If Viet Nam is able to join the World Trade Organization before the US Congress approves permanent normal trade relations status, the US could be forced to invoke the so-called non-application clause in WTO rules.

A report in Inside US Trade reckons, however, that will have a limited impact on actual trade: "While it would prevent the US from being able to use the WTO’s dispute settlement system with Viet Nam," Vietnamese goods would continue to get most-favoured nation (MFN) tariffs in the US as they have been on an annual basis.

On the other hand, the US will not get any additional concessions Viet Nam agreed to in its accession although bilateral trade will still be covered by the US-Viet Nam bilateral trade agreement.

The US will also have to decide whether to keep quotas on apparel in place if Viet Nam becomes a WTO member but the Congress has not approved PNTR.

Viet Nam hopes to conclude its last multilateral negotiation round before a WTO General Council meeting on October 10-11 where it hopes member countries will accept the working party report. After that it will only be a matter of time before Viet Nam becomes a full member some time in November to coincide with the APEC summit it hosts in Ha Noi.

In an interview with the local press last week Trade Minister Truong Dinh Tuyen said concluding multilateral talks with the EU had helped speed up clearing of remaining issues with other partners, creating a realistic opportunity for Viet Nam to join the WTO in October this year.

Harder than it looks

Excited at the prospect of winning big outsourcing contracts, Vietnamese software companies tried to recruit local talents only to find that the global outsourcing market is not as easy as they thought.

According to PC World Viet Nam, despite growing interest from foreign software companies, only a few local companies are able to meet their outsourcing requirements. But because of the hype these companies have paid high salaries to retain programmers, and even higher salaries to poach talents from other companies.

It is a tricky situation for many of them because what foreign outsourcers look for is the ability to accept large projects. So, the companies need to have deep pockets to maintain an adequate workforce in anticipation of future contracts. But then the risk of landing no contracts is as big as that of having no engineers if they do.

What local companies see as their selling point is cheap labour. But that cheap labour force does not have the required language skills that many foreign companies take for granted with Indian engineers. Vietnamese engineers are good at technical skills but they lack the ability to follow up on big projects as managers or even supervisors.

The high expectations from outsourcing also prompt programmers to jump from one job to another, pushing up salaries and inviting poaching among software companies. The average salary in the software industry has jumped 200 per cent because of this phenomenon.

Not surprisingly, the total value of the software market in Viet Nam was only US$70 million in 2005, a far cry from the expected half-a-billion dollars. This revenue was divided among 650 companies with a total workforce of 20,000.

Scrapping over scrap

The Environment Law, effective since July this year, bans the import of used equipment and machinery even to be used as scrap. Immediately after the law became effective many companies buying old ships to break them for scrap metal saw their shipments frozen at Hai Phong port.

Less than two months earlier, in May, the Government had issued a circular allowing companies to buy old ships, break them, and recover scrap metal. Many companies saw this as a cheap way to source scrap metal and imported a lot of old ships. They are all now stuck after the Government’s flip-flop.

The affected companies voiced their protest at the inconsistency of the legal system and ambiguity of the Environment Law. They said up to 95 per cent of scrap metal in Viet Nam was from dismantling old ships. The sudden ban would not only affect their business but also the steel industry, they warned.

Of course administrative bodies like the General Customs Department have to enforce current laws and regulations. It is thus their job to stop those shipments. But at the same time they should clear those purchases whose contracts were signed and, especially, whose shipments arrived before the law became effective.

For longer term solutions the National Assembly has to balance the need to protect the environment with studies about the impact on the environment when scrap metal is recovered from used ships.

Source: Vietnam News