RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
13 October 2004  
 
(04-4294) 
Working Party on the 
Accession of Viet Nam Original:   English 
 
 
 
ACCESSION OF VIET NAM 
 
Domestic Support and Export Subsidies in the Agricultural Sector  
 
Addendum  
 
 
 The following submission, dated 5 October 2004, is being circulated at the request of the Socialist Republic of Viet Nam.  
 
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 WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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- Supporting Table DS:1
 
Question 1 
Viet Nam had notified two structural adju stment programs: one under producer retirement 
programs, the other under investment aids.  Viet  Nam explained that it had moved the program 
that was previously notified  under producer retirement programs to investment aids and 
combined it with the program already notified there. 
Based on Viet Nam's description of these two prog rams, it is not clear to us that the program 
that pays farmers to convert agricultural land in to non-agricultural uses should be notified as 
an investment aid.  It would seem to us that this program better meets the criteria of resource retirement (paragraph 10 of Annex 2 to the Agreement on Agriculture).  The key difference 
between the two programs is that one converts land to non-agricultural uses, the other does not.  
Therefore, we would ask Viet Nam to consider mo ving this program to the resource retirement 
category. 
Answer:  
 
Structural adjustment assistance provided through resource retirement programmes is aimed at 
moving production from the low-efficient and unstabl e crops to other purposes, such as aforestration 
and aquaculture. 
Structural adjustment assistance provided through investment aids is aimed at moving land areas from 
ineffective and unstable-income cultivation of rice and some crops to higher-income cultivation of 
other crops or animal husbandry.  
In general, these two kinds of assistance program s provide partial cash amount for purchasing animals 
and plant breeds or covering the cost for land r eclamation. Their common objective is to encourage 
the restructure of agricultural production. 
Based on the comments and suggestions of some WTO Members, Viet Nam has merged these two 
programs into the structural adjustment assistance provided through investment aids.  We, however, 
would be open to further discussion with Members of  the Working Party to decide whether to keep 
the notification as it is or to retu rn to our previous notification. 
Question 2 
Concerning the program that has always been notified under investment aids, can Viet Nam 
confirm that the program does not mandate or in any way designate the agricultural products 
to be produced by the recipients except to requi re them not to produce a particular product. 
Answer:  
As stated above, "investment aid" is aimed at encouraging the restructure of agriculture land. 
Viet Nam would like to confirm that it does not mandate or in any way designate the agricultural 
products to be produced by the recipients. In additio n, it does not require the recipients to produce any 
particular product.  WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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- Supporting Table DS:5  
Question 3 
For rice, we agree with Viet Nam that if the supp ort is negative it should be set to zero in 
column 8.   However, it is not clear to us wh y eligible production for rice was set to zero for 
2001, when Viet Nam has entered an applied administered price in 2001. 
If the program was not operational in 2001, Viet  Nam should set the applied administered price 
to zero as well.  But, Viet Nam should keep in the external reference price since the 3-year 
average (1999-2001) will serve as the fixed external reference price for rice should Viet Nam 
decide to introduce such a measure in the future. 
Answer:  
The program was not operational in 2001, and the applied administered price was erroneously 
inscribed in the table. Viet Nam would like to conf irm that it has taken the comment and has adjusted 
the notification accordingly. 
Question 4 
For sugar, we reiterate our position that Viet Nam should only use th e market price support 
program - it cannot notify import licensing a nd authorized/designated importers as market 
price support for the purposes of these calculations.   It also cannot use internal prices for the 
applied administered price. The applied administe red price must be the price announced by the 
government. 
Answer:  
Viet Nam would like to confirm that it has take n the comment and has adjusted the notification 
accordingly. 
Question 5 
In response to our previous question, Viet Na m described its price support program for sugar 
as being provided by means of a minimum purchasing price for sugar cane (e.g., VND 240,000/tonne of sugar cane) and other market  intervention measures.  Please describe 
these other market intervention measures? 
Answer: 
 
In addition to minimum purchasing price for sugar can e, the government of Vi et Nam also intervened 
in the sugar market by ways of import licenses, designation of importers where necessary.  
Question 6 
In response to our question concerning market price support for other products, Viet Nam 
notes that it applied minimum purchasing price for cotton.  Please explain why Viet Nam has 
not calculated market price support for cotton in this table.  If there are technical problems, the 
WTO Secretariat may be able to assist Viet Nam with this calculation. WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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Answer: 
 
Cotton produced in Viet Nam is not of the sa me type as the common cotton available in the 
international market (in terms of fibre quality and length).  Therefore, the price of domestic cotton 
cannot be comparable with that of international cotton. As the comparable international reference 
price is not available, Viet Nam has chosen to notify in DS:7 instead of DS:5.  We would highly 
welcome any support to correct this issue.  
- Supporting Table DS:7  
Question 7 
We appreciate that Viet Nam took our comment on board and moved this information to 
supporting table DS:7. 
We would also note that supporting table DS :7 serves as a summary table for all product-
specific support, and Viet Nam should include any support from the previous product-specific support tables (DS:5-DS:6) in this table as directed. 
Answer: 
 
Viet Nam would like to confirm that it has take n the comment and has adjusted the notification 
accordingly. 
- Supporting Table DS:9  
Question 8 
We appreciate that Viet Nam responded to  our earlier request to remove all tax 
preferences/exemptions by removing the progr am that reduces/exempts VAT liability.   
However, we note that Viet Nam continues to include the agricultural land-use tax exemption.  
We continue to believe that this measure should  be removed from Viet Nam's supporting tables 
consistent with our position that tax exempt ions do not belong in the supporting tables. 
Answer:  
Viet Nam would like to confirm that it has take n the comment and has adjusted the notification 
accordingly.  This measure would be notified under the SCM Agreement in Viet Nam's next 
notification. 
- Supporting Table ES:1    
Question 9 
We note that Viet Nam has entered "export bonus upon performance" in the column (1) 
entitled "description of products."   It is not clear why this has been entered as a separate line 
item.  Is it not the case that this measure is  captured under the budgetary outlays/quantities 
listed by commodity (rice, pork, coffee, vegetables and fruits)?  WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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Answer:  
"Export bonus upon performance" is based on a number  of criteria: having growth rates of export 
turnover over time, exporting new products or to new markets etc. to encourage exporters.  The 
amount of bonus depends on each ente rprises and their export turnover.  
Question 10 
Please confirm that canned pinea pples and canned cucumbers are the only vegetables and fruits 
that received export support. 
Answer:  
In 1999 and 2000, canned pineapple juice and canned cucumbers receive d export support.  In 2001, 
canned fruit in general are entitled to subsidies in  the form of "export bonus".  These are the only 
vegetables and fruits that received expor t subsidies in the 1999-2001 period. 
Question 11 
Does the data in this table include budgetary s upport for state-owned enterprises, such as the 
rice exporting firms Vinafood I (Northern Food  Company) and Vinafood II (Southern Food 
Company)?  If not, please provide this data.  Are there any other state-owned enterprises 
engaged in exporting agricultural and food products? 
Answer:  
The data provided in the table presents the s upport from the State budget to all state-owned and 
private enterprises exporting agricultural and foods products.  There are numerous state-owned and 
private enterprises engaged in exporting each agricult ural product and the measures that Viet Nam has 
notified do not distinguish between private and stat-owned enterprises. 
Question 12 Regarding rural development, we would welcome further information on the structure of the 
commercial banks, which give loans to agricultura l projects.  We are especially interested in 
knowing whether there are any foreign investors in  that sector and whether loans are also given 
to private farmers? 
Answer: 
 
Viet Nam promulgated the Law on Foreign Investment  in 1989.  This Law has been revised several 
times since then to create more incentives to foreign investors.  In the agriculture sector, there have 
been 781 foreign investment projects with the total re gistered capital of US$ 3.8 billion by the end of 
October 2003.  Investors in the agricultu re sector come from various countries. 
Commercial banks in Viet Nam do not discrimin ate borrowers from different economic entities. 
Producers and traders of all types have access to credits from commercial banks if they can present 
their effective production or trading plan which help ensure the repayment of credit.  This requirement 
also applies to private farmers. 
Question 13 
Paragraphs 252-255 of WT/ACC/SPEC/VNM/4/Rev .1 contain information on Viet Nam's 
export subsidies and concerns ra ised by members in relation to them.  Paragraph 255 is square WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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bracketed and contains two sets of square brac keted text, one of which eliminates export 
subsidies upon accession.  We note that Viet Nam is a country that is likely to acquire substantial competitive strengths in the agricultu ral sector as it becomes a market economy and 
to develop a strong interest in the global elimination of agricultural export subsidies. 
We ask Viet Nam to provide details of the steps it will take to eliminate its export subsidy 
programs for agricultural products by the date of accession. 
We would expect to see a commitment from Vi et Nam that all export subsidies would be 
eliminated upon accession. 
Answer: 
 
Most of export subsidies in Viet Nam are aimed to provide support to beneficiaries in the risky event 
of the international market where agricultural pri ces go down and create serious impacts to the lives 
and income of a majority of farmers.  
Viet Nam commits to eliminate agricultural export subsidies upon accession, excluding those that 
developing countries are eligible to maintain.  
- Supporting Table DS:9   
Question 14 Support for land tax exemptions should not be notified as non product specific support where 
two, targeted product-specific sectors (rice and coffee) are receiving support. 
Please estimate the proportions of the payments that could be attributed to coffee producers 
and rice producers and notify the estimated payments in Supporting Table DS:7 (Other 
Product-Specific Support). 
Answer: 
 
According to suggestions by some Working Party Members, tax exemption is not considered as 
subsidies that should be notified in WT/ACC/4 and s hould be removed from this table.  Viet Nam has, 
therefore, eliminated this program from the notification.  
Question 15 
We recognize the evolution that has taken place in Viet Nam's position on agricultural export 
subsidies, and we would like to see a further evolution.  We have strong concerns about Viet Nam's adoption of new export subsidy progr ams during the negotiations as well as the level 
of export subsidies provided (approximately US$ 80 million).  Support systems should be 
reorganized to provide support in a less distorting  manner, including in recognition of the fact 
that the WTO membership is moving closer toward  the goal of eliminating export subsidies.  
We stand by our position that export subsid ies should be bound at zero upon accession. 
We ask Viet Nam to please provide details of th e steps it will take to eliminate its export 
subsidies. 
Answer:  
 
Over the past two years (2003, 2004), Viet Nam has made efforts in improving its policies on export 
subsidies toward a WTO-consistent fashion. In particular, export bonus based on export turnover has  WT/ACC/SPEC/VNM/3/Rev.2/Add.2 
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been transformed to be based on the increased prop ortion of turnover as compared with the previous 
year. Another example is to shift to support through trade promotion activities.  
Viet Nam commits to eliminate agricultural export subsidies upon accession, excluding those that 
developing countries are eligible to maintain. 
 
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