The Impact of Trade Liberation on the Viet Nam-Rice Sector

• Main Authors: Nguyen Thi Kim Cuc, 阮金菊
• Other Authors: Shwu-En Chen
• Format: Others
• Language: en_US
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/93758863252140205000

碩士 === 國立屏東科技大學 === 熱帶農業暨國際合作研究所 === 93 === Rice is, historically, staple food of the Vietnamese people, one of the important agricultural crops in Viet Nam. After 1986, when the Vietnamese Government implemented Revolution policy, the national economy has transacted from the planning economy to the market economy. With the free market policy, rice sector very quickly joined the international trade. Viet Nam started to export rice in 1999 and become a large rice exporter in the world with more than 10% share of rice export in the world market. In nowadays globalization state, Viet Nam economy has been being step by step integrated into the global economy. In the integration progress, rice sector should be affected by a series of changes in institutional conditions. The objective of this study is to analyze the effects of trade liberalization on the rice sector of Viet Nam. The Viet Nam-Rice Sector Model (VRSM), which includes seven equations, those are elated to rice demand, supply and international trade was used in the study. Domestic supply quantity of paddy rice, supply price of paddy rice, domestic demand quantity of white rice, domestic demand price of white rice, export price, export quantity and the import parity price of the Viet Nam rice that foreign traders faced in their countries are the seven endogenous variables that were solved in the model. Trade liberalization affects firstly on the import parity price of the Viet Nam rice that foreign traders faced in their countries. This change results in the change of the export price, then in the domestic demand price and the domestic supply price. Change in these prices affect the quantity, include supply quantity, demand quantity and export quantity. Three kinds of different changes in the tariff rate imposed in foreign countries against Viet Nam white rice were simulated in this study. The different changes in the tariff rate include (i) the average tariff rate imposed in foreign countries against Viet Nam exported rice decreases by 50% under condition of world trade liberalization, (ii) the tariff rate imposed in South East Asian countries decreases from current rate of 20% to 5% under the condition of the South East Asia Free Trade Agreement (AFTA), and (iii) the tariff rate imposed in the U.S. decrease from the current rate of 35% to 8.3% as condition of the Viet Nam — America Bilateral Trade Agreement. Results show that demand of Viet Nam rice in the world market will increases resulting from the decrease of the tariff rate against Viet Nam white rice imposed in foreign countries. In other words, export quantity of Viet Nam rice increases when the import tariff imposed in imported countries decreases. The increase in export quantity results in the increase in export price. This affects the whole rice industry in Viet Nam: the increase in the export price leads an increase of the supply price (selling price of paddy rice from farmer), which results in the increase in the paddy rice supply. Similarly, effecting from the increase of selling price of paddy rice from farmer, demand price of rice (buying price of consumer) is also increase, leading the decrease in the rice demand domestically. Thus, rice exporters and rice suppliers may get benefit from trade liberalization, but rice consumers in the domestic market should suffer from the increase of rice price in the domestic market.