UNEP Country Project on Trade Liberalisation in the Agriculture sector and the Environment (Draft presentation)

1
UNEP Country Project on Trade Liberalisation in
the Agriculture sector and the Environment (Draft
presentation)
The rice sector in Vietnam 19 February
2003Geneva

• Project Leader Truong Van Tyen, PhD
• Hue University of Agriculture and Forestry

2
Rice, people and Vietnamese culture
Trade liberalization in the Vietnam rice sector
Relevance of rice to the national economy
3
Rice position in agriculture and export
Trade liberalization in the Vietnam rice sector
4
Vietnam rice with its international position
Trade liberalization in the Vietnam rice sector
5
Trends of rice yield, area, production, and export
Trade liberalization in the Vietnam rice sector
6
Project objectives
Trade liberalization in the Vietnam rice sector

• Understand implications of trade lib. in rice
  sector
• Enhance capacity in trade policy and research.
• Assess environmental impacts of trade lib.
  policies
• Develop methodology to the impact assessment
• Enhance coordination and expertise in identify
  quantify impacts of trade lib. in agriculture
• Formulate policies to response to impacts
  identified
• Perform cost-benefit analyses of policy
  implementation

7
Local institutions involved
Trade liberalization in the Vietnam rice sector

• Hue University of Agriculture Forestry lead
  and coordinated the research implementation.
• Team members Economists, Community Dev.
  Agronomists, ecological environmental
  specialists.
• The team members involved are from
• Hue University (Central Vietnam)
• Hanoi Agri. University (North
  Vietnam)
• Mekong Delta Farming System RD
  Institute (South)
• Ministry of Agriculture and Rural
  Development

8
Stakeholder Approach and process
Trade liberalization in the Vietnam rice sector

• Stakeholders Universities, Institutes,
  Ministries, rice producers, traders, People
  Organisations, NGOs
• Consultation and policy dialogue carried out
  through the ISG to MARD for global integration
  (collaborated with the ISG Secretariat and ad-hoc
  theme groups related, and accessed the ISG
  e-forum)
• Approach Interdisciplinary team - consultation -
  stakeholder sensitization - specification -
  method development - data source - impact
  analyses - policy recommendation - policy
  dialogue and public hearing - and initial
  implementation of policy response

9
Process for assessment implementation
Trade liberalization in the Vietnam rice sector
10
Development of In-country Methodology
Trade liberalization in the Vietnam rice sector
Partial Equilibrium Model and Regression Model
are adopted for an ex-ant assessment, given
- Method familiarity to the team members
- Secondary data availability and
accessibility - Agrochemical use as a
major source of env. impact -
Responsiveness to WTO accession position, and
- Relevance to national policy context
for global integration
11
Scenario analyses and indicators
Trade liberalization in the Vietnam rice sector

• Base Scenario Simulate status of rice production
  and agrochemical use in 2006 without trade
  liberalization
• Impact analysis P1 reduce tariff rate to 5
  (AFTA) P2USs tariff against rice import
  reduced to 8.3 and P3rice area reduced 10
  (agri. diversification)
• Indicators (1) Rice supply, demand, export, and
  price (2) Agrochemical price, amount used for
  rice, (3) Pesticide and chemical fertilizer
  amount miss-used against the economically maximum
  application rate.

12
Assessment Methodology
Trade liberalization in the Vietnam rice sector

• Strategic screening the trade liberalisation
  impacts
• Access to relevant and available data
• Qualitatively comprehensive analyses of the
  impacts
• Apply PEM to quantify agrochemical miss-used
• Field visits for supplementing data needed and
  validating the qualitative analysis
  results/description
• Impact valuation benefited from empirical studies
  on trade liberalization by shadow price
  conversion
• Consultation and policy dialogue carried out via
  ISG to MARD. The Ministry has a numerous
  responsibility on environmental management

13
Integrated Assessment of Impacts of Trade
Liberalization and WTO Accession
Trade liberalization in the Vietnam rice sector
Three groups of policies affecting rice
sector 1. The renovation Doi Moi on economic
(and agriculture) management 2. The
trade policies on trade liberalization 3.
International commitments on
trade deregulation
14
The renovation Doi Moi on economic (and
agriculture) management
Trade liberalization in the Vietnam rice sector
Land laws (1989, 1993, 1998) allocated agri.
Lands to the farmers for long-term use and
recognized their full ownership on land use
rights Infrastructure investment for rice
(agriculture) development irrigation, make use
of bare lands (1994), and agri development in
Mekong delta (1996) Improvement of agri.
technology and input supports extension (1993)
re-organizing input services (1998) breeding
program (1999) removal fertilizer import
restriction with tariff rate 0 (2000)
15
The trade policies on trade liberalization
Trade liberalization in the Vietnam rice sector
-Domestic rice trade restrictions ( removed
1997) -The rice export quota Process of
quota allocation (decentralized in 1996)
Sector participation in rice export (private in
1997) Removal the rice export quota (in
2001) -The export tax reduced 25-0 (1998),
flexible -Milled rice import tariff 20 (in
2000), 40 (in 2001) -Restrictions on fertilizer
import decentralized in quota allocation (1996),
and removed (in 2001)
16
International commitments on trade
deregulation
Trade liberalization in the Vietnam rice sector
-Common Effective Preferential Tariff scheme
(CEPT) for ASEAN Free Trade Area (AFTA) e.g.
Tariff reduction to 0-5 by 2006
Removal of non-tariff barriers (NTBs) -Bilateral
trade agreement with the United States (USBTA)
e.g. Reduce tariff rates by 30 to 50
by 2005 -Negotiation for WTO accession e.g.
Trade deregulation corresponding to WTO AoA
17
Environmental Impacts
Trade liberalization in the Vietnam rice sector

• Stakeholder perception on env. impact of rice
  cultivation
• Strategic screening of env. impact of rice growth
  including trade liberalization
• Missed use of chemical inputs for rice
• Degradation of rice genetic resources

18
Perceived env. impact of rice intensification
19
Stakeholders screening env. impact of trade
liberalization
20
Over/under use of chemical inputs in Red river
Delta
Trade liberalization in the Vietnam rice sector
Optimal level
21
Environmental Impacts
Trade liberalization in the Vietnam rice sector
Over/under use of chemical inputs in Mekong Delta
Optimal level
.....
22
Most local varieties were replaced with modern
one
Trade liberalization in the Vietnam rice sector
Spring Autumn Spring Autumn
Spring Autumn
MV TV MV TV MV TV
MV TV MV TV MV TV
23
Local variety area remained a very low share(
share of local varieties in total)
Trade liberalization in the Vietnam rice sector
Spring rice Autumn
rice
24
Social and Economic Impacts
Trade liberalization in the Vietnam rice sector

• Changes in income of householders
• Changes in poor household percentage
• Benefit and costs of IFPRI research on policy
  changes

25
Trade liberalization in the Vietnam rice sector
Estimated effects of removal of internal rice
trade restriction on household income and poverty
26
Trade liberalization in the Vietnam rice sector
Estimated effect of removal rice export quota on
household income and poverty
27
Valuation of the effects
Trade liberalization in the Vietnam rice sector

• Valuation of overuse of chemical inputs
• Human health cost from exposure to pesticide
• Benefit and cost of IFGRI research on rice policy
  changes in Vietnam

28
Cost of overused agrochemical (VND/ha)(computed
base on overused amount price)
Trade liberalization in the Vietnam rice sector

• .

29
Benefit and cost of IFPRI research on rice
policies
Trade liberalization in the Vietnam rice sector
included those from relaxing export quota and
removing internal rice trade restriction
30
Decision processes in rice policy changes in
Vietnam
Trade liberalization in the Vietnam rice sector
31
A tentative policy package
Trade liberalization in the Vietnam rice sector

• Include env. education to stakeholders through
  puclic chanels and extension systems
• Include consideration of env. costs into taxation
  of use pesticides and chemical fertilizers
• Promote integrated or organic rice farming by
  providing supports to diversify farm production
  and develop non-farm rural small business.
• Policy dialogue through ISG to MARD to low down
  and stabilize the plan for rice production,
  export amount, and support improvement of quality
  and price of Vietnam rice export.

32
Project Experience Preliminary Conclusions
Trade liberalization in the Vietnam rice sector

• The stakeholder awareness and concern of env.
  impact is much less than that of socioeconomic
• Due to priority for food securiry and poverty,
  the trade liberalization was appreciated with
  possitive socioeconomics but neglected env.
  impacts
• EIA in rice sector is limited because the
  perceived negative impact seemed to be low. Other
  limitation is data availability and accessibility
• Qualitative impact assessment is not familiar to
  most resaerchers. In-country consultation is very
  limited. Impact valuation is new in VN, found
  very limited in the literature

33
Project Experience Steps Forward
Trade liberalization in the Vietnam rice sector

• Building stakeholder awareness of env. Impact,
  especially of trade liberalization via various
  forms of communication and training for
  researchers involved
• Involve specialists in provision of technical
  supports to quatify the impact of trade
  liberalization
• Initiate sensitization and dialogue with policy
  makers at ministry level of env. concerns on rice
  sector
• Finalize the PEM to quantify the identified
  impacts
• Carry out field visits for data subplement
• Finalize the assessment and policy development

34
Trade deregulation impact on rice sector (to be
further analyzed)
Trade liberalization in the Vietnam rice sector
Po Base scenario in 2005 P1 Tariff reduction
to 5 P2 US tariff reduced to rice import P3
10 area reduction
35
Trade deregulation on rice chemical inputs (to
be analyzed)
Trade liberalization in the Vietnam rice sector
Po Base scenario in 2005 P1 Tariff reduction
to 5 P2 US tariff reduced to rice import P3
10 area reduction