(VOV) -Since Vietnam’s entry to the World Trade Organization (WTO), agriculture is being most adversely affected in the national economy.
This assessment was made by experts at a recent seminar hosted by the Ministry of Agriculture and Rural Development (MARD) on the agricultural sector in the process of implementing Vietnam’s WTO commitments.
MARD Deputy Minister Nguyen Thi Thu said Vietnam is especially very vulnerable to global market fluctuations of the global market due to its failures to capitalise on the advantages offered by the WTO opportunities from the WTO and poor competitive capacity and a general struggle to compete at international levels.
Agriculture enjoys little WTO benefits
The Central Institute for Economic Management’s Dr Pham Lan Huong has from the Central Institute for Economic Management (CIEM) assessed the impacts of climate change and outside external factors on the Vietnam’s agricultural sector.
The forestry-agriculture-fishery sector grew at an annual 3.4 percent year-on-year over the 2007-2012 period, lower than the 4.1 percent five-year period’s average annual average growth of 4.1 percent before Vietnam’s admission to the largest trade organization.
Shifting the national economic focus from agriculture to industry and services also contributed to the decline and renewing forms of production see no or little improvements.
In the context of deeper international integration means rescinding protectionist policies and replacing them with measures prioritising production and value chain development and improving competitiveness.
Protective measures should be replaced with development policies attaching to production and value chains in order to improve competitive capacity of the production sectors.
Huong argued recent that sharp dramatic petroleum price increases in petroleum prices in recent times have greatly benefited the Vietnam’s macroeconomy as the country is crude oil exporter. However this puts the agricultural sector at a disadvantage as the agricultural sector uses large volumes of petroleum to operate agricultural machinery and irrigation projects.
Over the past five years, fertilizer prices rose by 2.5 times over the past five years, compared to rice prices increasing 1.2 while rice prices increase by only 1.2 times. The price hike of petroleum.
The petroleum price surge drove agricultural production prices costs up to by 35-4-40 percent in during the reviewed period while little increases in farm produce reduced farm revenues with no matching rise in revenue.
Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) Expert Pham Thi Ngoc Linh, an expert from the Institute of Policy and Strategy for Agriculture and Rural Development (Ipsard) presented reports on detailing the agricultural repercussions of free trade agreement (FTA) the impacts of tax barriers in the Free Trade Agreements (FTAs) on agriculture. Linh noted the tariffs imposed on imported agricultural products have fallen to between zero and 10 percent on staples like beef, dairy products, and rice.
Vietnam’s agricultural exports are facing challenges due to export tax rates reached in Free Trade Agreements (FTAs) with other countries.
The country was suffering from FTAs with other countries, especially in terms of tax rates. This had led to taxes on agricultural imports witnessing a sharp decrease to 0-10 per cent on products such as beef, dairy products and rice, Linh said.
Most of the country’s agricultural exports to FTA partners are subject toface tax rates of between 5–15 per cent, and with sugar, dairy products, vegetables, and meat had to suffer taxes of 30, 23 and 18 per cent subjected to rates as a high as 30 percent, she said.
She Linh forecasts that Vietnam’s trade deficit with its ASEAN, Chinese, South Korean, and Japanese four FTA partners including ASEAN, China, Republic of Korea and Japan would reach US$4 billion by 2017.
The total export turnover for forestry-agriculture-aquatic aquaculture products will increase by US$15–17 billion, she said.
The volume of agricultural exports to ASEAN country export volumes are expected to surge by 18–20 per cent, while the volume of rice exported to China will be up 25–30 per cent, vegetables 15 per cent, and dairy materials products nearly 50 per cent.
Highest The Japanese and RoK FTAs are the most beneficial for created benefits come from the RoK and Japanese markets in which farm exports Vietnam’s including rice, dairy, and produce exports products and fruit and vegetables will increase sharply in the future.
IPSARD Chief Dang Kim Son, Ipsard Head, said that after joining the reiterated Vietnam’s WTO membership has revealed the weaknesses of domestic agricultural products caused by excess, the agricultural sector have to face with challenges from outside due to poor competitive capacity of some products such as sugar and salt, salt, deficient animal husbandry, epidemics, poor food hygiene and safety standards, and pressures from the environmental and natural resource pressures.
The agricultural sector is also hampered by its small production scales. Inside challenges include small-scaled production, obsolete technology, and weak limited links and connectivity between with other economic sectors. Son says FTA tax reductions have presented foreign companies with plenty of third country export opportunities.
However, tax reductions for the country’s farm produce under FTA partners’ commitments have provided plenty of opportunity foreign companies to do business and export agricultural products to a third country, Son said.