Viewpoints and Goals of Vietnam's Foreign Trade Development

and the ability to repay foreign debt, local raw materials and the ability to mobilize domestic capital.

3.2. Viewpoints and goals of developing Vietnam's foreign trade

3.2.1. Vietnam's foreign trade development goals to 2010

The foreign trade development goals by 2010 are:

- Trade liberalization within the ASEAN framework: participating in the CEPT program to move towards AFTA in 2006. This is a necessary step associated with the trade liberalization process within APEC and globally.

- Building concentrated industrial parks, high-tech industrial parks and export processing zones can form key areas to increase production capacity and obtain large volumes of key export products to attract new technology and create jobs for workers. Developing domestic markets and trade is a decisive factor for the development of foreign trade.

- Administrative reform, promoting the role of State management in import-export activities by formulating policies and goals, specifically planning, long-term and short-term plans, policies and orientations on FDI for each region, each field and in ODA and foreign loans.

- Develop and use human resources effectively.

- To develop production of industries closely linked to the export market, it is necessary to build a "gap strategy" of the domestic and foreign markets with a systematic and consistent mindset.

Vietnam's foreign trade policy in the coming years needs to

meet Vietnam's export targets from 2001 - 2010 as follows:

- The average growth rate of export turnover in the period 2001 - 2005 reached 16%/year; in the period 2006 - 2010 reached 14%/year and reached 50 billion USD in 2010. This growth target is likely to be achieved, due to the continued very rapid growth of some key export items of Vietnam such as seafood, manufactured goods, textiles and footwear. Products with smaller export turnover such as processed foods, handicrafts and wood products, construction materials, chemicals and plastics, electrical products

and electronics are growing rapidly. The development of information technology including hardware and software is considered an important export item in 2010. The expected export turnover and structure are shown in the following table:

Export turnover and structure by 2010

Content

2000		2005		2010
Value (Perform)	%	Value (Perform)	%	Value (Perform)	%
GDP/capita (USD-current price)	400		620		1030
1. Raw materials (tr: USD)	1,517.6	10.5	1600	5.6	1,750	3-3.5
2. Agricultural and seafood products (tr: USD)	4,568.8	33.6	6,270	22	8,000-8,600	16-17
3. Processing and manufacturing (tr: USD)	3,035.5	21.0	9,980	35	20,000-21,000	40-45
4. High technology (tr: USD)	636.5	4.4	2,560	9	7,000	12-14
5. Other goods (tr: USD)	4,508.6	30.5	8,090	28.4	12,500	23-25
Total export turnover (tr. USD)	14,455	100	28,400-28,500	100	48,000-50,000	100

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Source: Statistical Yearbook 2001-2002 - General Statistics Office 46

Interim report on Resolution 4 of the Central Committee (VIII Term), Ministry of Trade (2002).

- Average import turnover growth rate in the period 2001 - 2005

reached 13.5%/year; period 2006 - 2010 reached 14.5%/year. The main import items of the period 2001 - 2010 are raw materials for production, equipment and advanced technology. Estimated import turnover by 2010

are given in the following table.

Import turnover and structure to 2010.

Content

2000		2005		2010
Value (Perform)	%	Value (Perform)	%	Value (Perform)	%
1. Means of production (million USD)	14,810	94.7	27,500	94.8	48,000	96.0
In there:
- Machinery, equipment, tools, spare parts	4,832.5	30.9	9,500	32.8	18,000	36.0
Raw materials	9,978	63.8	18,000	62.0	30,000	60
2. Consumer goods (million USD)	829	5.3			2,000	4.0
Total import turnover (million USD)	15,639	100	29,000	100	50,000	100

Source: Import-export development strategy for the period 2001 - 2010 - Ministry of Trade 2002.

With an export turnover of about 50 billion USD and an import turnover of about 50 billion USD expected in 2010, the trade balance is balanced.

3.2.2. Vietnam's international economic integration roadmap

Vietnam simultaneously undertakes commitments within the framework of many different institutions such as AFTA/CEPT, APEC, WTO - Vietnam - US Trade Agreement and that means Vietnam must simultaneously handle the relationship between different liberalization roadmaps.

The roadmap for international economic integration is the steps and sequence of implementing the principles and contents of commitments to trade liberalization. The roadmap for international economic integration depends on the objectives of trade policy and the ability to implement those objectives. Therefore, there cannot be one international economic integration roadmap for all countries.

For each institution, Vietnam needs to determine a separate roadmap, but one that is consistent in relation to the goals of its foreign trade policy. To consider Vietnam's integration roadmap with each institution in the coming time, we must first base it on Vietnam's specific commitments in the field of trade in goods with each institution.

+ Regarding trade in goods within the framework of ASEAN/AFTA:

Commitments under CEPT/AFTA: Vietnam's full CEPT participation list includes 6,323 tariff lines, of which 66% of items have a tariff rate of 0-5% and the remaining 34% of tariff lines have a tariff rate of 5-20%. The average CEPT/AFTA tariff rate of tariff lines in the IL list

has been reduced from 9.4% (in 2001) to 7.3% (in 2002) and 4% in 2006. By 2006, most of Vietnam's tariff lines applied to ASEAN countries will be reduced to 0-5%. For some sensitive agricultural tariff lines such as rice, paddy, and some processed agricultural products, they will be liberalized in 2013 (sugar will be implemented in 2010). In addition to implementing the tax reduction roadmap according to the commitment, Vietnam also commits to

cooperation in the fields of unifying quality standards, mutual recognition of quality inspection and certification, removing barriers to foreign investment, cooperation in the field of customs (unifying the ASEAN tariff list, uniformly applying the WTO Customs Valuation Agreement - GVA, unifying customs procedures, establishing a "green channel" for imported goods between ASEAN countries ... ), supporting macroeconomic consultancy ... with the aim of supporting the effective implementation of trade liberalization.

Customs issues (Form D, ASEAN unified customs procedures, customs valuation, ASEAN Common Tariff Nomenclature - AHTN):

1. Determining customs value: Vietnam implements the GATT/WTO Customs Valuation Agreement (GVA) starting from January 1, 2001 for goods originating from ASEAN countries and from January 1, 2003 for goods originating from other countries.

2. ASEAN Common Tariff Nomenclature (AHTN): Common Tariff Schedule

is being negotiated by countries. Vietnam's tariff schedule has been detailed at the basic 8-digit level in accordance with HS96. Some tariff lines that are not in accordance with AHTN are gradually adjusted until AHTN is applied.

The roadmap for the list of goods that Vietnam will implement tax reduction with ASEAN is built on the basis of the principles set forth by the National Assembly Standing Committee, which are: Not affecting the State budget revenue; reasonably protecting domestic production industries; creating conditions to encourage technology transfer; technological innovation for domestic production industries; and thoroughly taking advantage of the incentives that ASEAN countries give each other to expand export markets and attract foreign investment.

In compliance with the above principles, Vietnam's CEPT categories

built on the basis of trying not to cause a major impact on the economy in the short term, prolonging as long as possible the protection of domestic production and having more time to prepare to face the challenges of joining AFTA.

Regarding foreign affairs, Vietnam only publishes the annual tax reduction list, but domestically, it must create initiative for industries and enterprises in planning programs and plans for effective production and business development. The Government has directed the development of a 10-year overall tax reduction schedule with ASEAN (1996 - 2006) to achieve this goal (see appendix).

Based on the current domestic production situation, the appropriate option to implement tax reduction under CEPT for AFTA has been selected by the Government to develop a schedule: Vietnam implements tax reduction under the CEPT framework, while proactively promoting economic restructuring in accordance with Vietnam's relative advantages in comparison with ASEAN countries, focusing on rapidly developing industries with large comparative advantages, but still continuing to provide protection for a limited period of time or at different levels for most manufacturing industries to achieve a certain level of development before opening the market under CEPT, limiting production of a few industries in which Vietnam is not competitive. The tax reduction process will be implemented quickly for industries with strong competitive advantages, while the majority of the remaining industries will be reduced according to a relatively appropriate process. In this direction, domestic manufacturing industries are classified into 3 groups based on competitiveness, advantages, potentials and difficulties and limitations, to determine specific tax reduction schedules for each industry.

- Export-strength commodity groups: are commodity groups based on rich and diverse resources, abundant labor resources, can quickly acquire skills, and can maximize the effect of comparative advantages.

These are industries such as rice, coffee, tea, seafood, textiles, rubber, and footwear.

- Group of industries that can compete with imported goods in the future : these are industries such as vegetables, processed foods, electricity - electronics, mechanics, shipbuilding, chemicals, detergents, cement. These products can compete in the future on the condition that there are appropriate support measures.

- Group of industries with low competitiveness : with evaluation criteria being price compared to international prices, production costs compared to import costs, long-term development potential, and investment efficiency. Most of these industries in terms of competitiveness must be based on modern machinery and equipment.

modern and advanced technology and less dependent on labor factors and natural conditions. These are the industries: mining, metallurgy ...

+ Commitment to APEC:

- Adjust the number of tax rates from 25 to 15.

- Carry out work to implement the Agreement on Customs Valuation under GATT.

The Second APEC Summit in Osaka adopted nine principles that aim to create a legal framework for achieving APEC's goal of free and open trade and investment by 2010 for developed countries and by 2020 for developing countries as set out in Bogor. The nine principles are:

1. Comprehensiveness principle. 2. GATT/WTO consistency principle. 3. Uniformity principle. 4. Status quo principle. 5. Joint initiation, continuous process and differentiated timetable. 6. Flexibility principle. 7. Non-discrimination principle. 8. Publicity principle. 9. Technical cooperation.

Based on the above 9 principles, APEC members have proposed 15 specific areas to work together to implement trade and investment liberalization, including: Tax; Non-tariff; Services; Investment; Standards and compliance with standards; Customs procedures; Intellectual property rights; Competition policy: Government procurement; Deregulation; Rules of origin; Dispute settlement; Business mobility; Implementation of the results of the Uruguay Round; Collection and assessment of information.

On the basis of the collective action plan, each member must develop its own national action plan with the main contents related to:

to tariff, non-tariff, services and investment topics.

Vietnam has submitted a national action plan, which includes tax content. This content consists of two parts: a description of the current Tariff Schedule (as of June 1998) and a specific plan on import tax. Specifically:

- Short-term plan (1998 - 2000): reduce the number of import tax rates from 25 to 10, narrow the 0% tax rate area. List of tax tables

completed in accordance with the World Customs Organization Commodity Nomenclature (HS nomenclature) at the 6-digit level.

- Medium-term plan (2001 - 2005); implement the Agreement on Customs Valuation according to GVA and consider gradually reducing import tax rates according to APEC's goals.

- Long-term plan (2006 - 2020): continue to implement tax reduction towards APEC's goal of trade liberalization by 2020.

+ About preparing to join the WTO

It is expected that 2005 will be a pivotal year for Vietnam's successful accession to the WTO.

In May 2002, Vietnam conducted the first multilateral negotiation session on opening the market for goods and services. Although the initial commitments were low, the scope of commitments was very wide (Vietnam committed to more than 90% of tariff lines). One of the important criteria for assessing the possibility of joining the WTO is Vietnam's existing commitments within the framework of the Vietnam - US Trade Agreement. This is the first bilateral agreement that has used the principles and methods of commitment of the WTO as the basis for the entire negotiation and commitment process between the two sides.

* Regarding commitments related to import tax in the Vietnam - US Trade Agreement:

In the Vietnam - US Trade Agreement officially signed in July 2000, Vietnam made a number of commitments on taxes (especially import taxes), financial services (insurance) and business support services (accounting - auditing):

- After 3 years from the date the Agreement comes into effect, Vietnam will reduce import tariffs on 226 specific items with a tax cut of 5 to 10% (177 agricultural items and 49 industrial items). This tax reduction will apply to the US and also to all countries that have signed the MFN clause with Vietnam. In addition, Vietnam also agreed to include a commitment to maintain the import tariff after 3 years from the date the Agreement comes into effect for 18 items (all of which are agricultural items).

- The application of import tax calculation prices under the GATT Customs Valuation Agreement will apply for 2 years from the date the Agreement comes into effect.

- Apply the harmonized tariff system according to HS as soon as the Agreement comes into effect.

- Eliminate discrimination in special consumption tax on cars with less than 12 seats; tobacco and cigar materials after 3 years from the effective date of the Agreement.

- Eliminate surcharges on gasoline, metals (iron, steel) and fertilizers after 03 years from the effective date of the Agreement.

- Fees and charges related to import and export collected only by services rendered will be applied after 2 years of the Agreement coming into effect, these fees and charges are

applied uniformly throughout Vietnam.

The trade agreement systematically and relatively thoroughly handles non-tariff barriers and provides roadmaps for reducing non-tariff barriers over a period of 5 to 6 years with a completion date of 2006 to 2007. Particularly for quantitative restrictions, the number of items subject to quantitative restrictions as determined by the trade agreement is larger than in reality. The roadmap for reducing quantitative restrictions lasts until 2006 or 2007. For agricultural products, the number of tariff lines with commitments to limit quantitative restrictions is much larger than the actual regulations and roadmaps for participating in AFTA. For industrial products, currently "sensitive" items are included in the List of items subject to quantitative restrictions such as cement, paper, construction glass, tiles, construction steel, automobiles, motorbikes , etc.

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