1. Poverty Reduction in Vietnam Do tariff cuts hurt the poor?

2. Should poor countries cut tariffs? The public and political perception of an elimination of tariffs lead us to expect negative effects after a tariff elimination Poor countries reluctant to cut the tariffs, particularly in agriculture Are tariff cuts in developing countries helping in alleviating poverty?

3. Effects of a tariff elimination in Vietnam on the “Other Foods and Beverages sector” Most protected sector in Vietnam (8 to 66%) This sector includes: vegetable oils and fats, sugar, beverages and tobacco, other food products Largest share of imports among agricultural goods, but 5% of overall imports and 3% of total value of output Unskilled labor intensive Scenario: remove tariffs in Other Foods and Beverages sector Does this trade liberalization help the poor?

4. Regional poverty decomposition earningstaxescost of living POVERTY DRIVERS

5. Macroeconomic impacts 71% increase in imports of Other Food and Beverages ToT: -1% Average utility per capita increases: 0.132 Poverty distribution by strata

6. Drivers of poverty change in Vietnam Drivers of poverty Land1.82 Ag-Unskilled1.42 Ag-Skilled1.36 Nag-Unskilled1.4 Nag-Skilled1.29 Wage-Unskilled1.41 Wage-Skilled1.29 Ag-Capital1.11 Nag-Capital1.3 Transfers0 Taxes1.07 Cost of Living-0.59 Positive for convenience

7. Earnings shares in Vietnam EarningsAgricNonagricUrblabRurlabTransfUrbdivRurdiv Land0.0300000.040.01 Ag-Unskilled0.9600000.430.09 Ag-Skilled0000000 Nag-Unskilled00.5800.0100.110.14 Nag-Skilled00.0100000 Wage-Unskilled000.990.7900.020 Wage-Skilled0000.18000 Ag-Capital0.0100000.020 Nag-Capital00.40.010.0200.240.55 Transfers00.010 10.140.21

8. Changes in poverty StrataEarningsTax Cost of LivingTotal Agric0.00000 Nonagric-0.0030.002-0.001-0.002 Urblab0.00000 Rurlab0.00000 Transf0.00000 Urbdiv-0.0020.001-0.001-0.002 Rurdiv-0.0110.009-0.006-0.008 Total-0.0160.013-0.009-0.012

9. Conclusions Nonagric, Urbdiv and Rurdiv the only strata that changes in poverty occur Total change in poverty: 12,000 people coming out of poverty Contrary to expectations unskilled labor real earnings rise due to export expansion in the Textile and Apparel (P) and Manufactures Trade liberalization of the Other Food and beverage sector does help the poor in Vietnam.