What is the cost for missing the WTO train?
What is the cost for missing the WTO train?
18/12/2005
VietNamNet - Vietnam doesn’t want to enter the WTO at the expense of hard-won gains. Yet no one has answered what it would cost to miss out either.
Weighing the pros and cons
The press has reported much of late on opportunities and challenges when Vietnam joins the World Trade Organisation (WTO). However, the questions remain: will Vietnam win or lose, and what exactly would be that cost?
“Everybody has to pay admission. However, nobody will pay at just any cost to buy an expensive item. But here, the cost to enter the WTO is has not yet been analysed adequately and the people who bring out that idea have also not analysed it properly. What is the actual cost we have to pay if we hold out for more favourable terms? Who raises that price, and at which level will we see whether our economy can stand or not at that cost?” asked Pham Chi Lan, a member of Prime Minister Phan Van Khai’s trade research committee.
Nguyen Dinh Luong, former head of the negotiating mission for the Vietnam - US Bilateral Trade Agreement (BTA) commented: “This gain-loss problem can only be solved by presumption method. The answer is qualitative. Vietnamese people are familiar with the operations of farmers, who earn one dong and closely hold it. Everybody is afraid of losing, and is concerned only with keeping what they have had and fencing in their yards.”
But then the public is only vaguely aware of requirements pressed by trade partners, some of which could cause the economy to fall to pieces, in which case Vietnam must make some attempt to look out for itself.
“Meanwhile, on the comprehensive aspect, there is nobody working as an arbitrator and we don’t have a filter to see if the loss is real or not, if it is a loss for the society or the economy, or if it is only an impartial loss. Which is bigger, the impartial loss or the gain of the society?” Mr Luong asked.
Vietnam still lacks real and complete research on potential losses and gains of WTO membership, what benefits we must protect and what we can concede. Le Kim Sa, who works at a newly established centre to evaluate the impacts of WTO accession, admitted that the current research is still limited and experts mainly collect information via the press. But information in newspapers about the internal situation is insufficient. No one has seen bilateral agreements that Vietnam signed with the European Union (EU), Japan or China.
Missing the 2005 WTO train: no need to be disappointed?
If people enthusiastically and optimistically talked about the possibility of joining the WTO in 2005, the atmosphere cooled down surprisingly at year’s end as the WTO ministerial meeting in Hong Kong approached. The common feeling in domestic press reports then was that Vietnam shouldn’t be disappointed and it should not consider admission to the WTO critical.
However, Vietnam did several times push for WTO accession in 2005. Last year, the country voiced its wish to enter the WTO in January of this year, which was then changed to December 2005, and analysts agreed it was a feasible target.
Under the WTO, Vietnam’s textile-garment industry, which accounts for a large portion in the country’s export revenue, would benefit. This year, all WTO members enjoy the perpetual free export mechanism and are no longer subject to quotas. This has helped many countries to benefit on the world textile-garment market, notably China. But Vietnam still struggles under quotas and as a result faces loss of market share in the US and EU.
Some analysts have speculated that the EU has effectively abolished textile-garment quotas for Vietnam, but exports to this market haven’t grown much, proving "that quota is only one factor.” However, Pham Chi Lan said that we must view the situation from the position of our partners. They are still afraid of risks if bilateral agreements change, so they don’t dare invest largely and do business long term with Vietnam.
WTO accession would mark a positive political milestone for Vietnam’s 2001-05 development period, and would open a new era. Vietnam has set a target for 2010, by which all WTO commitments would be realised. But still, no one can ensure that this latest delay won’t lead to other delays, said one analyst.
Yet some argue that, though Vietnam has missed WTO membership this year, the community of foreign enterprises and those who strongly support its bid are equally disappointed. Chairwoman of the US - Vietnam Trade Council, Virginia Foote, said that it is not a ’disaster’ that Vietnam and the US couldn’t finish negotiation, this year adding: “The American business community and even the Vietnamese business community are more or less disappointed with both governments.”
Slow-paced = outcast
Speaking to the press about potential missed opportunities if Vietnam comes late to the WTO, Deputy Prime Minister Vu Khoan, Chairman of the National Committee on International Economic Cooperation, said: “The later we join, the higher the requirements. If the Doha round is successful, the standards for WTO membership will be higher for us. It means that the requirements for opening the door will be wider and deeper. That’s the biggest difficulty.”
Some officials hold out a hope that, according to reports, Doha won’t finish in 2006 and Vietnam need not hurry. However, information from the ongoing conference in Hong Kong shows that WTO members are indeed determined to conclude Doha on schedule. What would the cost be to join then?
Then there is the camp that believes Vietnam has already lost its chance to participate in the global trade liberalization rounds. For the past two years, the world has seen the boom of free trade zones and bilateral free trade agreements (FTA). The reason is simple: for many countries, the WTO ‘shirt’ becomes too tight.
In Southeast Asia, Singapore, Thailand and Malaysia have signed free trade agreements with the US and Australia, ignoring the attitude of other ASEAN members. Their argument is that they can’t wait for the remaining members. For them, national interests are supreme. The EU is also negotiating FTAs with some ASEAN countries, including Thailand, Singapore and Malaysia, but not Vietnam.
Several days ago, Prime Minister Phan Van Khai and his Japanese counterpart Junichiro Koizumi agreed to negotiate an FTA on the sidelines of the first East Asia Summit. Is Vietnam capable of signing an FTA when the of essence such an agreement is WTO++, with rules based on WTO rules? If we have not joined the WTO yet, how can we reach an FTA with Japan?
Vietnam can’t be a WTO outsider and it doesn’t intend to. Many experts have reviewed the doi moi (renovation) process and have said that the more open Vietnam’s door, the quicker its economy would develop. China, Vietnam’s large neighbour to the north, is, after all, quickly opening its doors, like a giant awakening.
Viet Lam
