IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2219.html
   My bibliography  Save this paper

The effect of the United States'granting Most Favored Nation status to Vietnam

Author

Listed:
  • Fukase, Emiko
  • Martin, Will

Abstract

Since the U.S.embargo on trade with Vietnam was lifted in 1994, exports from Vietnam to the United States have risen dramatically. However, Vietnam remains one of the few countries to which the United States has not yet granted most favored nation (MFN) status. The general tariff rates that the United States imposes average 35 percent compared with 409 percent for the MFN rate. Granting MFN status to Vietnam would improve its terms of trade and help improve the efficiency of resource allocation in the country. Better access to the U.S. market would increase the volume of Vietnamese exports to the United States and the prices received for them while also reducing their costs to U.S. users. The authors use a computable general equilibrium model to examine the effects of reducing U.S. tariffs on Vietnamese imports from general rates to MFN rates. They estimate tariff changes using the U.S. tariff schedule for 1997 weighted by Vietnam's exports to the United States. The results suggest that after a change to MFN status for Vietnam, its exports to the United States would more than double, from the 1996 baseline of $338 million to $768 million. By conservative estimates, welfare gains in Vietnam would be about $118 million a year, or a 0.9 percent increase in real income per capita. Sixty percent of that gain would come from improved terms of trade and the other 40 percent from gains in efficiency. Because Vietnam's exports to the United States have been growing rapidly since the lifting of the embargo in 1994, the trade expansion resulting from MFN status may be larger by the time Vietnam obtains it. Based on 1998 values, the increase in exports would have been around $750 million a year. For the United States, lowering the high tariffs on imports from Vietnam would improve consumer welfare by lowering prices and increasing the volume of those imports. The direct welfare gains in the United States are estimated to the $56 million a year. There are likely to be significant additional gains to both countries from the liberalization Vietnam will undertake as a result of the negotiation for MFN status and for entry into the World Trade Organization.

Suggested Citation

  • Fukase, Emiko & Martin, Will, 1999. "The effect of the United States'granting Most Favored Nation status to Vietnam," Policy Research Working Paper Series 2219, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2219
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1999/12/03/000094946_99112405321020/Rendered/PDF/multi_page.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Martin,Will & Winters,L. Alan (ed.), 1996. "The Uruguay Round and the Developing Countries," Cambridge Books, Cambridge University Press, number 9780521586016.
    2. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    3. Martin, W. & Winters, L.A., 1995. "The Uruguay Round and the Developing Countries," World Bank - Discussion Papers 307, World Bank.
    4. James E. Anderson & Will Martin, 1996. "The Welfare Analysis of Fiscal Policy: A Simple Unified Account," Boston College Working Papers in Economics 316., Boston College Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2006. "Vietnam’s Accession to the WTO: Lessons from Past Trade Agreements," MPRA Paper 61679, University Library of Munich, Germany.
    2. Nielsen, Chantal Pohl, 2002. "Social accounting matrices for Vietnam 1996 and 1997," TMD discussion papers 86, International Food Policy Research Institute (IFPRI).
    3. repec:asi:aeafrj:2017:p:1179-1196 is not listed on IDEAS

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2219. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.