The Ministry of Finance (MOF) is consulting with other ministries and branches on the amendment of the Decree 125/2017 which stipulates the preferential tariff. The US has asked to cut tariffs on some kinds of farm produce, including chicken and chicken-made products, almonds, apples, fresh grapes, wheat, pork and potatoes.

According to Dinh Trong Thinh, a respected economist, the most worrying is that some of the items such as pork and chicken are less competitive than US products. If Vietnam cuts the tariff, this would put pressure on Vietnam’s livestock industry.

“It may happen that farmers would go bankrupt if the US cheap farm produce are imported to Vietnam en masse. If so, this will affect economic security,” Thinh said in Dat Viet newspaper.

In the interview, Thinh spoke about the ‘sugar lesson’, saying that the Philippines, Thailand and Indonesia, while committing to remove the tariff and quota barriers within the frame of ATIGA (ASEAN Trade In Goods Agreement), still applies necessary measures to protect their sugar industry.

Vietnam needs to learn from experiences from other regiolnal countries and take appropriate measures to protect domestic production, experts say.

They have installed technical barriers – regulations, licenses and fees – to control the penetration of sugar imports from ASEAN into the domestic markets. The goal of the barriers is preventing cheap imports from affecting local sugar production.

The US asks for the tariff cut in the context of Vietnam enjoying surplus in trade with the US. Some analysts said if Vietnam doesn’t have methods to ease the imbalance in Vietnam-US trade, the US is likely to apply necessary measures to reduce its trade deficit.

Since obtaining WTO membership and signing the Vietnam-US Bilateral Trade Agreement, Vietnam’s exports to the US have increased rapidly. In recent years, the US has become the biggest export market for Vietnam.

The General Department of Customs (GDC) reported that in 2018, Vietnam received a surplus of $34.8 billion in trade with the US, which was equal to 73.2 percent of Vietnam’s export value to the country.

Sharing the same view, Thinh said if Vietnam cannot behave reasonably, it would face the high risk of losing the US market, bearing high tax.

One of the measures to reduce the trade surplus is that Vietnam increases imports from the US. And in order to do this, Vietnam should consider cutting tariffs on some products.

However, Vietnam needs to behave correctly when cutting tariffs so as to avoid damages to local industries.

Kim Chi

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