The effects of the United States granting MFN status to Vietnam

Conclusions In this paper, the direct impacts on Vietnam’s trading opportunities of the U.S. granting MFN treatment were first estimated by building up from the resulting level of tariffs applied to individual traded goods. Then, the economic impacts on Vietnam were inferred, using simulations with the Global Trade Analysis model. The results revealed that the increased market access to the United States brings significant welfare gains to Vietnam. The direct terms of trade improvement resulting from increased market access accounts for 60 percent of the total gain, with the remaining 40 percent derived from second-best induced gains in efficiency. Exports to the United States more than doubled, from $338 million to $768 million.¹³ The estimated increase in exports of clothing is especially significant, with these exports increasing almost fifteenfold, while exports of agricultural commodities decreased slightly. Total welfare as measured by Equivalent Variation increased by $ 118 million or 0.9 percent increase in real expenditure per capita. By granting MFN status to Vietnam, the United States also gains from improved resource allocation, although some of the gains are offset by deterioration in its terms of trade. The gains for the United States were estimated to be around $56 million per year.     

How will growth in China and India affect the world economy?

China and India are rapidly growing, labor-abundant economies with very different export mixes. China is more integrated into global production sharing for manufactures, while services exports are more important for India. Even assuming India integrates more comprehensively into global production chains, there will be opportunities for rapid growth in both countries. Improvement in the range and quality of their exports can create substantial welfare benefits for the world, and for China and India, and can offset the terms-of-trade losses otherwise associated with rapid export growth. Most countries will need to respond to increased competition in some sectors, and to greater opportunities in others.     

Developing Countries and a New Round of WTO Negotiations

This article summarizes some of the results and findings emergingfrom an ongoing World Bank research and capacity-building projectthat focuses on the World Trade Organization (WTO) negotiatingagenda from a developing country perspective. Recent researchsuggests that the potential gains from further multilateralliberalization of trade remain very large. The payoffs associatedwith attempts to introduce substantive disciplines in the WTOon domestic regulatory regimes are much less certain. This suggeststhat the focus of current and future negotiations should beprimarily on the bread and butter of the multilateral tradingsystem—the progressive liberalization of barriers to tradein goods and services on a nondiscriminatory basis. In addition,priority should be given to ensuring that rules are consistentwith the development needs of poorer countries and to helpingdeveloping countries implement WTO obligations.