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Vietnam's Trade Policy Dilemmas

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Author Info

  • David Vanzetti

    (Australian National University and Central Institute for Economic Management)

  • Pham Lan Huong

Abstract

Vietnam faces alternative options in opening its economy to trade. It is about to join the World Trade Organization; as a member of the ASEAN Free Trade Area it is contemplating extending the regional trade area to include China, Korea and Japan; and it has recently concluded a bilateral agreement with the United States. Opening up to trade is a two-edged sword, with the beneficial effects of improved market access and resource allocation liable to be partially or totally offset by adverse terms of trade effects and significant, albeit one-off, cost of structural adjustment. Simulations of unilateral, bilateral, regional and multilateral liberalization reform and a tariff harmonization scenario are undertaken using a general equilibrium model, GTAP. Results indicate that significant welfare benefits could be obtained from unilateral liberalization without the need to negotiate with others. Harmonization of tariffs at the current average also shows to be beneficial in raising tariff revenues with little need for adjustment. The extension of AFTA brings moderate benefits, as does a multilateral reform which reduces applied tariffs by 50 per cent. There are only limited gains in the agricultural and resources sectors, as these major exports face low tariff barriers. However, the market for Vietnam's textiles and apparel is crucially important.

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File URL: http://www.eaber.org/node/22036
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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 22036.

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Date of creation: Jan 2006
Date of revision:
Handle: RePEc:eab:tradew:22036

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
Web page: http://www.eaber.org
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Related research

Keywords: Vietnam; trade; WTO negotiations;

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Cited by:
  1. Houssein Guimbard & Hugo Valin, 2008. "Vietnam's Accession to the WTO: Ex-Post Evaluation in a Dynamic Perspective," Working Papers 2008-31, CEPII research center.
  2. Abbott, Philip & Bentzen, Jeanet & Huong, Thi Lan & Tarp, Finn, 2007. "A Critical Review of Studies on the Social and Economic Impacts of Vietnam’s International Economic Integration," MPRA Paper 29789, University Library of Munich, Germany.

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