Tax cuts at the time of entering into Trans-Pacific Partnership (TPP) will be a driving force for the rapid increase in competitively priced imports from TPP member countries into Vietnam. This challenges Vietnam’s agricultural products, and farmers will bear the direct impact. Mr Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) under the Ministry of Agriculture and Rural Development, said this in an interview granted to Vietnam Business Forum. Thanh Yen reports.
Is TPP expected to be a driving force for more powerful economic integration of Vietnam?
Obviously, TPP will create a huge opportunity for member countries to integrate deeper into the world economy, enhance the competitiveness of domestic enterprises, and increase exports as well as GDP.
However, TPP also poses many challenges. Tax cuts will inevitably lead to a rapid increase in imports with competitive prices from TPP countries into Vietnam.
Subsequently, domestic enterprises will face stiff competition and their market share will be narrowed or even lost.
According to many experts, Vietnam’s agriculture will be most vulnerable when joining TPP. What do you think?
That’s correct. And I believe that TPP will have many impacts on agricultural products and farmers will be the most vulnerable. Vietnam has to open its market, that is to say, it has to remove all tariff lines (import duties) on agricultural products, while it does not have enough or high technical barriers to defend the domestic market from being placed into a disadvantageous position.
However, Vietnam has large agricultural production and high demand for market opening from partner countries who, however, tend to protect their agricultural products (i.e. not opening their markets).
Therefore, it is not easy for Vietnam’s agriculture to grasp the opportunity with TPP, because agricultural production remains small and scattered, while its quality and traceability management can hardly meet the standards imposed by demanding markets.
Another matter is TBT (technical barriers to trade) and SPS (sanitary and phytosanitary measures), which are important to the market accessibility of Vietnamese agricultural products because, although import duties are completely eliminated, quarantine and antibiotic residue testing, packaging and labelling requirements of TPP countries still limit the exportability of Vietnamese agricultural products and even pose more risks than tariffs. Frankly speaking, unless there are fundamental changes in agriculture, Vietnam agriculture will have a hard time taking advantage of the opportunities and overcoming the challenges with TPP.
However, do you think zero tax at the time of entering TPP will still be an expectation for the entry of Vietnam’s agricultural products into international markets?
Currently, Vietnam’s agricultural commodities are mainly exported to two major markets, the US and Japan. With respective annual spending on imported agricultural products at US$20 billion and US$10 billion, Vietnam can double its export value of agricultural products to the US and Japan.
However, it is impossible to expect a double increase in agricultural exports. Take coffee, for example; although Vietnam has a very strong position, it cannot dominate the market.
In reality, Vietnam’s coffee is now absent from the US market. If we itemise our exports when we evaluate the effectiveness of joining an agreement like TPP, it will not be objective because gains and losses are always interwoven. What concerns us is how to take advantage of strengths and restrict weaknesses. If we look at coffee and feel discouraged, we will lose more than what we earn. With TPP, what I believe what we need to look at right now is how to further promote the export of processed agricultural products. We must take into account policy changes and limit raw exports. TPP will provide the impetus for Vietnam’s agriculture to go this way, and we have to seek the interests and opportunities on our own.
How must the Vietnamese agricultural sector prepare to play effectively on the common TPP playing field?
The challenges that Vietnam must overcome to “attack and defend” are infrastructure, technology, management, and agriculture development policies.
To overcome its challenges, Vietnam must first call for investment and support from other nations, particularly the US. Technical infrastructure and management issues will quickly be resolved by the US’s strong resources and desire to strengthen US – Vietnam relations. To do this, Vietnam’s investment attraction policies and reform, and opening up, must be carried out rapidly, powerfully and thoroughly.
Besides, instead of just waiting for help, Vietnam must actively save itself. Agricultural reform policies, from the stage of land allocation, capital support, engineering, technology, production methods, product quality improvement to access output markets, must be implemented to create strength, endurance and resistance for Vietnamese agricultural products. Then, by combining with such advantages as abundant labour and natural conditions, Vietnam’s products will be completely able to compete with products from other nations.
Đăng ký: VietNam News