IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2219.html
   My bibliography  Save this paper

The effect of the United States'granting Most Favored Nation status to Vietnam

Author

Listed:
  • Fukase, Emiko
  • Martin, Will

Abstract

Since the U.S.embargo on trade with Vietnam was lifted in 1994, exports from Vietnam to the United States have risen dramatically. However, Vietnam remains one of the few countries to which the United States has not yet granted most favored nation (MFN) status. The general tariff rates that the United States imposes average 35 percent compared with 409 percent for the MFN rate. Granting MFN status to Vietnam would improve its terms of trade and help improve the efficiency of resource allocation in the country. Better access to the U.S. market would increase the volume of Vietnamese exports to the United States and the prices received for them while also reducing their costs to U.S. users. The authors use a computable general equilibrium model to examine the effects of reducing U.S. tariffs on Vietnamese imports from general rates to MFN rates. They estimate tariff changes using the U.S. tariff schedule for 1997 weighted by Vietnam's exports to the United States. The results suggest that after a change to MFN status for Vietnam, its exports to the United States would more than double, from the 1996 baseline of $338 million to $768 million. By conservative estimates, welfare gains in Vietnam would be about $118 million a year, or a 0.9 percent increase in real income per capita. Sixty percent of that gain would come from improved terms of trade and the other 40 percent from gains in efficiency. Because Vietnam's exports to the United States have been growing rapidly since the lifting of the embargo in 1994, the trade expansion resulting from MFN status may be larger by the time Vietnam obtains it. Based on 1998 values, the increase in exports would have been around $750 million a year. For the United States, lowering the high tariffs on imports from Vietnam would improve consumer welfare by lowering prices and increasing the volume of those imports. The direct welfare gains in the United States are estimated to the $56 million a year. There are likely to be significant additional gains to both countries from the liberalization Vietnam will undertake as a result of the negotiation for MFN status and for entry into the World Trade Organization.

Suggested Citation

  • Fukase, Emiko & Martin, Will, 1999. "The effect of the United States'granting Most Favored Nation status to Vietnam," Policy Research Working Paper Series 2219, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2219
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1999/12/03/000094946_99112405321020/Rendered/PDF/multi_page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James Riedel, 1993. "Vietnam: On the Trail of the Tigers," The World Economy, Wiley Blackwell, vol. 16(4), pages 401-422, July.
    2. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    3. Martin, W. & Winters, L.A., 1995. "The Uruguay Round and the Developing Countries," World Bank - Discussion Papers 307, World Bank.
    4. Martin,Will & Winters,L. Alan (ed.), 1996. "The Uruguay Round and the Developing Countries," Cambridge Books, Cambridge University Press, number 9780521586016, January.
    5. James E. Anderson & Will Martin, 1996. "The Welfare Analysis of Fiscal Policy: A Simple Unified Account," Boston College Working Papers in Economics 316., Boston College Department of Economics.
    6. P. J. Lloyd, 1999. "International Trade Opening and the Formation of the Global Economy," Books, Edward Elgar Publishing, number 1623.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2006. "Vietnam’s Accession to the WTO: Lessons from Past Trade Agreements," MPRA Paper 61679, University Library of Munich, Germany.
    2. Keshab Bhattarai & Dung Thi Kim Nguyen & Chan Van Nguyen, 2019. "Impacts of Direct and Indirect Tax Reforms in Vietnam: A CGE Analysis," Economies, MDPI, vol. 7(2), pages 1-36, May.
    3. Dimaranan, Betina & Ianchovichina, Elena & Martin, William J., 2007. "China, India, and the future of the world economy : fierce competition or shared growth?," Policy Research Working Paper Series 4304, The World Bank.
    4. Nielsen, Chantal Pohl, 2002. "Social accounting matrices for Vietnam 1996 and 1997," TMD discussion papers 86, International Food Policy Research Institute (IFPRI).
    5. Jibran Hussain & Ahsan Ali & Muhammad Haseeb, 2017. "Regional Trade Between India and Pakistan: Prospect of Most Favourite Nation (MFN)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(12), pages 1179-1196, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emiko Fukase & Will Martin, 2000. "The effects of the United States granting MFN status to Vietnam," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(3), pages 539-559, September.
    2. Kym Anderson, 2003. "Trade Liberalization, Agriculture, and Poverty in Low-income Countries," WIDER Working Paper Series DP2003-25, World Institute for Development Economic Research (UNU-WIDER).
    3. Anna Strutt & Kym Anderson, 2000. "Will Trade Liberalization Harm the Environment? The Case of Indonesia to 2020," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 203-232, November.
    4. Ji Chou & Shiu-Tung Wang & Kun-Ming Chen & Nai-Fong Kuo, 2003. "Taiwan's Accession into the WTO and Trade in Services: A Computable General Equilibrium Analysis," NBER Chapters, in: Trade in Services in the Asia-Pacific Region, pages 99-136, National Bureau of Economic Research, Inc.
    5. Randhir, Timothy O. & Hertel, Thomas W., 2000. "Trade Liberalization As A Vehicle For Adapting To Global Warming," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), pages 1-14, October.
    6. Martin, Will, 2001. "A Quantitative Evaluation of Vietnam's Accession to the ASEAN Free Trade Area," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 545-567.
    7. Kym Anderson, 2005. "Agricultural trade reform and poverty reduction in developing countries," Chapters, in: Sisira Jayasuriya (ed.), Trade Policy Reforms and Development, chapter 9, Edward Elgar Publishing.
    8. Roland-Holst, David & Tarp, Finn & Huong, Pham Lan & Thanh, Vo Tri, 2003. "Dragon by the Tail, Dragon by the Head, Bilateralism and Globalism in East Asia," Conference papers 331086, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Kathuria, Sanjay & Martin, Will & Bhardwaj, Anjali, 2001. "Implications for South Asian countries for abolishing the Multifibre Arrangement," Policy Research Working Paper Series 2721, The World Bank.
    10. Anderson, Kym & Yao, Shunli, 2003. "How Can South Asia and Sub-Saharan Africa Gain From the Next WTO Round?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 466-481.
    11. Yongzheng Yang, 2000. "Food Embargoes against China: Their Likelihood and Potential Consequences," Asia Pacific Economic Papers 304, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    12. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, University Library of Munich, Germany.
    13. Sébastien Jean & David Laborde & Will Martin, 2008. "Choosing Sensitive Agricultural Products in Trade Negotiations," Working Papers 2008-18, CEPII research center.
    14. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.
    15. Lucian Cernat & Sam Laird & Alessandro Turrini, 2003. "How Important are Market Access Issues for Developing Countries in the Doha Agenda?," International Trade 0302004, University Library of Munich, Germany.
    16. Walmsley, Terrie L. & Hertel, Thomas W. & Ianchovichina, Elena, 2001. "Assessing the Impact of China’s WTO Accession on Foreign Ownership," Conference papers 330941, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. James R. Markusen & Thomas F. Rutherford & David Tarr, 2000. "Foreign Direct Investments in Services and the Domestic Market for Expertise," NBER Working Papers 7700, National Bureau of Economic Research, Inc.
    18. Dimaranan, Betina V. & Hertel, Thomas W. & Keeney, Roman, 2003. "OECD Domestic Support and the Developing Countries," 2003 Annual meeting, July 27-30, Montreal, Canada 22000, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Hewitt, Joanna, 2008. "Impact evaluation of research by the International Food Policy Research Institute on agricultural trade liberalization, developing countries, and WTO's Doha negotiations:," Impact assessments 28, International Food Policy Research Institute (IFPRI).
    20. Bruce A. Babcock & John C. Beghin & Jacinto F. Fabiosa & Stephane De Cara & Amani Elobeid & Cheng Fang & Chad E. Hart & Murat Isik & Holger Matthey & Alexander E. Saak & Karen Kovarik & FAPRI Staff, 2002. "Doha Round of the World Trade Organization: Appraising Further Liberalization of Agricultural Markets, The," Center for Agricultural and Rural Development (CARD) Publications 02-wp317, Center for Agricultural and Rural Development (CARD) at Iowa State University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.