Vietnam to axe tariffs for WTO entry

Vietnam will slash import taxes and open up some industries for foreign investors under its commitment made to enter into the World Trade Organization (WTO), the local newspaper Saigon Liberation reported on Friday.

Vietnam, scheduled to become a WTO member on Nov. 7, will lower the average import tax of all tariff lines from current 17.4 percent to 13.4 percent gradually within 5-7 years upon the WTO accession. Specifically, over one third of all 10,600 tariff lines, mainly those having tax rates of more than 20 percent, are subject to tax reduction and removal.

Products slated for biggest tax reductions include garment, textiles, fishes and related products, wood, paper, some kinds of manufactured goods, machines, and electrical and electronic equipment.

The average import tariff levied on farm produces is to decrease from current 23.5 percent to 20.9 percent within five years, and that on industrial products will be slashed from current 16.8 percent to 12.6 percent within five to seven years.

However, Vietnam will still remain certain protection on major products, including farm produces, cement, steel, construction material, automobile and motorbike. It will also maintain placement of quota tariffs on the four imports: sugar, poultry egg, tobacco and salt.

Within the quota, the tariff on poultry eggs currently stands at 40 percent, crude sugar 25 percent, refined sugar 40-50 percent, tobacco 30 percent, and salt 30 percent. If the import volume exceeds the quota, the tariff will be higher.

Vietnam has pledged to abolish agricultural export subsidy. Some modes of state assistance in the form of agricultural production promotion are not subject to removal, but the assistance cannot exceed 10 percent of the value of total agriculture output.

The country has also pledged to remove trading rights discrimination among foreign and domestic enterprises and individuals. Specifically, state-owned enterprises in Vietnam are to maintain rice export monopoly till 2009, and pharmaceutical import monopoly till 2011. However, foreign enterprises and individuals will have the rights to only import pharmaceuticals into Vietnam, not distribute them in the country.

Vietnam will allow import of motorbikes with capacity of over 175 cubic centimeters on July 31, 2007, and remove import limitations on cigarettes and cigars upon WTO accession. However, only state-owned enterprises have the rights to import cigarettes and cigars.

The WTO has given Vietnam a two-year timeframe to revise its luxury taxes levied on alcohol and beer.

Regarding the opening up of such services as telecommunications, banking and securities, Vietnam has, basically, made commitments which are similar to those in the Vietnam-U.S. bilateral trade agreement (BTA). The country has pledged to completely open up the goods distribution field to foreigners on Jan. 1, 2009, 19 days later compared with the BTA.

Vietnam will open up the field of distributing such key industrial products as steel, cement and fertilizer three years after the accession. It will not open up the field of distributing petroleum products, pharmaceuticals, books, magazines, video tapes, cigarettes, rice, sugar and precious metals.

Concerning general commitments toward services, foreign companies will be allowed to send managers to Vietnam, but the percentage of Vietnamese managers must be at least 20 percent.

Vietnam has agreed to permit foreign firms to establish wholly foreign-owned enterprises in Vietnam five years after the WTO entry to provide assistance services to the exploitation of oil and gas. However, some areas like flight service and the provision of equipment and materials to offshore oil rigs are conducted by only Vietnamese enterprises.

The WTO's General Council will formally approve the accession terms for Vietnam on Nov. 7, the newspaper said. It will officially become the organization's 150th member 30 days after its top legislature, the National Assembly, approves the accession agreement.

Source: Xinhua