1. Generally, what is your assessment about the prospect of the agricultural sector when Vietnam joins the WTO? Do you think the sector will enjoy more advantages or disadvantages?

WTO membership could help Viet Nam to realize its potential in boosting exports of agricultural and fisheries products, thanks to improved access to international markets. Viet Nam hopes to take advantage of the WTO dispute-settlement mechanism, as well as increase its attractiveness for foreign direct investment. Once Viet Nam becomes a member, it would also have a say in shaping WTO rules. 

However, there remain big challenges for the agriculture sector, where 69% per cent of Viet Nam’s labour force is employed in farming, and 45 per cent of the rural population live below the poverty line. One of the challenges is low competitiveness of agricultural products, such as sugar, maize and livestock products. Furthermore, products such as sugar and maize have to compete with heavily subsidized ones from the US and EU.  US maize farmers receive subsidies of as much as US$10bn a year.  Meanwhile, maize is a crucial crop for food security and income of 2.6 million households who are poor and near-poor, especially in disadvantaged areas in Viet Nam. And it will take time and support to help poor people to look for livelihood alternatives to secure income, so that people can afford to have children to go to school and pay for health care costs. 

Another challenge is Viet Nam’s capacity to implement agreements such as Sanitary and Phytosanitary Measures (SPS), without securing a transition period. The SPS agreement involves harmonizing national standards in agricultural and fishery products, which will be an enormous challenge for poor producers, especially in the remote rural areas of Viet Nam, and will undoubtedly take some time to achieve. At the very least, it is essential that rich countries give Vietnam the required technical support to rapidly build domestic capacity in SPS.

At the same time, Viet Nam is being denied access by WTO members to special safeguards (SSGs) against import surges that could cause prices to fall. This is particularly important for livestock products such as pork, beef and poultry and especially for the poorest producers of these products.

Any price fluctuation that causes a fall in farm income would deepen the already increasing inequalities between rural and urban incomes. Losses of agricultural income could have strong multiplier effects. The point is not only that the negative impacts of WTO accession should be mitigated, but also that poor people should be given the best possible opportunities to benefit from the positive aspects of WTO accession.

2. What are agricultural products affected the most and what could be most competitive upon Vietnam’s WTO accession?

It is difficult to say when the final agreement is yet to be signed. What we can say is that Viet Nam is likely to see a continued increase in exports of various traditional agricultural products such as cashew nuts, pepper, and tea. However the classification of Viet Nam by the US and EU as a non-market economy (NME) could restrict Viet Nam’s access to international markets. The WTO allows member states to use more flexible calculation methods to determine the existence of dumping in the case of imports from an NME.

Furthermore, the challenge is how to increase the value added of agricultural products, with better quality, better processing and a wider variety of products. Viet Nam has been relying on our cheap labour force to make agricultural and fisheries products competitive in export markets. This will not be sustainable in the long term as Viet Nam develops further. 

As mentioned above, sensitive products with low competitiveness such as maize, sugar, livestock etc. would have to compete with cheaper imports, which could be extremely difficult for resource-poor farmers. But of course, cheaper imports would benefit net consumers. However, please don’t forget that the majority of the poor live in rural areas, either as small farmers or landless labourers working for other farmers. The rural economy and their livelihoods depend on getting decent prices for crops. Furthermore, while in theory cutting import tariffs can make food cheaper for poor people in urban areas, in practice, trade liberalisation has not always led to lower consumer prices. Example of Honduras shows that increased cheap imports from the US did not lead to cheaper food for consumers because big importing companies colluded to skim off the profits rather than pass them on. And although cheap imported food today may seem good for consumers, it could undermine the country’s ability to feed itself in the future. Our research in Viet Nam shows that cheaper maize is unlikely to have any effect on poverty reduction. It would rather benefit transport and feed companies.

3. Do you think bad quality and weak processing technology are among the major challenges for the agricultural sector to become more competitive?

Improvement in processing technology would help the agricultural sector to become more competitive. However there are many other factors including improvements in hygiene standards, food safety, trademarks and distribution. All of these require better and bigger investment from different actors, including investment in infrastructure and human capacity. This will take time, which is why Viet Nam needs a transition period to make the necessary preparations in agriculture and other sectors that are vital to becoming competitive in the world market.

4. Can you forecast what agricultural products of which country will affect Vietnam most? Do you think the US and EU will be big threat for the country’s agricultural sector?

The EU, and countries like US, Australia and New Zealand have a lot of interest in opening Viet Nam’s domestic market for agricultural products including livestock products, especially beef and dairy. The EU provides subsidies of US$2.62 per day per cow, which means that a cow in the EU gets paid more than many farmers in Viet Nam!  If Viet Nam is to develop export of livestock products, including meat, than it faces the generally low-price international markets, caused by subsidies in most of the richer countries, and also by highly efficient production systems based on well developed infrastructure and modern technology, for example in New Zealand. 

5. In China and some other developing countries, farmers have to abandon their fields as their products become less competitive. Do you think it could happen to Vietnam’s farmers?

This is a real threat. As mentioned above, price fluctuations could threaten a fall in farm income. If resource-poor farmers can’t cope with this, they would have to look for alternatives in the area or migrate to towns and cities to look for jobs. And not every poor household can afford to migrate. The case of Guangxi’s sugar farmers, one of the poorest provinces of China, is an example. The fall of sugar prices in China, due to increases in imports, put hundreds of thousands of poor households out of business. Such an adverse impact on Guangxi’s sugar industry is not the result solely of market forces. The EU depresses the world sugar price by 10-20 per cent by its use of trade-distorting export and production subsidies.  

For Viet Nam, the key question is whether farmers who find they can no longer make a living from farming have viable alternative livelihoods opportunities that are available to them.  If they do, then the negative effects for those people as a result of joining the WTO can be mitigated, and in the longer term, they may benefit.

6. Farmers in many regions in Vietnam have already abandoned their fields because they could not live on their products. Farmers who sell their land and become landless are becoming a common phenomenon in Viet Nam. What do you think about this, especially upon the country’s WTO accession?

As mentioned earlier, either as small farmers or as landless labourers working for other farmers, the rural economy and their livelihoods depends on getting decent prices for crops and livestock products. But poor farmers who experience distress sales of their land are particularly vulnerable in finding alternatives for their livelihoods.  And because gardens and land for staple crops often provide them with their primary source of food, in selling all their land they can also face a food problem, which in turn particularly affects children.

It can be extremely difficult for the landless to find jobs in factories due to low educational levels and lack of appropriate skills. Some can afford to migrate, others will have to stay. There are other disincentives to migrate too, such as difficulties in getting access to school for children because of the need to register the household.  

7. Can you name the government’s subsidies for the agricultural sector at present?

There is a range of measures used by most Governments in the world, including in Viet Nam, to protect the interests of their farmers.  These include export and domestic subsidies for the agricultural sector.  Vietnam’s Ministry of Agriculture and Rural Development would be able to provide a current list.

8. Can you tell about some experiences of the agricultural sector of some developing countries that suffer from the WTO accession?

According to the 2005 World Bank report "China and the WTO: Accession, Policy Reform and Poverty Reduction Strategies”, the poorest rural households suffered a sharp 6-per-cent drop in their living standards, as measured by consumption, due to the combined effect of a drop in real wages and an increase in the prices of consumer goods. The study then urged Chinese authorities to take measures to deal with  uneven distribution of benefits from WTO membership between rural and urban areas. China is now facing the challenge of adjusting labor market policies to improve productivity in the rural sector and to allow workers to move to more competitive sectors. 

It is important to look at both short term and long term impacts of WTO accession. An issue for the government of any acceding country, including China or Viet Nam, would be to find alternative WTO-compliant policies to meet its goals of stabilizing and managing agricultural markets and prices, raising farm incomes, ensuring supply and reasonable prices for consumers or end users, and finally, maintaining social and political stability. The government needs policy space to balance these needs according to the demographic of their populations, and not under the pressure of rich countries’ governments.

9. Do you have more comments?  

There will be winners and losers with WTO accession: it is important that the gains are maximized, and the losses minimized, for the benefit of all people in Viet Nam.  One important way to ensure this happens is to closely monitor the impact on poor people of the changes that come with WTO accession, and to rapidly respond to any negative changes in order to protect people’s livelihoods.  But it is impossible to say now exactly what will happen after accession: as the man who led Switzerland’s negotiating team for entry to the WTO said:  “joining the WTO is like jumping into a fast-moving river in the dark”.  We have to be as prepared as we can possibly be before we jump in– and then we have to hope that the journey down river takes us where we want to g