The world’s few last communist-ruled country of Vietnam will have to confront big challenges when it joins the global largest commercial playground World Trade Organization (WTO) beside the potential opportunities for its development, assessed economists.
Although Vietnam is well positioned for WTO entry with globally competitive exports in several industries, the country’s success after the accession much depends on its ability to respond and adapt to challenges facing it in the new circumstances, said the United Nations Development Program (UNDP) economist Scott Cheshier.
“Currently, Vietnam is very competitive in primary and low value-added goods such as garments, footwear, crude oil and seafood”, said Cheshier whilst affirming the importance of competition in the sectors as it generates jobs and brings in foreign exchange.
Diversifying production to make high value-added products is crucial for Vietnam’s further development, which will be more difficult after WTO entry and needs the government’s support as production units cannot themselves diversify manufacturing and upgrade technology chains.
The business community in the fast-growing Vietnam needs to produce more high-tech products, which requires a clear technology policy approved by the government.
Another UNDP economist Martin Gainsborough also clarified that the Vietnamese government is pushed extremely hard to make concessions across a wide range of areas as this Southeast Asian country is expected to enter the WTO on tougher terms than other recent entrants such as China and Cambodia.
The urge also reduces Vietnam’s transition periods for implementing its WTO commitments, specifically giving Vietnamese firms less time to adjust to increased competition, added Gainsborough.
Despite the fact that WTO membership offers Vietnam the potential for significant long-term gains, implementing the terms of the agreement cannot be done without some pain, the UNDP economist judged.
Otherwise, WTO membership will facilitate equal treatment for domestic and foreign investors while making costs of some imports fall due to fewer tariff barriers, supporting import-dependant manufacturing firms that are seeking to enhance their competitiveness as well as reduce production costs, Gainsborough affirmed.
Theoretically, the WTO status ought to open Vietnamese exporters to non-discriminatory access to markets of fellow Geneva-based body members; however, the accession is likely to be more restricted as Vietnam will have to comply with the WTO dispute-settlement mechanism that it does not have once inside the organization.
Meanwhile, the first secretary of the Swedish Embassy in Vietnam, Mattias Forsberg seemed to be more optimistic about the potentials of Vietnam’s WTO entry, quoting the increase in exports due to more open access to international markets, opportunities to learn experiences from developed counties through exchanges, benefits of economic integration and enhancement on competitiveness.
While talking about Vietnam’s WTO accession, Le Quoc An chairman of Vietnam Garment and Textile Association posted a sparking assessment that the move will open more export potentials for foreign investors and enterprise because the domestic market still psychologically prefers imported products.
Vietnam has wrapped up the negotiation process with 26 member countries of the Geneva-based trade body, the remaining include the US and Mexico.
The country will join the WTO in accordance with its economic renovation and not at any price as demanded by its partner, announced recently Trade Minister Truong Dinh Tuyen, adding that Vietnam can join the WTO before the APEC summit in November if it quickly handle the remain multilateral issues.
Vietnam News
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