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Reducing Tariffs according to WTO Accession Rules: The Case of Vietnam

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  • Henrik Barslund Fosse
  • Pascalis Raimondos-Møller

Abstract

When Vietnam entered WTO in 2007 it was granted an accession period up to 2014. During this period tariffs would have to fall according to the accession agreement. This paper evaluates this 2007-2014 trade liberalization by building an applied general equilibrium model and calibrating it to the Vietnamese data. The model pays careful attention to the fact that Vietnam has many state-owned enterprises that do not behave in a profit maximizing way. The model simulations show that the WTO imposed tariff reforms will reduce the overall welfare level of the Vietnamese households. Moreover, the biggest loss of income will take place among the poor rural households in Vietnam. We propose other tariff reforms that both raise overall welfare and reduce income inequality.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3628.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3628

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Keywords: Vietnam; WTO accession; trade reforms; state-owned enterprises;

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  1. John Whalley & Shunming Zhang, 2006. "State-Owned Enterprise Behaviour Responses to Trade Reforms: Some Analytics and Numerical Simulation Results Using Chinese Data," NBER Working Papers 12780, National Bureau of Economic Research, Inc.
  2. Madanmohan Ghosh & John Whalley, 2000. "State-Owned Enterprises, Shirking and Trade Liberalization," NBER Working Papers 7696, National Bureau of Economic Research, Inc.
  3. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2009. "Trade and Development: Lessons from Vietnam's Past Trade Agreements," World Development, Elsevier, vol. 37(2), pages 341-353, February.
  4. Sjöholm, Fredrik, 2006. "State Owned Enterprises And Equitization In Vietnam," EIJS Working Paper Series 228, The European Institute of Japanese Studies.
  5. Raimondos-Møller, Pascalis & Woodland, Alan D, 2006. "Steepest Ascent Tariff Reforms," CEPR Discussion Papers 5782, C.E.P.R. Discussion Papers.
  6. Jonathan Haughton & Nguyen The Quan & Nguyen Hoang Bao, 2006. "Tax Incidence in Vietnam ," Asian Economic Journal, East Asian Economic Association, vol. 20(2), pages 217-239, 06.
  7. Hatta, Tatsuo, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Wiley Blackwell, vol. 44(1), pages 1-21, February.
  8. Nielsen, Chantal Pohl, 2002. "Social accounting matrices for Vietnam 1996 and 1997," TMD discussion papers 86, International Food Policy Research Institute (IFPRI).
  9. James A. Schmitz, 1996. "The role played by public enterprises: how much does it differ across countries?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-15.
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