Viet Nam mulls over new strategy to push trade in wake of BTA

14 Dec 2001

Ha Noi - Experts from different Ministries involved in export gathered today in Ha Noi to take a fresh look at Viet Nam's trade and export strategy in the wake of the new trade accord signed with the U.S and in the context of falling commodities prices and global economic slowdown.

The "Seminar on Export Potential‚", part of the UNDP/Switzerland-supported ‚"Support for Trade Promotion and Export Development ‚" project, brought together officials and decision makers from the Ministries of Agriculture and Rural Development, Industry, Trade as well as the Central Institute for Economic Management and the Viet Nam’s Association of Seafood Exporters and Producers. The project is implemented by the International Trade Centre (ITC) UNCTAD/WTO and Viet Nam Trade Promotion Agency (VIETRADE) under the Ministry of Trade.

The project’s experts presented new findings of the assessments of Viet Nam’s export potential and recommendations for trade and export policy. The assessment focused on how Viet Nam can maintain its high rate of growth of exports, while also undertake the transformation to higher value added products and services, and eventually exports of knowledge based products and services.

“The ratification of the Bilateral Trade Agreement between Viet Nam and the United States and the ChinaÃøs recent entry to the WTO present both opportunities and challenges to Viet Nam. The project therefore proposes to help Viet Namese exporters find solutions in light of new external development‚”, said Ngo Van Thoan, Head of VIETRADE.

Asia is currently the market for 60% of Viet Nam’s exports, while Europe accounts for about 25%. Viet Nam’s currently most important trading partner is Japan (18.2%), followed by China (10.6%) and Australia (8.8). The U.S arrives only at the 6th place with 5.1%. ‚”China is emerging as Viet Nam’s key competitor, especially after joining WTO but it also presents a stimulus for Viet Nam’s exporter‚” said Alain Chevalier, Senior Technical Advisor of the project.

The ratification of the US-Viet Nam trade agreement, combined with aggressive marketing in the US over the coming years is expected to significantly increase the market share of the US from currently 5-6% of Viet Nam's total exports to 15-20% by 2010. This would imply a growth of the merchandise exports to USA from currently about USD 0.8 billion to USD 10 billion. ‚”The signing of the BTA is only the first step because the U.S market is very competitive and requires careful preparations‚” said Chevalier.

This opinion was shared by Nguyen Thi Bich Ha, from the Young Business Association. Ha pointed out the example of the catfish, saying that Viet Namese exporters of catfish got into trouble in the U.S and are not aware of the legal aspect of the dispute.

Viet Nam’s has so far displayed an excellent performance in export development as a relative newcomer in a market based economy in an early stage of industrialization. Viet Namese exports of goods and services grew by 28% per annum 1990-1999, four times as fast as the annual growth of the world trade. In 2000, exports of products and services reached an estimated USD 17 billion, representing 55% of Viet Nam's GDP, indicating a very high openness of the economy.

Viet Nam has managed to become a key player on the global market for a series of commodities and products, notably rice coffee, pepper and cashew. In terms of industrial products, Viet Nam is also a leading exporter of footwear and garments.

The Report notes that Viet Nam has to a certain extent become a victim of its success as an exporter of agriculture commodities. Its economy has become vulnerable to the well-known cyclical rapidly changing prices of some key commodities, and in some cases Viet Nam even has contributed to a global oversupply, resulting in depressed prices. The overall decline in prices on basic commodities such as rice, coffee and rubber since the late 1990s is affecting both the national economy and in particular smallholders specializing in these commodities.

“The challenge is whether the country can transform this performance to a more diversified and advanced export structure into a second generation, and also shift towards products and services with assumed long term rapid global growth in demand‚” says the Report.

To promote export in general the Report recommends the creation of a conducive environment to enhance supply, attract foreign investments and joint ventures, develop basic human resource and supportive infrastructure, etc, Based on a set of criteria ranging from the value of exports, the position of Viet Nam’s exports in the total global trade, to social and environmental quality of the exports, the Report also recommends that first priority should be given to the fruits and vegetables, marine products, handicraft, textiles and garments, footwear, electronics, wood products and tourism.

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