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Vietnam becomes 150th member of wto { December 2007 } Original Source Link: (May no longer be active)
http://www.chron.com/disp/story.mpl/ap/fn/4462928.htmlhttp://www.chron.com/disp/story.mpl/ap/fn/4462928.html
Jan. 11, 2007, 5:18AM
Vietnam Officially Becomes WTO Member
By BEN STOCKING Associated Press Writer
© 2007 The Associated Press
HANOI, Vietnam — After years of negotiation and anticipation, Vietnam officially became the 150th member of the World Trade Organization on Thursday, opening the door to a new era of trade and investment in one of Asia's fastest-growing economies.
Vietnam will be required to slash tariffs and open previously closed sectors of its economy to foreign investors. While many of the changes will take effect immediately, others will be phased in. Foreign banks, for example, won't be allowed to open their own branches until April 1.
Vietnam, in turn, will have increased access to foreign markets and a neutral arbiter to hear disputes that arise with its bigger, more powerful trading partners. It will also benefit from the increased demand for goods and services that increased foreign investment brings.
At the WTO's Geneva headquarters, a giant blue banner read: "Welcome, Bienvenue, Bienvenido, Vietnam."
Pascal Lamy, the WTO's director-general, praised Vietnam for making tough reforms to bring its legislation in line with the organization's standards.
"When people work hard in the WTO, things happen," Lamy said in Geneva. "This is a very good example."
In Hanoi, Foreign Ministry spokesman Le Dung told reporters: "This is a momentous event in the international economic integration of Vietnam, showing Vietnam's deep and comprehensive participation in the global trading system."
While many Vietnamese companies see new opportunities, others are bracing themselves.
"We estimate that after Vietnam joins the WTO, we will lose about 20 percent of our market share to foreign rivals," said Nguyen Van Thoai, deputy manager of the Saigon Cosmetic Corp., which sells perfumes, toiletries and other products.
Many high-end cosmetic firms, such as Shiseido Co., L'Oreal SA and Clarins SA, are already operating in Vietnam. But with tariffs on cosmetics being slashed from 40 percent to 20 percent, Thoai expects more firms to enter the market.
"With their well known brand-names and large advertising budgets, they will make the competition even harder for us," he said.
The global trade group's members approved Vietnam's application in November, and the agreement was ratified shortly afterward by communist Vietnam's legislative National Assembly. Under WTO rules, membership becomes official 30 days after Vietnam formally notifies the WTO institution of the vote.
As it negotiated its WTO entrance, Vietnam approved many new laws and regulations intended to bring its business environment in line with international standards. While large, state-owned firms still dominate the economy, the government has sought to level the playing field for foreign and private domestic firms, which are playing an increasingly significant role.
In response to the new market reforms, foreign firms began increasing their investments in Vietnam ahead of the WTO agreement. Foreign direct investment reached a record US$10 billion last year. The government expects the economy grew 8.2 percent in 2006.
While foreign investment is expected to keep growing, Vietnam's WTO entry won't change the economic landscape overnight, said Adam Sitkoff, executive director the American Chamber of Commerce in Hanoi.
"Vietnam has been slowly bringing its trade and investment regime in line with international norms, and that's already made this place an attractive destination for some time now," Sitkoff said.
In spite of the market improvements ushered in by Vietnam's WTO reforms, Sitkoff cautioned that investors shouldn't have unrealistic expectations. Obstacles and challenges will remain, as entrenched interests seek to protect their economic turf.
"This is still a 'socialist-oriented' market economy," Sitkoff said. "That means the government is still preserving a commanding role for many large state-owned companies."
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