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GTAP Resource #1423

"The Doha Development Round and its Poverty Implications for a WTO Accession Candidate: The Case of Vietnam"
by Daude, Sabine

The objective of the paper is to analyze implications of the actual liberalization discussions in the agricultural sector within the Doha Round for Vietnam and its poor rural population.
Within the liberalization efforts during the last years the World Trading Organization (WTO) played an important catalytic role by establishing a multilateral trading system where up to January 2004 148 member countries were accepted by the Ministerial Conference. However, during the present Negotiation Round, also called the Doha Development Round, some drawbacks occurred and scheduled deadlines could not be met, especially true for the agricultural sector. In preparation of the Ministerial Meeting in Cancún, Mexico, in September 2003, the WTO suggested further liberalization for the agricultural sector in the Harbinson Paper to break up the deadlock in the negotiations.
Vietnam is currently not a WTO member but is in the process of accession negotiations. The objective of the Vietnamese Government is to accede to the WTO within the Doha Round by 2005. The incentive to fully join the trade system of the WTO will largely be driven by the possible gains that can be expected from the accession. The Working Party on the accession of Vietnam was established in January 1995. In January 2002 an initial offer on tariffs was brought into the negotiation process which was then further elaborated and discussed in bilateral market access contacts. These talks are still ongoing.
The chosen methodology uses first a general equilibrium setting (standard GTAP model) to assess the implications of the Harbinson suggestions in the agricultural sector under the two different assumptions of Vietnam being a member of the WTO or not. Simulations focus on the area of export subsidy reductions and market access. The data are from the GTAP database. By using a quantitative analysis it is possible to grasp the magnitude of changing production, prices, trade flows and welfare effects. In a second step data from a household survey in Son La and Bac Kan province (Northern Vietnam) from 2001/2002 are used to derive the consumption and income situation of the rural population in this area. The Northern Mountainous Regions are the poorest regions in Vietnam and are considered to give a good picture of the situation of poor rural farmers within the country. Within a post-simulation analysis the impact of price changes from the GTAP simulations on the poverty situation of rural households are examined. Results would show how rural farmers in Northern Vietnam may be affected by the countries accession to the WTO and how this affects their income and thus their poverty situation.
If Vietnam does not become a member of the WTO when the Doha Round decides for further agricultural liberalization the agricultural sector in Vietnam would shrink. Labour would move out of the agricultural sector into the manufacturing sector. Wages for unskilled labour would go down. In the case of Vietnam’s accession to the WTO the effects on the Vietnamese agricultural sector would be the reverse. The agricultural sector would expand, wages are still assumed to go down but only very modest. For rural households in the Mountainous regions of Son La and Bac Kan in Northern Vietnam this would mean that they are negatively affected by further agricultural liberalization within the WTO if Vietnam stays outside the multilateral trading system. The income situation of these people would deteriorate. With an accession to the WTO the poverty situation of these people could be positively influenced.

Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Created: Daude, S. (3/30/2004)
Updated: Bacou, M. (6/26/2004)
Visits: 2,290
No keywords have been specified.

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