CHAPTER 2 VIETNAM’S ACCESSION PROCESS TO THE WTO AND THE
2.3. VIETNAM’S ACCESSION PROCESS TO THE WTO
Policymakers from both Vietnam and the vast number of countries seeking to join the WTO give a range of economic and political reasons for doing so. For some, the rationale is to further integrate their country into the world economy. Here, the hope is to have a more predictable access to foreign markets through WTO membership and subsequently result in higher exports.
Another economic rationale isto attract more foreign direct investment (FDI)and, more generally, to use WTO membership as a seal of approval recognized by the international business community. It is also the case, however, that many nations join the WTO for political reasons.
Transitional economies, for example, often see WTO membership as a means to signal their commitment to joining the international community of market - based economies. In short, many see WTO accession as facilitating bothpolitical and economic reformprocesses within their countries.38 There is some overlap between these stated rationales and the potential benefits of WTO accession, in particular as they relate tobolstering exports and foreign direct investment inflows.
Economists would also point to the benefits that flow from better foreign access to the acceding nation’s markets, specifically in terms of lower prices for and a greater variety of imports. By binding national tariffs, committing to eliminating quotas on imports, and reforming other state measures, the credibility of an acceding nation’s policies can be enhanced and the private sector faces less uncertainty. In principle, WTO accession can improve important components of the national business environment which, in turn, has sizeable domestic payoffs.39
The aim of this section is to give an overview about the WTO accession process of Vietnam.
The necessary steps for WTO accession are mentioned in Figure 2.3 below. This process requires
37UN ESCAP, 2013.Introduction to the WTO, pp. 12-14.
38Evenett, S.J. et al., 2005.WTO accession: Lesson from Experience, Trade note, pp. 1-2.
39Evenett, S.J. et al., 2005.WTO accession: Lesson from Experience, Trade note, pp. 1-2.
the careful preparation of a detailed memorandum on an applicant’s foreign trade policies and practices in tandem with a convincing commitment to implement the WTO agreements.
Figure 2.3: The Accession Process to the WTO First steps
Request for membership
Communication to the Director - General Establishment of a Working Party
General Council decision
Working Party Fact - finding stage
Submission of a Memorandum on the Foreign Trade Regime; supporting documentation;
responses to questions from members; other documentation, as requested.
Negotiations stage
Preparation of draft Working Party Report, including draft Protocol and Decision, and draft Schedules on Goods and Services
Completion of the Working Party’s Mandate Adoption by the Working Party of its Report Multilateral
negotiations on rules
Multilateral discussions on agricultural support and export subsidies
Bilateral negotiation on market access for goods and services
Final Steps
Adoption of Working Party Report and terms of accession by General Council/Ministerial Conference
Acceptance of Terms by the applicant, by signature or otherwise.
Notification of acceptance by the applicant Membership thirty days after notification of ratification or acceptance
Table 2.2: Timeline for Vietnam’s Accession Process to the WTO
1. Application Received January 4, 1995
2. Working Party Established
Chairpersons: 1998-2004, H.E. Mr. Seung Ho (the Republic of Korea); 2005-2006, H.E. Mr. Eirik Glenne (Norway)
January 31, 1995
3. Memorandum September 24, 1996
4. Questions and Replies March 4, 1998
March 12, 1998 August 20, 1998
5. Meetings of the Working Party July 30-31, 1998
December 3, 1998 July 22-23, 1999 November 30, 2000 April 10, 2002 May 12, 2003 December 10, 2003 June 15, 2004 December 15, 2004 September 15, 2005 March 27, 2006 July 19, 2006 October 9, 2006 October 26, 2006
6. Other Documentation
(a) Additional Questions & Replies April 20, 1999
July 16, 1999 June 26, 2000 August 6, 2001 March 6, 2003 October 30, 2003 April 28, 2004 October 13, 2004 April 7, 2005 April 7, 2005 July 26, 2005 September 2, 2005 December 20, 2005 June 9, 2006 September 28, 2006 October 3, 2006 October 12, 2006
(b) Agriculture (WT/ACC/4) November 5, 2002
April 28, 2004 April 28, 2004 October 13, 2004 May 20, 2005 August 2, 2006 July 21, 2005
(c) Services (WT/ACC/5) August 24, 1998
(d) SPS/TBT (WT/ACC/8) June 26, 2000
October 11, 2004 October 31, 2002 April 23, 2004
(e) TRIPS (WT/ACC/9) June 26, 2000
November 5, 2001 April 23, 2004
(f) Legislative Action Plan June 26, 2000
April 23, 2004 November 5, 2001 December 23, 2002 May 15, 2003 June 26, 2001 October 31, 2003 December 5, 2001 April 26, 2004 October 24, 2002 November 4, 2003 November 4, 2003 July 14, 2006
7. Market Access Negotiations
(a) Goods Offer January 7, 2002
April 27, 2004 July 26, 2005
(b) Draft Goods Schedule August 11, 2006
October 5, 2006
(a) Services Offer January 7, 2002
April 27, 2004
(b) Draft Services Schedule October 10, 2006
October 19, 2006
8. Factual Summary September 19, 2001
9. Draft Working Party Report November 22, 2004
October 19, 2006
Accession Package Adopted by the General Council Working Party Report
Goods Schedule Services Schedule
November 7, 2006 November 7, 2006 November 7, 2006
Source: Retrieved from website http://www.wto.org/english/thewto_e/acc_e/a1_vietnam_e.htm, accessed April 9, 2013.
Table 2.2 above presents the timeline for Vietnam’s accession process to the WTO from January 4, 1995 to November 7, 2006. The followings are some landmarks in the process of Vietnam’s WTO accession.
First steps: the request for accession
In June 1994, Vietnam was accepted to be an observer of the WTO. The Government of Vietnam applied for the WTO membership on January 4, 1995. The General Council established a Working Party to examine the application of the Government of Vietnam to accede to the World Trade Organization under Article XII of the Marrakesh Agreement establishing the WTO at its meeting on January 31, 1995.
Working Party, Fact-finding stage:
On September 24, 1996, Vietnam submitted a “Memorandum on the Foreign Trade Regime”
that covers all aspects of trade, economic policies and institutions relating to the agreements of the WTO to the Secretariat and Working Party. The first two meetings of the Working Party were held on July 30-31, 1998 and December 3, 1998. Before that, members of the Working Party asked hundreds of questions on foreign trade regime on goods, Vietnam’s economic policies, the political system and the treatment of state owned enterprises (SOEs), private enterprises, foreign invested companies as well as monetary policies. It also submitted numerous questions relating to the bilateral and plurilateral trade agreements that could affect the competitiveness of Vietnamese merchandises and the capacity to implement the principles of the WTO. In response to those questions, the Government of Vietnam submitted answers in rounds through documents in its preparation for acceding to the WTO. Vietnam started negotiating with trading partners on November 7, 1998. The process of negotiations to join the WTO was conducted in two parallel methods, the bilateral and plurilateral negotiations.40 The following outlines the plurilateral negotiation.
Vietnam’s Process of plurilateral negotiations
Plurilateral negotiations related to the implementation of WTO agreements after Vietnam joining this global organization. 14 meetings were held by the Working Party since 1998: July 30 -31 and December 3, 1998; July 22-23, 1999; November 30, 2000; April 10, 2002; May 12 and December 10, 2003; June 15 and December 15, 2004 under the Chairmanship of Mr. Seung Ho (the Republic of Korea); and on September 15, 2005; March 27, July 19, October 9, and October 26, 2006 under the Chairmanship of Mr. Eirik Glenne (Norway).41Through 14 multilateral rounds
40Wiemann, Jurgen, 2006. “Vietnam-the 150th WTO-Member: implications for industrial policy and export promotion”, German Development Institute Publisher, Bonn, p. 31.
41Wiemann, Jurgen, 2006. “Vietnam-the 150th WTO-Member: implications for industrial policy and export promotion”, German Development Institute Publisher, Bonn, pp. 31-32.
of negotiations, Vietnam was basically able to implement fully the WTO agreements after accession.42
Vietnam’s Process of bilateral negotiations
Bilateral negotiations helped Vietnam by shedding light on what WTO members were seeking, and by enabling Vietnam to explain its position. The Working Party worked in parallel with several rounds for bilateral negotiations in regards to opening the markets of goods and services. In 2004, the results of the questions and answers were complied with in a Draft Report of the Working Party. Meanwhile, bilateral agreements had been completed with all important trade partners such as the EU, Japan, China, Brazil, Mexico, Argentina, and Chile. Vietnam finished bilateral negotiations with the USA in May 2006. The last round of negotiations took place in October 2006 with the consultation on documents accepted in the Working Party’s last meeting.43
The final “accession package”
Vietnam’s accession package consists of: (i) Vietnam’s draft commitments on goods-the 560-page list (or “schedule”); (ii) Vietnam’s draft commitments on services-the 60-page document (also a “schedule”); and (iii) the working party’s 260-page report-describing Vietnam’s legal set up for trade, along with commitments it has made in many of these areas.44
Final steps-Adoption of Working Party Report and terms of accession by General Council/Ministerial Conference:
WTO members negotiating the terms of Vietnam’s membership completed their task on October 26, 2006.45The documents went to the full membership in the General Council, which met on November 7, 2006 to decide on accepting Vietnam. Vietnam informed the WTO on December 12, 2006 that it had ratified the Membership Agreement. Vietnam became the 150th WTO member on January 11, 2007. What are the main commitments of Vietnam to its trading partners in the WTO?
The next section will describe some major commitments of the country to the WTO members.