Deputy Trade Minister: Viet Nam So Close to WTO

Deputy Trade Minister Luong Van Tu

Viet Nam has spent 11 years on negotiations for accession to the World Trade Organization (WTO), with over 4,000 meetings. Sai Gon Giai Phong has talked with Deputy Trade Minister Luong Van Tu, head of the Vietnamese delegation for WTO entry, about the accession process. 

Sai Gon Giai Phong: Could you brief about Viet Nam’s WTO accession process?

Mr. Luong Van Tu: WTO is the world’s biggest trade organization with 150 member countries and 29 observer countries. The total is almost equal to the number of the United Nations members, which is 191. WTO accounts for about 85% of global trade and up to 90% of global service. Viet Nam’s WTO entry goal is to facilitate development of businesses, not to make Viet Nam richer or poorer. How we can take advantage of WTO depends on how businesses operate.

Viet Nam has conducted many bilateral and multilateral talks with different countries to improve Vietnamese policies. For example, Viet Nam has applied one-door policy, lifted bans of imports of cigarettes, used cars and other items, and opened the service market. Viet Nam has passed fourth-fifths of the way to be able to join WTO. Regarding tax, Viet Nam has offered thousands of tax lines. The offering for 10,000 eight-digit tax lines is 18%, the average tax for industry and agriculture is 15%, industrial tax for the EU is 16% and agricultural tax is 20%. In terms of service, many countries want full liberalization but Viet Nam opens the market based on the country’s situation, and has made offerings for 11 service fields and 100 sub-fields. For example, Viet Nam has opened the finance and banking sector based on a set roadmap. In telecoms, six domestic companies are allowed to establish joint ventures with foreign companies, but 100% foreign-owned companies are still not permitted.

Why couldn’t Viet Nam join WTO in 2005?

In 2005, Viet Nam concluded bilateral talks with 16 countries but could not make it with important partners like the US, New Zealand and Australia. The main reason was that the partners have required a lot, and Viet Nam says it is still a developing country at a low level, so it needs more time for businesses to prepare.

What countries does Viet Nam have to negotiate with? Which country do you think is most difficult? 

Four countries: the US, Mexico, Honduras and Dominica. In this March, Viet Nam will conduct one bilateral and one multilateral negotiation round with the US. I think the US is still the most important partner. When Viet Nam finishes the talks with the US, it will get more chances to talk with the other partners.

What are the gaps now?

Obstacles still exist in tax and services. Viet Nam is facing a lot of challenges because the way near the destination is even more difficult to go. This means existing problems are the most difficult.

What are the challenges?

As I said, Viet Nam must negotiate with the US, Mexico, Honduras and Dominica. The US always require Viet Nam to negotiate all problems, no emphasis on a particular problem, while Viet Nam does not fully understand the US’s laws. As for talks with the US, experts will deal with technical problems and diplomats do their task. Joining WTO is a chance for Viet Nam to improve its legal system and sharpen its competitive edge, as well as to open the market. Concluding talks with all partners is not the end of the road.

I would say that Viet Nam’s joining WTO is within reach.

Some businesses have recently said that the Vietnamese economy is still weak, so it is very difficult to compete with other economies when joining WTO. What do you think about that?

About 10 years ago when Viet Nam was in talks with other countries to join ASEAN and pledge to carry out the ASEAN Free Trade Agreement, the same concerns were raised, saying that ASEAN goods would flood the Viet Nam market when Viet Nam joined ASEAN. But the current reality is not so. Therefore, I believe that when joining WTO, the Vietnamese economy will develop. If not, we’ll go against the globalization trend.

How would you advise businesses?

Businesses, especially small and medium enterprises, need to pay close attentions to three matters. First, they need to merge into bigger enterprises, which is a popular tendency. Second, they have to prepare well for a new period. Third, the Government will keep providing enterprises with some assistance such as support in trade promotion. Enterprises should take full advantage of such assistance. 

Reported by Thuy Hai – Translated by Tuong Thuy

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