Vietnam finds cost of joining WTO is getting higher
HANOI - Amid feverish efforts by the World Trade Organization (WTO) to resuscitate the Doha round, one country with a huge stake in the talks has been left on the sidelines.
As a country with 60 per cent of its population working in farming and its agriculture exports soaring, Vietnam could stand to gain from drops in subsidies and import barriers by developed countries.
Vietnam had hoped that the Hong Kong ministerial meeting that starts on December 13 would mark its long-awaited entry into the WTO, but Hanoi is stalled in negotiations with key members including the U.S., Australia and New Zealand.
Like other latecomers to the world trading club, Vietnam is finding the cost of WTO entry is getting higher.
'The bar is continuously being raised for each successive country that joins,' says Steve Price-Thomas, Vietnam country director for the British charity Oxfam, which accuses current WTO members of 'extortion at the gate' in a recent report on the organization.
Casual observers might assume there is one set standard for joining the WTO, but in fact, each country joins with a different 'accession package', a series of bilateral agreements that must be negotiated with each of the existing members.
Countries that joined in the late 1990s had relatively easy accession packages. But these days, prospective members are being asked to quickly open up their domestic markets to foreign competition, slash import tariffs to rates lower than existing members have and to end agriculture subsidies almost immediately.
'WTO is a club, and it's a club that gets harder and harder to get into over time,' admits Adam Sitkoff, executive director of the American Chamber of Commerce in Vietnam.
The trend started with China, whose 2001 accession deal included unique 'safeguards' allowing extended quotas on textiles, recently invoked by the U.S. and the E.U. to limit China's flood of cheap clothing.
When Cambodia joined two years ago, it agreed not to import generic pharmaceuticals after 2007, even though existing members have until 2012.
Now, Vietnam could be facing one of the toughest accession deals yet.
Take agriculture import taxes: as founding members, the U.S. and E.U. still have farm tariffs over 100 per cent; Cambodia entered with tariffs capped at 60 per cent; Vietnam has offered to cap them at 24 per cent, and yet is reportedly being pressured to lower them even further, according to Oxfam.
The issue of farming subsidies is particularly annoying to Pham Chi Lan, an economic adviser to the Vietnamese government, who says developed countries are being hypocritical.
'Both the U.S. and the E.U. and a number of developed countries have big subsidies to agriculture but they still insisted to ask developing countries, including Vietnam, to open the markets,' Lan says. 'In Vietnam, we have very small subsidies to agriculture. It's unfair, really unfair in that way.'
The U.S. is also pushing for Vietnam to agree to enter as a 'non- market economy', opening the door to a China-style safeguard quota on garments, one of Vietnam's fastest-growing industries.
For critics, Vietnam's experience exposes flaws in the WTO process skewed in favour of rich countries.
Oxfam argues that such tactics may threaten poverty reduction in such countries as Vietnam, which cut poverty in half from 1993 to 2003.
'We're not arguing for special treatment for Vietnam,' Price- Thomas says. 'We're just saying it should get the same as the other countries.'
But Sitkoff says U.S. companies - feeling burned that China has not lived up to the promises it made to open up domestic markets - are pushing their government hard to make sure they can compete on a level playing field in Vietnam.
'The United States Congress isn't prepared to let another China- like agreement come into force in terms of WTO,' Sitkoff says.
Plus, while still a developing country, Vietnam is hardly in a position to argue extreme poverty. Its gross domestic product (GDP) is growing at 8 per cent this year and it already has a 4-billion- dollar trade surplus with the U.S.
'No one is claiming this process is supposed to be fair,' says Sitkoff. 'The WTO is a business deal. If you want in, you negotiate your way in.'
And Vietnam not only wants, but needs to get in to the WTO. In the past decade, the WTO has gone from an experiment to an essential in world trade.
Without membership, Vietnam's garment industry, which employs 2 million people, faces continued U.S. quotas while most of its competitors have unrestricted access to the U.S. market.
And without the trading club's rules, Vietnam has no way to fight anti-dumping tariffs like those the U.S. slapped on Vietnamese catfish and shrimp.
'To be an outsider in this world is not good,' admits Le Dang Doanh, an adviser to Vietnam's Ministry of Industry.
Political analyst and Vietnam expert Carl Thayer, who teaches at the Australian Defence Academy, says Hanoi really has no choice.
'It's like it should have competed in the Olympics one year, you wait another four years, there will be even better players and the times will be harder to beat.
'So the longer they stay on the outside the harder it is going be for them to come up to that standard,' Thayer said.
By Kay Johnson - Deutsche Presse Agentur - December 11, 2005.
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