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Assessing the Cost of Protection in Vietnam after Becoming WTO’s Member

This paper’s objective is to estimate the welfare cost of protection in Vietnam before and after it became WTO member. Although the welfare cost of protection is confirmed in economics theory, the structure of protection in Vietnam is vivid (Prema-chandra Athukorala, 2006), quantitative analyses on Vietnam’s welfare cost of protection are.still limited.　　 | Assessing the Cost of Protection in Vietnam after Becoming WTO’s Member Nguyen Anh Thu 1．Introduction 　　Since the economic reform in 1986, Vietnam has experienced extremely quick integration into the world market. Trade volume has increased sharply and the composition of Vietnam’s trading partners has broadened. Trade turnover in 1990 was roughly 6.2 billion USD, however, in 2005 it reached 69.2 billion USD and that of 2008 has been 143.4 billion USD. The growth of Vietnam’s trading rate in 2000─2005 period is 18.4%, which is 2.6 times the growth rate of Vietnam’s GDP. At the same time, the number of trading partners has increased, of which Asian countries constitute the most important trading partners of Vietnam, accounting for more than 50% of Vietnam’s trade. 　　Vietnam has become WTO member in 2006, which is one big step of its integration into the world market. Becoming WTO’s member means that Vietnam has to fulfill its obligations regarding reducing tariffs, opening markets for foreign products but at the same time it can have more access to foreign markets. 　　Although the objective of WTO is freer trade all over the world, its negotiations of the Doha Round have been halted for a long time (Jones, 2009). Almost all countries in the world including Vietnam still maintain many restrictions on the movements of goods across borders. As widely accepted in economics, this will reduce surplus or gains from trade of all countries engaged. Restrictions of Vietnam on imports and restrictions of other countries on Vietnam’s export will reduce the consumers’ choices and will divert resources from industries where there are comparative advantages. 　　This paper’s objective is to estimate the welfare cost of protection in Vietnam before and after it became WTO member. Although the welfare cost of protection is confirmed in economics theory, the structure of protection in Vietnam is vivid (Prema-chandra Athukorala, 2006), quantitative analyses on Vietnam’s welfare cost of .