The Ministry of Finance (MoF) has, finally, announced Vietnam’s commitments on World Trade Organization (WTO) entry, particularly detailing opening the financial market.
According to the MoF, after Vietnam has concluded bilateral talks on opening the domestic market with the whole 26 WTO member countries who require tariff negotiations, synthesized negotiating results for the entire 10,600 import tariff lines, the country pledges to reduce import duties by 22% compared to the current rates. This is scheduled to be carried out mainly within five years from the entry into the WTO.
Namely, the average duty rate of agriculture sector in the final commitment with the WTO is 21%, down by 10.6% from the current rate. This 21% is also lower than the average incentive tariff rate of 23.5% under the Most Favored Nation (MFN) Status. The committed tariff rate applicable for industrial sector is 12.6%, reducing by 23.9% against the present rate and lower than the MFN tariff rate of 16.6%.
The final committed tariff rate averages 13.4% when the country joins into the global trade body, reduced by 21.7% compared to the present level.
According to the MoF, such sectors entitled to the most tariff reduction include apparel, fish and fish products, wood and paper, electric equipment.
However if compared to China’s pledged tariff levels, Vietnam’s tariff rates are higher. China’s tariff rate, when entering the WTO, is pledged to be 16.7% for agriculture sector, 9.6% for industrial sector and 10% on average.
The MoF’s report also said that the WTO’s rules on subsidy mainly focus on differing between allowed subsidy and banned subsidy. The allowed subsidy consists of support for development researches, assistance to disadvantageous regions and support for environment protection and others. The banned subsidy, mainly for export or replacement of imported goods, will be completely removed.
The country will be allowed to maintain some kinds of subsidies for domestically-manufactured goods. However if these subsidized goods would be exported later, causing losses for goods of importers, such importers may be permitted to take certain measures to prevent entry of those goods.
Under the WTO commitments, Vietnam must abolish the whole export subsidy for exported agriculture products as soon as Vietnam accesses the WTO, whereby the domestic subsidy is allowed at 10% of production value like other WTO developing member countries. Nevertheless, the domestic level, the MoF said, is now lower than 10%.
Additionally, Vietnam’s industrial sector is requested to remove banned subsidies as soon as the WTO entry time, for example subsidies for export and replacement of imported goods and others. The banned subsidies in form of investment incentives for export and replacement of imported goods will be abolished after five years after the WTO entry time for such projects which have been put into operations.
The banned subsidies which are being applied for apparel sector must be lifted right when Vietnam joins into the WTO.
According to the finance ministry, almost all financial services are pledged to be opened up thereby foreign invested enterprises (FIEs) can set up 100% foreign-invested subsidiaries in the next five years at the most.
Specifically, the country has totally opened the accounting-auditing market to foreign partners. As for tax consultation services, FIEs which are allowed to establish legal entities in Vietnam will be licensed for operation one year after Vietnam enters the WTO.
Given insurance sector, Vietnam commits to allow insurance companies operating abroad to supply insurance services to FIEs, foreigners in Vietnam.
There is no restrictions for establishing legal entities of foreign insurance companies in Vietnam except compulsory insurance services will be permitted to open to 100% FIEs by the start of 2008. In addition, FIEs are allowed to open non-life insurance branches five years after the country joins into the WTO but FIEs are not licensed to set up life insurance branches.
Regarding securities services, Vietnam allows establishment of representative offices and joint ventures where foreign investment can account for 49% of total capital. Five years after the country’s entry into the WTO, Vietnam permits formation of 100% foreign invested securities service companies and branches of securities service companies abroad. However the country does not allow opening branches specializing in securities trading services and issuing securities.
As for the customs sector, Vietnam commits to mainly focus on identifying customs value based on methods and regulations of the WTO Agreement on customs valuation, the country will not allow customs agencies to apply rules on minimum import prices or mandatory price lists in a bid to limit import.
Additionally, customs procedures in general are pledged to not cause trade barriers and to follow international standards under the Kyoto convention.
Vietnamnet
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