Encuesta

Besides the application of The Partial Equilibrium Modelling Framework – the WITS/SMART Model of World Bank (Sam Laird and Alexsander Yeats, 1986) to test the change of turnover of Vietnam’s Timber industry if all the tariff lines will be cut down to zero, the hypotheses of the study also have been analysed using regression model. The reason for combining these research methods is that each model has its pros and cons, the analysis of regression models based on the factors affecting timber import and export activities of Vietnamese timber enterprises have been mentioned in Chapter 4 will help us take a more comprehensive view of the effects of the EVFTA Agreement to Vietnam Timber industry.

5.1. WITS/SMART model

SMART model is developed by the Word Bank to stimulate the partial equilibrium impact of a tariff reduction for a single market. It allows analysis of trade reforms in the presence of imperfect substitutes and is more adequate than homogenous good model when examining tariff preferences, as it avoids corner solutions. In addition, it allows increasing export supply functions: part of the adjustment occurs through changes on the export price of exporters. However, like any partial equilibrium model, these strong assumptions only allow trade policy analysis to be undertaken in one country at a time. In spite of this weakness, WITS/SMART can help estimate trade creation, diversion, welfare and revenue effects.

Smart model based on the assumption (Olivier Jammes and Marcelo Olarreaga, 2005):⁴² 1) Partial Equilibrium: no income effects; 2) Armington Assumption: HS 6 digit goods imported from different countries are imperfect substitutes, i.e., woods from Vietnam are an imperfect substitute to woods from Malaysia. 3) Export supplies are perfectly elastic: world prices of each variety (e.g., wood from Thailand) are given.

42 The techinal description of the model is explained in the annxex

WITS database comes from various sources. It is in close collaboration with the UNCTAD, ITC, United Nations Statistical Division (UNSD) and WTO.

The use of the SMART model is as follows:

- Searching, compile and download the data by country or product based on classification on type of goods and different levels

- Access to information about measuring non-tariff barriers

- Perform commercial and tax queries from reports and partners from countries or groups of countries, products or groups of products specified according to specific standard (HS and SITC) or nomenclative products(BEC, ISIC, GTAP, NACE, ...)

- Calculate and compare trade competitiveness of countries

- Create the simulative assumptions about the single market or multiple markets after tariff cuts

As Vietnamese wood products have an elasticity of supply by price and are under competitive pressure compared to other markets so the SMART model should be simulated with two scenarios:

- Simulation sceneria 1: The Vietnam-EU FTA is concluded successfully with the tax cut to 0% for all commodity groups mentioned above, supply elasticity is 99, replaced elasticity is 1.5 (default of the SMART model)

- Simulation sceneria 2: Both the FTA between Vietnam and the EU and FTAs between the EU and other competitive timber markets such as Indonesia, China; Malaysia; Thailand and Brazil are signed (All countries enjoy the preferential tariff of 0%)

5.2. Regression model 5.2.1. Research design

The research was divided into two main phases: preliminary research and formal research. These two study periods are presented in detail as follows:

5.2.1.1. Preliminary research

Preliminary research was carried out through two methods - qualitative research and quantitative research. The purpose of qualitative research is to discover the factors that affect Export-Import turnover Vietnam’s Timber Industry with the EU and to adjust the scale to suit the characteristics of Vietnam Timber Enterprises. Qualitative research is conducted by discussing with experts in trade and legal expert to learn the barriers and the obstacles which Vietnam Timber Enterprises have to face at the moment, from which to build a draft scale. The next step, 05enterprises are interviewed in a convenient way of sampling to detect errors of the questionnaires and check-up the scale. The result of this step is to develop a questionnaire used for formal research.

5.2.1.2. Formal research

The formal research was done by means of quantitative research, taken as soon as the questionnaire had been modified from the results of the preliminary research. This study directly interviewed Vietnamese Timber Enterprises to collect survey data. The subjects of this research are Vietnam Timber Enterprises which conducted import and export activities with the EU. SPSS 22.0 software is the main tool for analysing data, testing research framework and testing hypotheses in this research.

5.2.2 The research hypotheses and the model research

Based on the factors affecting import and export activities of goods, the issues mentioned in the EVFTA and the requirements of the EU market for timber products, to assess the some factors affecting Vietnam's timber industry as the EVFTA is signed and implemented, the research has developed evaluation models as follows:

Export-Import activities Vietnam’s Timber Industry VN-EU = β₀ + β₁x F1 + β₂x F2+β₃x F3 +β₄x F4 + β₅x F5 + β₆x F6

With hypothesizes as following:

H1: Quality standards have negative effect on Export-Import activities Vietnam’s Timber Industry with EU.

H2: Technical barriers have negative effect on Export-Import activities of Vietnam’s Timber Industry with EU

H3: Administration procedures have negative effect on Export-Import activities of Vietnam’s Timber Industry with EU

H4: Environment requirements have negative effect on Export-Import activities of Vietnam’s Timber Industry with EU

H5: Corporation responsibility requirements have negative effect on Export-Import activities of Vietnam’s Timber Industry with EU

H6: Internal Problems have negative effect on Export-Import activities of Vietnam’s Timber Industry with EU

Export-Import activities of Vietnam’s Timber Industry VN-EU = β₀ + β1x F1 + β2x F2+β₃x F3 +β₄x F4 + β₅x F5 + β₆x F6

Table 5.1 Model research Quality standards

Technical Barriers

Administration procedures

Environment requirements

Corporation responsibility Internal Problems

Export-Import turnover Vietnam’s Timber Industry with EU H1

H3

H4

H5 H6 H2

Chapter 6 Research results and analysis