Other significant reforms have been made with regard to the imports. Import tariffs have been reduced little by little, conforming to Vietnam’s WTO commitments. The tariff reduction plan forms an important step to assist the progress of the long-term planning of Vietnamese manufactures. A great number of quantitative limitations have also been removed. As a result, all domestic companies have now opportunity to import any products that are not subject to quotas. Foreign investors and private businesses are likely to experience continued growth.
2. Bad effects of WTO While WTO allows Vietnam to gain some of the benefits (in terms of access to foreign markets) in the beginning, the perceived costs (resulting from opening the Vietnamese market to foreign companies and removing tariffs barriers) may come later. WTO places the increasing demands on the country. Membership in the WTO is not free. First, independent economic state of Vietnam is cut short and short-term maneuvering in trade-related policies is opposed and also limited.
Individuals engaged in politics and interest groups who are used to behaving selfishly will take the political cost involved in ‘tying their hands’ to a serious degree. Second, there are economic costs regarding the opportunity costs of employing professionals for the realization of WTO commitments and constant participation in WTO meetings. Third, a more liberal trade politics promoted by WTO membership may expose domestic firms in vulnerable economies to stronger competition with foreign firms.
Foreign firms often will be from more advanced developing member states rather than from developing countries. The consequence may be a short-term worsening of the current account. Higher imports because of market opening become invested faster than higher exports due to bettered market access in foreign countries. The external vulnerability of Vietnam may thus be intensified. Fourth, the financial costs of decreasing import tariffs may be considerable. The reason is that taxes on international transactions are a main source of government income in Vietnam.
This may be less felt by the government in the early stages of free trade when non-tariff barriers are tariffied and prohibiting tariffs are reduced in amount and imports go up. In the intermediate – to long-term stage, however, considerable reductions in average tariff rates make necessary a broadening of government’ tax base (Tran-Nam and Pham 98). Finally, there are additional costs of employing professional employees to deal with WTO matters that government of Vietnamese economy has to assess.
Experience of other countries indicates that during the GATT period, governments of member states rated these costs as extremely high. Globalization Nowadays, Vietnam is proud to be the model for the neighbor countries and other developing nations. It has enjoyed a long period of steady development. Entry to the WTO has opened its door to the world. Vietnam now is an attractive destination for foreign investors and multinational firms. The country aims to become a modern industrial nation by 2020.