The General Council of the World Trade Organization (WTO) officially announced that Vietnam would become the WTO's 150th member on January 11, 2007. The decision ends an 11-year debate over the country's preparations, including eight years of negotiations.
One of the biggest effects of this move, according to a report in Economic Reference on January 9, will be that China's commodities will see more market admittance and increased trade opportunities in Vietnam.
Taking southeast Guangdong Province as an example, the trade cooperation between China and Vietnam can be plotted on a three-point trajectory.
First, the trade complementation between Guangdong and Vietnam will be fully developed after the later joins the WTO.
As one of China's economic powerhouses, Guangdong's economy is more developed than Vietnam. Guangdong's exports to Vietnam mostly consist machinery and electronic products, while Vietnam's are products related to natural resources.
Since Vietnam overtook Australia to become Guangdong's largest source of imported coal in 2002, its coal exports to the province further increased to total 3.503 million tons in 2005. In the first 11 months of 2006, Guangdong imported 6.109 million tons of coal from Vietnam, 1.1 times that of 2004.
Besides coal, Guangdong imported more crude oil from Vietnam, up from 50,000 tons in 2001 to 252,000 tons in 2005; natural rubber imports increased from 5,735 tons in 2001 to 19,000 tons in 2005. In the first 11 months of 2006, the imported volume of natural rubber totaled 17,000 tons, an increase of 6 percent comparing to the same period of 2005.
Second, Guangdong's merchandise will be more competitive in Vietnam.
After entering the WTO, the average customs duties in Vietnam will be reduced from 17.4 to 13.4 percent within five to seven years. From this January, Vietnam will reduce customs duties on 1,812 kinds of consumables, including woodwork, motorcycle, cars, chemical medicines, plastics, clothing and mechanical equipment.
Machinery and electronic products top the exports from Guangdong to Vietnam. In the first 11 months of 2006, about US$400 million worth products were exported to Vietnam, 42.1 percent of total exports to this country. Among them, motorcycles accounted for US$28.237 million, an increase of 63.1 percent from 2005, and US$16.844 million for mobile communication base stations, 1.6 times up from 2005.
In the first 11 months of 2006, Guangdong exports to Vietnam valued at US$84.29 million in steels, US$83.8 million in textiles, US$13.52 million in clothing and US$9.76 million in plastics, increasing by 1.1 times, 48.1 percent, 29 percent and 15.8 percent respectively.
Third, Vietnam's entry to the WTO will benefit Guangdong's enterprises on industrial division.
Guangdong, as one of the most significant manufacturing bases in the world, demands a large number of up-stream products. To this end, Vietnam plays a good role in the industrial chain in meeting Guangdong's manufacturing requirement. In the first 11 months of last year, Guangdong imported US$23.43 million-worth printing circuits, a big jump of 99.3 percent from 2005; US$10.04 million for imported transformers, rectifiers, inductors and accessories, an increase of 24.3 percent; and US$9.1 million for synthetic fiber yarns, an increase of 10.1 percent.
Besides up-stream products, Guangdong's enterprises will utilize all of Vietnam's favorable policies to directly invest in local environment to establish clothing, furniture and TV factories. This will be done according to world trade regulations and will create jobs for local people as well as developing the local economy.
According to statistics from Guangzhou's customhouse, in 2005, the trade volume between Guangdong and Vietnam reached US$1.12 billion, 3.8 times that of 2001. In the first 11 months pf 2006, this climbed further to US$1.42 billion.
(China.org.cn by Zhou Jing, January 11, 2007)
