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Vietnam One Step Closer to WTO Membership

Deputy U.S. Trade Representative Karan Bhatia and Vietnamese Deputy Minister of Trade Luong Van Tu formally signed a bilateral market access agreement that is required as part of Vietnam's bid to accede to the World Trade Organization Wednesday. Representatives from both countries were present in Ho Chi Minh City for the signing ceremony.

The bilateral agreement, which will be implemented fully when Vietnam joins the WTO, will create significant new opportunities for U.S. producers and exporters of industrial and agricultural goods as well as U.S. services providers.

Bhatia says the agreement opens a vibrant and growing market for American agricultural goods. Under the bilateral agreement, duties on more than three-quarters of U.S. agricultural exports to Vietnam will be lowered to rates of 15% or less. In return, Vietnam will gain access to the United States for food and agricultural products at normal trade relations' duty rates.

A statement from the National Cattlemen's Beef Association the agreement will boost export opportunities for U.S. cattle producers. 

According to the negotiated terms, Vietnam will immediately begin accepting all U.S. beef and beef products from animals less than 30 months of age. Upon Vietnam's entry into the WTO, tariffs on U.S. beef offal will be reduced from the most favored nation rate of 20% to 15% immediately, and staged down to 8% over four years. Boneless beef will also enjoy a significant tariff cut, from 20% to 14% over five years. Beef sausages which faced a MFN duty of 50%, will drop immediately to 40% and be phased down further to 22% over five years. Bone-in U.S. beef will face a 20% applied tariff rate.

"Unlike free trade agreement negotiations, bilateral WTO accession negotiations rarely eliminate tariff rates," explains NCBA Chief Economist Gregg Doud. "However, this agreement will eliminate a key [minimum price] barrier to entry into the Vietnamese market and will become the platform from which future trade negotiations with Vietnam will advance. Therefore, the terms negotiated in this agreement are a major accomplishment."

The National Pork Producers Council also released a statement of support for the agreement. NPPC states tariffs on pork variety meats, which are in high demand in Vietnam, will decline from a rate of 20% to a rate of 8% in four years from the time of implementation. Tariffs on most other pork products will be reduced by 50% in five years from the date of implementation.

Additionally, Vietnam has made numerous improvements to its implementation of WTO rules on sanitary and phyto-sanitary measures and has agreed to recognize the U.S. inspection system for pork as equivalent to its inspection system. The matter of equivalence is very important to the pork industry because low tariffs don't mean anything if sanitary and technical barriers are used in place of tariffs to restrict U.S. exports.

Agriculture groups will be urging Congress to now move to provide Permanent Normal Trade Relations status to Vietnam, the next step in negotiating Vietnam's accession to the WTO. The granting of PNTR allows for unconditional, unlimited, permanent market access and ends the required annual review of Vietnam's trade status. To achieve final accession, Vietnam must work with individual WTO members to break down trade barriers, conform to WTO rules and allow market access on a non-discriminatory basis.

--Fact Sheet on Bilateral Market Access Agreement on Agricultural Goods