Trade Policies In Vietnam
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This paper presents an analysis of the trade policies in Vietnam and how they have affected the rest of the world. It also includes teriff information, as well as information on the trade embargo policies.
International business 150 point paper.
Trade policies in Vietnam have restrictions in their trade agreements to protect their country interests and those of its people. A major protection from their perspective is the ability to protect domestic production. However the official powers recognize the benefits of participating in trade agreements with other countries. To that extent they have entered into traded agreements and joined numerous official trade unions with many countries, including the United States.
Vietnam has applied for entrance into the WTO (World Trade Organization) and joined ASEAN(ASEAN Free Trade Area) in 1997 with the intent to comply with trade agreements rules as defined by AFTA (Asian Free Trade Area) and CEPT (Common Preferential Tariff Scheme) (Department of Planning, 2006).
The motivating factor for Vietnam to join ASEAN with its accompanying trade guidelines of AFTA and CEPT, among others, was to raise awareness and understanding of tariff traded items with their related and non-related measures, called NTMs and non-tariff trades barriers, called NTBs (United Nations Development Project, 1999).
To trade within a given market such as country versus international arena you must know the guidelines of a given entity to know boundaries and comply. This is the very purpose of all the various trade agreements.
The agreements provide benefits and standards that can be used for any and all companies and countries. Additional agreements are created and maintained for compliance and repercussions for infractions.
It is a delicate dance when you operate in the international trade arena but one that has specific steps to take else you violate someones customs. The international trade dance steps are synonymous with observing ethics and customs, as well as international policies meant to protect the given country and international trade platform. They go beyond the step and establish the rules for interaction on a more personal level while abiding by rules to protect the interests of all.
The dance of business between countries is to trade in the international arena without losing ones own autonomy and confronting disadvantages that out weigh the benefits. Additionally some goods and services are bought at significantly lower prices when exported that can be produced within a given country. From that perspective trade imbalances can be huge. This necessitated the tariff approach as a “checks and means” approach when a country enjoys the benefits of exportation but does not reciprocate and import. The economic balance and climate in between is a “work-in-progress”, whose effects are such that many countries and entities will push the envelope for the bottom line for any person, company and country seemingly without regard for the rules they agreed to abide by. To this objective they either interpret the laws to empower themselves or ignore the laws or justify why.
For Vietnam to enter into the global arena and trade unions, such as trade agreements and WTO, it must adjust its tariffs and comply with the tariffs of other countries (United Nations Development Project, 1999). To that purpose Vietnam must understand what NTMs and NTBs are not rather than what they are. They are not tariffs.
It is believed in the global and international trade arena that tariffs can reduce potential real world income and thus, are not advantageous to the trade environment or profit landscape of international business (United Nations Development Project, 1999). A different word used to fulfill this imposition of charges may also be called minimum quotas.
NTBs are considered a subset of NTMs, which means that not all NTMs are necessarily NTBs. The definition is somewhat blurred, perhaps for interpretation reasons when a tariff may serve a country within its borders or is considered necessary for income or success. When NTBs are accepted they are supposed to protect domestic production but not be perceived as an international regulatory device or even a cost for that matter (such as quarantines) (United Nations Development Project, 1999).
To be accepted into international trade arenas Vietnam agreed to reduce its internal tariffs to at least 5% or less by the year 2006 per its agreement with AFTA.
Additionally it must also reduce the tariffs per the CEPT time guidelines to insure compliance.
There exists some exclusions to these requirements known as Exclusion Lists but Vietnam is expected to also reduce products on exclusion list by 2006 (United Nations Development Project 1999). Many of the restrictions in Vietnam are quantitative rather than qualitative. ASEAN guidelines give Vietnam an additional five (5) years beyond the compliance date or until 2011 (United Nations Development Project, 1999) due to the fact the country is in political and economic upheaval.
ASEAN guidelines seek to assist countries, such as Vietnam in shipping their goods by creating harmonizing customs procedures, developing sanitary standards, maximum residual limits in pesticides, and product standards. Vietnam is not compliant in any arena yet (United Nations Development Project, 1999). Additionally a harmonized system of tariffs has been developed for all countries, including Vietnam (United Nations Development Project, 1999).
Doing business with Vietnam may require expert knowledge of international laws, ASEAN compliance guidelines and AFTA and CEPT compliance timetable guidelines. Vietnam does have price control measures and imposes Para-Tariffs. They impose customs charges on goods going out and coming in. They also have additional charges of internal taxes and surcharges on imports which can impact, discourage, or limit imports. These include value-added taxes and special sales tax that are not seen in the guidelines of ASEAN; therefore they are not precluded nor is the customer protected with ASEAN guidelines in regards these specific taxes or tariffs. Furthermore they have decreed customs charges that may not actually be the actual value, AKA minimum declaration or decreed values (United Nations Development Project, 1999).
Vietnam has internal pricing guidelines for imports that establish the minimum amount and maximum amount that may be imported and even what may be paid for said goods. They also control all exports as to pricing and profit. The country gets a portion of the income or charges a percentage of the