of them are very dynamic but they lack capital and technology.

Secondly, measures to protect tariffs and import prohibition will be less effective when we lower tariffs and remove rules contrary to WTO regulations. State budget revenue from import tariffs will decrease but will be paid off by export turnover and the total amount of taxes collected

Thirdly, we should heighten competitiveness at the State, branch and business levels.

Fourthly, we should develop security policy, retrain our cadres to improve their qualifications, foreign languages and improve workers’ skills to meet new job demands.

Though there are many difficulties, our position and strength are quite different from what they were 20 years ago, when we started to open our doors. We believe that after the 10^th Party Congress and with the determination of the Party, people and businesses, we will grasp opportunities, overcome difficulties and bring our country forward.