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Vietnames e agriculture and global integration

Vietnames e agriculture and global integration. David Vanzetti and Pham Lan Huong Australian National University and independent consultant. National CGE Workshop Melbourne, 7 th October 2013. Integration and structural adjustment.

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Vietnames e agriculture and global integration

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  1. Vietnamese agriculture and global integration David Vanzetti and Pham Lan Huong Australian National University and independent consultant National CGE Workshop Melbourne, 7th October 2013

  2. Integration and structural adjustment • Vietnam is signing up to bilateral, regional and multilateral trade agreements • Structural adjustment • the movement of factors of production (capital, labour and land) between sectors. • Declining sectors? • Unemployment of factors, particularly labour?

  3. Objectives • Economic integration (four FTAs) • Assess macro and sectoral impacts • Identify need for structural adjustment

  4. Global general equilibrium model • GTAP • Version 8, base 2007 • Bilateral trade and tariffs (2010) • Includes preferential tariffs (needed for FTAs) • Whole economy • Includes resource (land, labour, capital, natural resources) constraints • Limitation - each country: one region, one household

  5. Scenarios • Four FTAs • AFTA • China • Korea • Japan • All simultaneously • Each FTA without exemptions

  6. Methodology • Based on negotiated FTA schedules • Specify bilateral tariff cuts for 5113 products • Aggregate (trade weighted) to 24 sectors by 19 regions using TASTE • Specify baseline growth assumptions • Specify labour and capital market assumptions • Simulate • Report

  7. Exemptions • Scheduled tariff cuts have exemptions for sensitive products • Few in number but cover large volume of trade • These differ by partner • Specify HS 6 level tariff cuts (5113 products) from bilateral applied tariff schedules as negotiated

  8. Sectoral coverage

  9. Reported results • Welfare (national income) • Imports • Exports • Employment and wage rates • Tariff revenue • Sectoral effects (production and trade)

  10. Baseline Schematic representation. Not to scale.

  11. Baseline in steps

  12. Change in FTA tariffs on Vietnam’s exports Source. GTAP 2010.

  13. Change in tariffs on Vietnam’s imports

  14. Results • Macro • Welfare • Exports • Imports • Tariff revenue • Real wages • Agricultural sector • Output • Exports • Imports

  15. Vietnam welfare gainsin 2017 relative to 2012 Income growth important

  16. Vietnam trade impactsin 2017 relative to base Growth in imports exceed imports

  17. Vietnam trade balancein 2017 relative to base

  18. Welfare with and without exemptionsin 2017 relative to base Japanese rice tariffs

  19. Real wagesin 2017 relative to base Fixed employment for skilled labour

  20. Vietnam tariff revenuein 2017 relative to base

  21. Agricultural sector impacts • Output • Exports • Imports • Use of land, labour and capital • Factor prices

  22. Change in outputin 2017 relative to 2012 Textiles Cassava

  23. Change in exportsin 2017 relative to 2012 Switch to cassava from other crops

  24. Change in importsin 2017 relative to 2012 Feed. Processed agriculture.

  25. Use of factors in agricultureChange in 2017 relative to 2012

  26. Factor pricesin 2017 relative to 2012

  27. Summary of macro results • Income growth important. Changes implemented against background of expanding economy • Positive welfare effects (national income) from FTAs • Real wage increases • Tariff revenue reduced somewhat • Trade balance negative

  28. Policy implications • Income growth depends on capital (macro policy) • Non-tariff barriers still exist, and may increase • Structural adjustment manageable • Need flexible land, labourand capital markets • WTO virtually completed. No further tariff cuts • Ignored here other FTAs, such as EU, Trans Pacific Partnership, Regional Comprehensive Economic Partnership

  29. The End

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