Anticipating New Doha Negotiations

17 | 06 | 2007

MUTRAP II (Multilateral Trade Assistance Project) is an EC funded project that takes place in Vietnam and receives Input from the Vietnam Ministry of Trade. A spokesperson for MUTRAP, Antonio Cordella, said that World Trade Organization (WTO) Doha negotiations will probably mean a change in regulations related to agriculture and these changes would affect Vietnam. He suggested that Vietnam will need to change long-term policies as a result of the negotiations.

As a part of MUTRAP II, the EC and the Ministry of Trade opened conference 'Review of Vietnam's commitments under the Agreement on Agriculture and proposal of policies complying with WTO' on April 5 in Hanoi. Conference participants looked into those areas that may change if the Doha negotiations do go forward: increased market access, protection of domestic production, export competitiveness and cotton fabric import/export. The Doha Declaration of 2001 is the foundation upon which negotiations can continue on these issues. At issue is to what degree and in what instances should greater access to markets be allowed and to what extent should export and domestic subsidies be lowered or eliminated in developing countries.

If countries/territories cut subsidies for their agricultural products like rice, coffee and tea, the price for these goods will increase. This will be good for Vietnam because rice, tea and coffee are all potential exports of Vietnam and the country will have an opportunity to increase sales of these products abroad. However, an increased price for farm produce especially rice would likely affect domestic consumers, as rice is the most important food item for Vietnamese.

Renewed negotiations may lead to a reduction of subsidies. In one scenario, Vietnam would cut its current agricultural subsidies by 37-60 percent, while the EU would see cuts of 76 percent and the US and Japan 65 percent. Farm products would then be more expensive to produce, prices in the marketplace due to this factor would rise everywhere. People would be paying more. This would effect end consumers in Vietnam as the price for farm produce in the domestic market would go up.

If the Doha negotiations can be revived and agreements made, all forms of export subsidies may be gone by the end of 2013. Vietnam has pledged to abolish every kind of export subsidies, excluding those that will be allowed for developing countries, like subsidies for marketing activities and transportation. This abolishment will cause the price for farm produce (mostly temperate and tropical products) in the world market to increase and therefore have a positive impact on farm produce exporting countries and territories including Vietnam. But, inevitably the abolishment will make the price for farm produce inside Vietnam go up affecting domestic consumers.

In 2006, each WTO member pledged to eliminate cotton fabric export subsidies, set cotton fabric quotas, drop import taxes on cotton fabric coming from underdeveloped countries and territories and lower other subsides provided to domestic producers. If the US and the EU reduce the subsidies they give to their cotton growers, this will raise the price of US cotton fabric, imported cotton will become more expensive and Vietnamese cotton farmers will benefit from this.

Antonio Cordella said that because Vietnam is a WTO member, the Doha negotiations will affect production and trade in Vietnam, in some ways positively, in some ways negatively. As agreements change with the anticipated negotiations, the country will find itself having to alter its trade-related targets. To reach the new targets, Vietnam will need comprehensive trade and agricultural policies that will lead to infrastructure development and international trade and marketing development. It will also need to put in place enforceable laws under which WTO regulations can be enforced, something very important for the future success of Vietnam, he said. Vietnam needs to determine where technical assistance is most needed and improve the skills and abilities of personnel so that it can formulate trade and agricultural policies and be able to protect its interests as a member of the WTO community.

Viet Nam Economic News Online

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