HANOI (AP) — Vietnam officially became the 150th member of the World Trade Organization yesterday, 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 also will 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,” Mr. 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.”
In Washington, U.S. Trade Representative Susan Schwab said Vietnam’s inclusion “marks the beginning of a new era in the political and economic relationship between our two countries — an era that will witness expanding economic opportunities and cooperation.”
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 Cosmetics 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, Mr. Thoai expects more companies 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.