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UNEP Country Project on Trade Liberalisation in the Agriculture sector and the Environment (Draft presentation). The rice sector in Vietnam 19 February 2003 Geneva. Project Leader: Truong Van Tyen, PhD Hue University of Agriculture and Forestry.

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UNEP Country Project on Trade Liberalisation in the Agriculture sector and the Environment (Draft presentation)


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UNEP Country Project on Trade Liberalisation in the Agriculture sector and the Environment (Draft presentation)

The rice sector in Vietnam

19 February 2003Geneva

Project Leader: Truong Van Tyen, PhD

Hue University of Agriculture and Forestry

project objectives

Trade liberalization in the Vietnam rice sector

Project objectives
  • Understand implications of trade lib. in rice sector
  • Enhance capacity in trade policy and research.
  • Assess environmental impacts of trade lib. policies
  • Develop methodology to the impact assessment
  • Enhance coordination and expertise in identify & quantify impacts of trade lib. in agriculture
  • Formulate policies to response to impacts identified
  • Perform cost-benefit analyses of policy implementation
local institutions involved

Trade liberalization in the Vietnam rice sector

Local institutions involved
  • Hue University of Agriculture & Forestry: lead and coordinated the research implementation.
  • Team members: Economists, Community Dev. Agronomists, ecological & environmental specialists.
  • The team members involved are from:
  • Hue University (Central Vietnam)
  • Hanoi Agri. University (North Vietnam)
  • Mekong Delta Farming System R&D Institute (South)
  • Ministry of Agriculture and Rural Development
stakeholder approach and process

Trade liberalization in the Vietnam rice sector

Stakeholder Approach and process
  • Stakeholders: Universities, Institutes, Ministries, rice producers, traders, People Organisations, NGOs
  • Consultation and policy dialogue: carried out through the ISG to MARD for global integration (collaborated with the ISG Secretariat and ad-hoc theme groups related, and accessed the ISG e-forum)
  • Approach: Interdisciplinary team - consultation - stakeholder sensitization - specification - method development - data source - impact analyses - policy recommendation - policy dialogue and public hearing - and initial implementation of policy response
development of in country methodology

Trade liberalization in the Vietnam rice sector

Development of In-country Methodology

Partial Equilibrium Model and Regression Model are adopted for an ex-ant assessment, given:

- Method familiarity to the team members

- Secondary data availability and accessibility

- Agrochemical use as a major source of env. impact

- Responsiveness to WTO accession position, and

- Relevance to national policy context for global integration

scenario analyses and indicators

Trade liberalization in the Vietnam rice sector

Scenario analyses and indicators

  • Base Scenario: Simulate status of rice production and agrochemical use in 2006 without trade liberalization
  • Impact analysis: P1= reduce tariff rate to 5% (AFTA); P2=US’s tariff against rice import reduced to 8.3%; and P3=rice area reduced 10% (agri. diversification)
  • Indicators: (1) Rice supply, demand, export, and price; (2) Agrochemical price, amount used for rice, ; (3) Pesticide and chemical fertilizer amount miss-used against the economically maximum application rate.
assessment methodology

Trade liberalization in the Vietnam rice sector

Assessment Methodology
  • Strategic screening the trade liberalisation impacts
  • Access to relevant and available data
  • Qualitatively comprehensive analyses of the impacts
  • Apply PEM to quantify agrochemical miss-used
  • Field visits for supplementing data needed and validating the qualitative analysis results/description
  • Impact valuation benefited from empirical studies on trade liberalization by shadow price conversion
  • Consultation and policy dialogue carried out via ISG to MARD. The Ministry has a numerous responsibility on environmental management
integrated assessment of impacts of trade liberalization and wto accession

Trade liberalization in the Vietnam rice sector

Integrated Assessment of Impacts of Trade Liberalization and WTO Accession

Three groups of policies affecting rice sector

1. The renovation “Doi Moi” on economic

(and agriculture) management

2. The trade policies on trade liberalization

3. International commitments

on trade deregulation

the renovation doi moi on economic and agriculture management

Trade liberalization in the Vietnam rice sector

The renovation “Doi Moi” on economic (and agriculture) management

Land laws (1989, 1993, 1998) allocated agri. Lands to the farmers for long-term use and recognized their “full” ownership on land use rights

Infrastructure investment for rice (agriculture) development: irrigation, make use of bare lands (1994), and agri development in Mekong delta (1996)

Improvement of agri. technology and input supports: extension (1993); re-organizing input services (1998); breeding program (1999); removal fertilizer import restriction with tariff rate 0% (2000)

the trade policies on trade liberalization

Trade liberalization in the Vietnam rice sector

The trade policies on trade liberalization

-Domestic rice trade restrictions ( removed 1997)

-The rice export quota:

Process of quota allocation (decentralized in 1996)

Sector participation in rice export (private in 1997)

Removal the rice export quota (in 2001)

-The export tax: reduced 25%-0% (1998), “flexible”

-Milled rice import tariff: 20% (in 2000), 40% (in 2001)

-Restrictions on fertilizer import: decentralized in quota allocation (1996), and removed (in 2001)

international commitments on trade deregulation

Trade liberalization in the Vietnam rice sector

International commitments on trade deregulation

-Common Effective Preferential Tariff scheme (CEPT) for ASEAN Free Trade Area (AFTA): e.g.

Tariff reduction: to 0-5 % by 2006

Removal of non-tariff barriers (NTBs)

-Bilateral trade agreement with the United States (USBTA): e.g.

Reduce tariff rates by 30 to 50 % by 2005

-Negotiation for WTO accession: e.g.

Trade deregulation corresponding to WTO AoA

environmental impacts

Trade liberalization in the Vietnam rice sector

Environmental Impacts
  • Stakeholder perception on env. impact of rice cultivation
  • Strategic screening of env. impact of rice growth including trade liberalization
  • Missed use of chemical inputs for rice
  • Degradation of rice genetic resources
environmental impacts21

Trade liberalization in the Vietnam rice sector

Over/under use of chemical inputs in Mekong Delta

Environmental Impacts

Optimal level

.....

most local varieties were replaced with modern one

Trade liberalization in the Vietnam rice sector

Most local varieties were replaced with modern one

Spring Autumn Spring Autumn Spring Autumn

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social and economic impacts

Trade liberalization in the Vietnam rice sector

Social and Economic Impacts
  • Changes in income of householders
  • Changes in poor household percentage
  • Benefit and costs of IFPRI research on policy changes
slide25

Trade liberalization in the Vietnam rice sector

Estimated effects of removal of internal rice trade restriction on household income and poverty

slide26

Trade liberalization in the Vietnam rice sector

Estimated effect of removal rice export quota

on household income and poverty

valuation of the effects

Trade liberalization in the Vietnam rice sector

Valuation of the effects

  • Valuation of overuse of chemical inputs
  • Human health cost from exposure to pesticide
  • Benefit and cost of IFGRI research on rice policy changes in Vietnam
benefit and cost of ifpri research on rice policies

Trade liberalization in the Vietnam rice sector

Benefit* and cost of IFPRI research on rice policies

*: included those from relaxing export quota and removing internal rice trade restriction

a tentative policy package

Trade liberalization in the Vietnam rice sector

A tentative policy package
  • Include env. education to stakeholders through puclic chanels and extension systems
  • Include consideration of env. costs into taxation of use pesticides and chemical fertilizers
  • Promote integrated or organic rice farming by providing supports to diversify farm production and develop non-farm rural small business.
  • Policy dialogue through ISG to MARD to low down and stabilize the plan for rice production, export amount, and support improvement of quality and price of Vietnam rice export.
project experience preliminary conclusions

Trade liberalization in the Vietnam rice sector

Project Experience: Preliminary Conclusions
  • The stakeholder awareness and concern of env. impact is much less than that of socioeconomic
  • Due to priority for food securiry and poverty, the trade liberalization was appreciated with possitive socioeconomics but neglected env. impacts
  • EIA in rice sector is limited because the perceived negative impact seemed to be low. Other limitation is data availability and accessibility
  • Qualitative impact assessment is not familiar to most resaerchers. In-country consultation is very limited. Impact valuation is new in VN, found very limited in the literature
project experience steps forward

Trade liberalization in the Vietnam rice sector

Project Experience: Steps Forward
  • Building stakeholder awareness of env. Impact, especially of trade liberalization via various forms of communication and training for researchers involved
  • Involve specialists in provision of technical supports to quatify the impact of trade liberalization
  • Initiate sensitization and dialogue with policy makers at ministry level of env. concerns on rice sector
  • Finalize the PEM to quantify the identified impacts
  • Carry out field visits for data subplement
  • Finalize the assessment and policy development
trade deregulation impact on rice sector to be further analyzed

Trade liberalization in the Vietnam rice sector

Trade deregulation impact on rice sector (to be further analyzed)

Po: Base scenario in 2005; P1: Tariff reduction to 5%

P2: US tariff reduced to rice import; P3: 10% area reduction

trade deregulation on rice chemical inputs to be analyzed

Trade liberalization in the Vietnam rice sector

Trade deregulation on rice chemical inputs (to be analyzed)

Po: Base scenario in 2005; P1: Tariff reduction to 5%

P2: US tariff reduced to rice import; P3: 10% area reduction