topic describe the main contents of the wto agreement onagriculture aoa and make six specific recommendations to thevietnamese government on agricultural policy

This agreement aimed to reform the global agriculturaltrading system by promoting three main principles, which will bementioned in the first chapter.Vietnam, a major agricultural produce

SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS

ECONOMICS INTEGRATION

TOPIC: Describe the Main Contents of the WTO Agreement on Agriculture (AoA) and Make Six Specific Recommendations to the Vietnamese Government on Agricultural Policy

Major: International Economics

Class: International Economics 63B

Lecturer: Assoc Prof Ngô Thị Tuyết Mai Time of studying: 2 Semester 2023 - 2024 nd

HÀ NỘI, APRIL 2024

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

MEMBER OF GROUP 2

No Name Student ID Contribution Rate (%)

1 Dương Anh Duy 11211672 100

2 Đào Thành Huy 11212587 100

3 Phạm Huy Hoàng 11212371 100

4 Nguyễn Quỳnh Thu 11219803 100

5 Bùi Ngọc Khánh 11212815 100

6 Đàm Tuấn Đạt 11211214 80

7 Đặng Minh Quân 11214931 100

SIGNATURE

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

TABLE OF CONTENT

CHAPTER 1 WTO AGREEMENT ON AGRICULTURE (AOA):

1.3 Negotiation Process and the Deadlock of Negotiation Process 8

CHAPTER 2 VIETNAM’S AGRICULTURE POLICIES AND

2.2 Adaptation Ability of Vietnam’s Agriculture: Before and After WTO

CHAPTER 3 RECOMMENDATIONS FOR VIETNAMESE GOVERNMENT ON AGRICULTURAL POLICY 13

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

LIST OF ABBREVIATIONS

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

INTRODUCTION

Agriculture has historically been a sector heavily influenced by government intervention Prior to the World Trade Organization (WTO)'s establishment, countries often employed trade barriers and domestic subsidies to protect their agricultural sectors This created a distorted global market where competition was stifled and international trade wasn't functioning efficiently

Recognizing these issues, the WTO Agreement on Agriculture (AoA) was established in 1994 This agreement aimed to reform the global agricultural trading system by promoting three main principles, which will be mentioned in the first chapter

Vietnam, a major agricultural producer and growing player in the global food market, joined the WTO in 2007 This presented both challenges and opportunities for the Vietnamese agricultural sector While Vietnam needed to adjust its policies to comply with the AoA principles, it also gained access to new markets and fairer competition on the world stage

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

CHAPTER 1 WTO AGREEMENT ON

AGRICULTURE (AOA): MAIN CONTENTS

1.1 Background

The Uruguay Round of negotiations, spanning from 1986 to 1994, laid the groundwork for the establishment of the Agreement on Agriculture, which came into force in 1995 This agreement is a pivotal component of the World Trade Organization's efforts to foster fairer competition and reduce distortions in agricultural trade By addressing various aspects such as subsidies, market access, and domestic support, the Agreement on Agriculture endeavors to create a more level playing field for agricultural producers worldwide Through its provisions and regulations, it seeks to promote transparency, encourage sustainable agricultural practices, and facilitate smoother trade relations among member nations

1.2 Key Pillars

The WTO Agreement on Agriculture (AoA) rests upon several fundamental pillars aimed at regulating and liberalizing international agricultural trade

Firstly, it addresses domestic support, which encompasses the various policies and subsidies provided by governments to their domestic agricultural sectors These support measures are classified into different boxes: the amber box includes subsidies considered to distort trade and production; the blue box comprises less distorting forms of support, subject

to certain conditions; and the green box encompasses policies that are minimally or non-trade-distorting, such as those promoting rural development or environmental conservation

Secondly, the AoA focuses on market access, which involves reducing barriers to trade and enhancing the openness of agricultural markets This

is achieved primarily through commitments to tariff reduction, facilitating increased access to foreign markets for agricultural goods

Thirdly, the agreement prohibits the use of export subsidies, thus eliminating a significant mechanism for distorting global agricultural trade This measure aims to create a more level playing field for agricultural producers worldwide

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

Lastly, the AoA recognizes the principle of Special and Differential Treatment (S&D), which acknowledges the differing needs and capacities

of developing and least developed countries (LDCs) This provision allows these countries certain flexibilities and exemptions from certain obligations, recognizing their developmental challenges and constraints

1.3 Challenges and Debates

There are concerns that liberalization under the AoA may undermine food security in developing countries by exposing domestic producers to increased competition from cheaper imports Unemployment is a cruel hardship, but starvation is fatal UN member states are bound to protect and promote the universal human right to food

The model for agricultural trade implicit in the AoA presumes that agricultural markets are only distorted by government interference In practice, as researchers have increasingly documented, agricultural markets are heavily distorted by the presence of oligopoly buyers and sellers at different points in the agri-food chain Monsanto, for example, makes some 90% of the genetically modified seed in commercial use Cargill, ADM and Zen Noh control over 80% of maize sales from the US (which in turn has some 40% of the world maize market)

The external effects of farm production (the impact agriculture has on the environment, for example) pose another set of challenges to the assumption that agriculture can be left to the free market For example, research in the Philippines has shown that while green-revolution technologies produce more rice per hectare than traditional methods, overall productivity on farms using green-revolution inputs is lower because the pesticide-filled water in the paddy no longer supports fish stocks

Climate change is posing many new challenges for agricultural planning Experts forecast that valuable agricultural land in Bangladesh and elsewhere will disappear under water as the world’s glaciers melt Although warmer climates in some places may increase their agricultural potential, the most likely change seems to be increased instability in weather patterns

The second half of the 20th century presented the world with a new problem: what to do with surplus production, not just from a good year but also from massive increases in productivity year after year At the turn of

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

the 20th century, over 25% of agricultural production was used to feed the animals that helped till the soil and move people and goods It is vital to manage production, not least to limit the damage caused by the technologies the productivity relies on It is necessary to keep an eye to the future, and plan for long-term food security, not just for keeping costs down today World population growth has moderated but the world’s population is still increasing, while the total arable land available to the planet is not

1.4 Negotiation Process and the Deadlock of Negotiation Process The Uruguay Round (1986-1994): This round established the AoA,

recognizing the need for agricultural reform It included provisions for reducing tariffs, export subsidies, and domestic support However, these reductions were subject to future negotiations

The Doha Round (2001-present): This ongoing round aimed to further

liberalize agricultural trade Developed countries pushed for developing countries to cut tariffs, while developing countries sought reductions in domestic support provided by developed nations, arguing it distorts the market

Negotiations surrounding the AoA have become deadlocked due to several factors Developed countries providing substantial subsidies to their farmers creates an uneven playing field, a point fiercely contested by developing nations Finding a compromise on acceptable subsidy levels has proven difficult Additionally, developing countries are concerned about further trade liberalization jeopardizing their food security and harming rural livelihoods They seek safeguards to shield their domestic producers Finally, reaching consensus amongst a growing and increasingly diverse WTO membership presents a significant challenge These combined factors have resulted in a stalemate, hindering progress towards a more level playing field for agricultural trade

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

CHAPTER 2 VIETNAM’S AGRICULTURE POLICIES AND ADAPTATION ABILITY

2.1 Vietnam’s Agriculture Policies

Vietnam's agricultural policies demonstrate a comprehensive approach aimed at addressing various key aspects of agricultural development By prioritizing sustainable development, increased productivity, and robust food security, the government acknowledges the importance of long-term viability in the agricultural sector Strategic reforms aligned with WTO standards indicate a commitment to international trade regulations and competitiveness

The emphasis on market-oriented approaches and private sector participation reflects a recognition of the role of market forces in driving agricultural growth Encouraging innovation within the sector further underscores a commitment to adaptability and competitiveness in the global market

Diversifying crops, improving irrigation systems, and promoting sustainable farming practices are essential components of ensuring the resilience and sustainability of the agricultural sector These measures not only contribute to increased productivity but also mitigate risks associated with climate change and environmental degradation

Addressing trade barriers through harmonizing regulations and enhancing product quality indicates a proactive approach to international trade By meeting global standards, Vietnam aims to strengthen its position in the WTO and enhance the competitiveness of its agricultural exports

Moreover, the integration of technology and modernization of farming practices underscores a commitment to social and economic development, particularly in rural areas By enhancing the livelihoods of the rural population, these policies contribute to poverty reduction and overall economic growth

Balancing exports with domestic food security highlights the government's recognition of the importance of ensuring access to food for its citizens while also capitalizing on export opportunities

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

2.2 Adaptation Ability of Vietnam

2.2.1 Adaptation Ability of Vietnam’s Agriculture: Before and After WTO Membership

Pre-WTO Membership

Before Vietnam's accession to the WTO, its agricultural sector faced significant challenges Market access was restricted by tariffs and quotas in key export markets, hindering the growth potential of Vietnamese agricultural products and limiting the income and resources available for investment in adaptation measures Moreover, the agricultural landscape was dominated by subsistence farming practices, characterized by a reliance on traditional methods and a lack of adoption of modern technologies and practices This focus on subsistence agriculture further constrained the sector's ability to adapt to changing market dynamics and environmental challenges Overall, the pre-WTO membership period was marked by limited market opportunities and a lack of modernization in Vietnam's agriculture sector, highlighting the need for reforms to enhance competitiveness and resilience

Post-WTO Membership

Following Vietnam's accession to the WTO, significant transformations occurred within the agricultural sector One of the most notable changes was the expansion of market access, facilitated by Vietnam's newfound status as a member of the global trade organization This enhanced market access opened doors to major international markets, creating opportunities for increased agricultural exports and subsequently generating substantial income streams

In addition to improved market access, the post-WTO era witnessed a remarkable uptick in the adoption of modern technologies and practices within Vietnam's agricultural landscape With increased trade and foreign investment, farmers and agricultural enterprises were incentivized to embrace innovation The integration of advanced crop varieties and sophisticated irrigation systems not only bolstered agricultural output but also positioned Vietnam's farmers to better navigate the challenges posed

by climate change and evolving market demands

Furthermore, recognizing the pivotal role of agriculture in the country's economic development, the Vietnamese government prioritized allocating resources to support its growth and adaptation Increased public funding facilitated the development of essential infrastructure, such as rural roads

Lecturer: Assoc Prof Ngô Thị Tuyết Mai

and irrigation networks, which bolstered the resilience of agricultural communities and improved market access for farmers Moreover, heightened investment in agricultural research and development initiatives contributed to the advancement of adaptation strategies tailored to the unique needs and challenges faced by Vietnam's agricultural sector With the advent of WTO membership, Vietnam experienced a notable surge in the adoption of advanced agricultural technologies, particularly in the realms of crop cultivation and irrigation management Enhanced crop varieties engineered for superior yields, resilience to environmental stresses, and improved nutritional profiles gained widespread acceptance among farmers nationwide Concurrently, there was a pronounced uptick

in the deployment of modern irrigation systems aimed at optimizing water usage efficiency and bolstering agricultural productivity, which not only propelled Vietnam's agriculture sector towards greater efficiency and sustainability but also empowered farmers to confront the challenges posed

by climate variability and resource constraints head-on

Over the two-decade period from 2000 to 2020, government expenditure

on agriculture surged from representing 10% of the national budget to a notable 20% This marked escalation in financial support underscores the government's steadfast commitment to fostering the growth and resilience

of the agricultural industry The increased investment was channeled into a diverse array of initiatives aimed at enhancing agricultural infrastructure, research and development, extension services, and farmer education and training programs

2.2.2 Vietnam's implementation of the AOA agreement according to WTO requirements

Vietnam has undertaken tariff reductions and subsidy eliminations as committed to under the AoA However, this process has been gradual, following a negotiated and agreed-upon schedule

Vietnam has implemented tariff reductions for the majority of agricultural products, in accordance with its obligations under the Agreement on Agriculture (AoA) Detailed information regarding the specific tariff adjustments for individual products can be found in Vietnam's import and export tariff schedule These reductions were rolled out gradually over a period of time, from 1995 to 2018, as part of Vietnam's phased approach to aligning its trade policies with international standards For instance, the average applied tariff rate for agricultural products decreased from 27.6%

in 2001 to 15.3% in 2019