A study made by two experts from the Mutrap 2, Nguyen Thi Hong and Pham Thi Lan Huong, pointed out that almost all existing domestic subsidy policies on agriculture are accepted in Green Box. Such polices, thus, could be kept working.

Under the WTO Agreement on Agriculture, subsidy programs have been classified according to their impact on trade flows in terms of colored boxes: “green” for those that have minimal impacts on trade, “amber” for those that have important impacts, and “blue” for programs that are explicitly allowed in the agreement.

The study also showed that Vietnam’s aggregate measurement of support (AMS) has not yet exceeded 3.4 per cent of total agricultural production, far lower than 10 per cent as permitted by the WTO.

Sugar industry is an exception, as it presently enjoys a very high subsidization with AMS level of 98.7 per cent estimated in each product. The industry has been suffering many adverse impacts from subsidy reduction under WTO regulations.

Many subsidy policies on agriculture allowable under WTO regulations, however, have not yet come into effect in Vietnam, where farmers have gained no benefits from income insurance and income security network programs, according to the study.

Huong explained in the study that low state budget allocation for agriculture has already limited expenses for implementation of Green Box subsidy polices, although such policies are believed to bring profit to farmers.

According to Antonia Cordella, an expert from Mutrap 2, Vietnam’s accession to WTO will surely make a great contribution to agriculture sector trade liberalization, offering a lot of benefits to consumers but competition challenges to the farmers. As a result, Vietnamese farmers have to reduce production cost and improve quality in order to raise competitiveness of their farm produce.

Cordella suggested the State should have policies supporting agricultural development commensurate with the WTO’s general rules, such as the development of human resources, irrigation and traffic infrastructure, the application of new technologies as well as the provision of market information.

Last year, the agro-forestry and fisheries sector contributed 18.7 per cent of Vietnam’s gross domestic product (GDP), or VND79 trillion (US$49 billion).