Tropentag, October 5 - 7, 2004 in Berlin "Rural Poverty Reduction through Research for Development and Transformation"

Agricultural Trade Liberalisation in the WTO and Its Poverty Implications: The Case of Rural Households in Northern Vietnam

University of Hohenheim, Institute of Agricultural Economics and Social Sciences in the Tropics and Subtropics (490a), Germany

Abstract

The objective of the paper is to analyse poverty implications of the actual liberalisation discussions in the agricultural sector within the WTO negotiations for rural households in Northern Vietnam.
Within the liberalisation efforts during the last years the World Trade Organisation (WTO) played an important catalytic role. However, during the present Negotiation Round, also called the Doha Development Round, some drawbacks occurred and scheduled deadlines could not be met, especially true for the agricultural sector. In preparation of the Ministerial Meeting in Cancún, Mexico, in September 2003, the WTO suggested further liberalisation for the agricultural sector in the Harbinson Paper to break up the deadlock in the negotiations. Vietnam is currently not a WTO member but is in the process of accession negotiations. The objective of the Vietnamese Government is to accede to the WTO within the Doha Round by 2005.
The chosen methodology is a macro-micro approach which uses first a general equilibrium setting (standard GTAP model) to assess the price changes of the Harbinson suggestions for further agricultural liberalisation. Two scenarios are simulated: Vietnam being member of the WTO and Vietnam not being a member of the WTO. The data for the macro simulation are from the GTAP database.
In a second step data from a household survey from Northern Vietnam (2001) are used together with the price changes from the macro simulation to estimate poverty implications for the households. Within this post-simulation analysis household data are mapped to the GTAP data. In order to estimate the net income and poverty effects of trade liberalisation the income side (via factor price changes) and the consumption side (via consumption price changes) are considered. Households are classified following their income structure and their consumption shares for different product categories. Results show how rural farmers in Northern Vietnam may be affected by the countries accession to the WTO and how this affects their net income and thus their poverty situation.

Keywords: Agricultural trade liberalisation, general equilibrium model, macro-micro approach, post-simulation analysis, poverty

Contact Address: Sabine Daude, University of Hohenheim, Institute of Agricultural Economics and Social Sciences in the Tropics and Subtropics (490a), 70593 Stuttgart, Germany, e-mail: daudeuni-hohenheim.de