|
Tuesday, December 18, 2007 |
| The Vocal and the Silent: Vietnam Progress to Market Integration
|
January 11, 2008 marks one year for Vietnam’s accession to WTO. In this one year, a lot has been written on Vietnam’s accession to WTO. There is an upbeat mood in the government and among the people (especially those in industry and urban settlements), and the market sentiment too is upbeat.
On celebratory notes, economic managers are positing the impact to be positive. Using indicators of increases in FDI investment, expansion in securities market, growth in export turnovers (which show an annual increase of nearly 20%), potential of technology transfer and even the non permanent membership to United Nations Securities Council, a successful impact is being talked of.
Market integration, as has been seen by the early turn of indicators over 2007, has a trust enhancing impact on the foreign investors. It means greater flow of FDI, open competition based reforms in domestic markets, a growth in export orientation and ecommerce, further energy in real estate markets and pressure on other economic and administrative reforms. It implies greater access to US and EU and other markets for Vietnamese goods on the one hand and lower import tariff and access barriers for agriculture and manufactured goods from these countries to Vietnamese markets, on the other. Furthermore key services sectors such as telecom, financial services, insurance will be opened over a period to foreign investment
In general, Vietnam is “more open” now. Domestic industry and agriculture as well as services face increasingly stiffer competition, as level playing fields are made available. “Reforms” such as protection given out to farmers and even domestic manufacturers given by the way of import duties, direct and other indirect subsidies such as input subsidies, price protection etc will be withdrawn over time, we are told.
Level playing field competition is translating to pressure on labour sector liberalization, greater competition for labour – both on the off farm and on farm sector, ceding public spaces to private and a growing market invasion in the society in a build up to corporate culture. Export orientation of the productive processes, over time implies shift in both cropping patterns and industrial production. In preparation for introducing WTO to people, government spokespeople have at different points in time, indicated their optimistic view of these elements.
While Vietnamese society discusses these issues, WTO accession and other bilateral agreements are being welcomed in other parts of the world, most notably in the US and EU as these will, apart from increased access of these countries goods to Vietnam, yield other important benefits to them, such as continued domestic reform and rule of law, and strengthening of relations in strategically important region in the neighbourhood of China.
Propelled by Accession to WTO, market integration is creating a situation towards two halves in Vietnam- one with Voice, represented by emerging capitalists, stock market and economic managers, and one which is a Silent Vietnam which is represented by rural communities, wage labourers and small holder farmers, and those being left out of the race.
Market integration and WTO accession clearly leads to high competition in domestic sector. Labour market reforms for bringing efficiency and competition as a key means fulfill these agreements narrow spaces for labour rights. Labour rights are the last remaining protective spaces, available to millions of wage earners, for whom such market integration leads to only one thing –an inevitable race to the bottom. In many countries, these have turned to stark realities for labour - a world in which there is enough for many, but not for them!
Another negative impact is on agriculturalists and small farmers. Reduction of trade distorting subsidies in domestic industry (without such conditions being met by huge agricultural subsidies in the north), means progressive removal of protection given out to millions (by the way of input subsidies, price protection), especially in a socialist state like Vietnam in order to and have a national strategy to guarantee local food supplies and build buffer stocks.
Another impact on the poor is a shifting of control and power away from them. Greater opening up, attendant privatization of resources, and promotion of TNCs (the FDI holders) leads to situation where control gradually and uni-directionally shifts away from poor and small holder farmers and from the state to agri-business TNCs and privates, leading to a concentration of power in the food system. It would be pertinent to mention here that 5 corporations control nearly 90% of the world grain trade and 6 corporations hold the global pesticide market today.
Together with other market reforms, such an integration leads to ceding national spaces which are public to the overall private in what some people call as privatization of the state. Such a privatization of assets, knowledge and public processes, is negative of people who have not had the historical advantage of capital, knowledge and power.
The promise of FDI is sometimes is also an elusive one. For one, FDI leads to increase in foreign share in nations wealth stock increases, causing denationalization of the domestic productive sectors. While FDI brings in capital, it also leads to outflows of capital and capital flight. The promise of technology transfer, is often an over-promise, since rarely has the developing world benefited from technology transfers, given the segmentation of production process and control of patents by the TNCs.
Similarly, biodiversity is another sensitive area to be affected by WTO accession. Experiences of bio-piracy and usurpation of traditional knowledge without sharing the benefits with custodians of biodiversity have become more serious due to TRIPS. This process also promotes a control and benefit away from communities to Trans National Corporations.
The economic models which lead to overwhelming pursuit of GDP led growth model and market monomania can only lead to finishing touches of a bigger eventual project which destroys small holder farmers, labour and wage earners. The negative impact of these models on environmental degradation is well recognised.
In this context, there is a need for Vietnam Government to build and strengthen domestic capacity, build a knowledge base for use and implementation of WTO use, as well as to build effective standard setting agencies. Post WTO poverty monitoring processes, to analyse the impact and develop recommendations for protective spaces, such as what some NGOs – like ActionAid and Oxfam are supporting, could also lead to useful learnings and development of strategies.
At the first anniversary of WTO Accession, it must be said that one year is a very short period to assess its impact on economy. Vietnam is a late “accessor” to WTO. Medium and long term experience of countries which have joined and learnt both positive and negative lessons are widely available and have learnings for Vietnam. While it is difficult for one country to continue to stay out of the global processes driven by the ideas of free trade, without risking isolation and losses, we know that free trade does is not just trade. Perhaps with these lessons Vietnam together with other countries in the south, have the historic opportunity to forge a world of trade and exchange based on principle of peoples control and justice, as an alternate process to the current hegemonic one.
|
|
| 0 Comments: |
|
| |
 |
| |
|
|
