Although in first 7 months of 2019, Vietnam exported USD 145.13 billion, up by 7.5% year over year (YoY), the key sectors including textile, agricultural and fishery products have levelled out due to market fluctuations as well as other trade barriers. In this context, the business community has longed for the implementation of Free trade agreements (FTAs) to enjoy tariffs and other incentives to boost exports.

The report from the General Department of Statistics shows that in first 7 months of 2019, Vietnam’s export turnover amounted to approximately USD 145.13 billion, up by 7.5% YoY (a 15.3% increase in the same period). In particular, textiles and garments reached USD 18.3 billion, up by 10.5% YoY (a 16.2% increase in the same period); and agriculture, forestry and fisheries reached USD 23.03 billion, up by 2% YoY (a 7.8% increase in the same period),…

These figures show that Vietnam’s exports of goods in general and commodities such as textiles and agricultural and fisheries products in particular began to feel the impact of the US-China trade war and trade protection barriers from markets. Mr. Vu Duc Giang, Chairman of Vietnam Textile and Garment Association, openly acknowledged that, in the first half of this year, the export of textile and apparel industry to China is extremely difficult and yarn products cannot be even exported to this market. Similarly, the fisheries sector has also has to address issues concerning the Chinese market’s change in import policies, pressure of the US’ anti-dumping tax on pangasius, as well as the Council of Europe (EC)’s yellow card on Vietnamese seafood.

The Ministry of Industry and Trade indicated that amidst an increasingly complex world that directly threatens the market penetrability of Vietnamese goods, the signing of new-generation FTAs will to contribute to enhance competitive advantages, help Vietnamese goods become more competitive. Given the participation in the Vietnam – EU Free Trade Agreement (EVFTA) last June, Vietnam now becomes one of the countries participating in the most numerous Free trade agreements in the world with a total of 16 FTAs, in which, 10 FTAs are in effect, 2 FTAs have not been effective, 1 FTA has concluded negotiations and 3 FTAs are under negotiation.

Above all, CPTPP is the most important FTA over the past two decades, promoting economic integration in the Asia – Pacific region with 11 countries, accounting for 11.5% of total turnover all over the globe. CPTTP with many commitments on reduction of tariffs, origin, SPS (Sanitary and Phytosanitary Measures) and TBT (Technical Barriers to Trade) as well as investment, intellectual property and other commitments.

For EVFTA, it is confirmed that the comprehensive agreement covers all issues related to trade, taxes and technical barriers,… and ensures interests of all stakeholders. When the Agreement is expected to take effect in early 2020, the EU will remove import duties on 99.2% of tariff lines, equivalent to 99.7% of Vietnam’s export turnover after 7 years.

Ms. Nguyen Son Tra, Deputy Head of WTO and Trade Negotiations, Multilateral Trade Department (Ministry of Industry and Trade), said that Vietnam’s key export products such as textiles, seafood and wood,… will enjoy tax reduction right after EVFTA comes into effect in early 2020. For example, for seafood, nearly 50% of tariff lines with basic tax rate of 0 – 22% most of which ranges from 6 – 22% will be reduced to 0% when the Agreement comes into effect. This will bring a huge advantage for businesses to boost exports.

Mr. Hoang Quoc Vuong, Deputy Minister of Ministry of Industry and Trade, stated that EVFTA will enable Vietnam to build a more favorable and transparent business environment, thereby helping businesses enhance their competitiveness in the international market. However, the EU’s opening its market for Vietnamese businesses means that Vietnam must open its market for EU businesses. Thus, many businesses will enter and do business in Vietnam, creating a more competitive environment for Vietnamese businesses.

Experts show that the advantages that FTAs, especially CPTPP and EVFTA bring to businesses are huge. Businesses not only enjoy the 0% tariff rate but the import of machinery and raw materials within the member countries of these FTA is also subject to 0% tariff rate. This is an opportunity to help businesses complete their production activities, meet the standards of rules of origin, improve product quality, and increase market value.

Mr. Truong Dinh Hoe, Secretary General of Vietnam Association of Seafood Exporters and Producers (VASEP) affirmed that in addition to the basic benefits of import and export tariffs, given participation in new-generation FTAs such as CPTPP and EVFTA, Vietnamese fishery products will have the opportunity to expand export markets, enhance competitiveness compared to other competitors without FTA with partners (India, Thailand); diversify supply of raw materials from intra-regional countries; attract foreign investment, improve production technology and product quality, join regional supply chains thanks to the investment transition of multinational corporations,…

According to Mr. Vu Duc Giang, Chairman of Vietnam Textile and Apparel Association, all agreements bring great opportunities along with challenges. It is product safety, environment, people’s livelihood and labor,… Because these are very high-demanding markets, requiring high quality, especially to ensure the above issues during product usage. For example, in terms of EVFTA, exporting to the EU, businesses will have to participate in a playground with more transparent laws, requiring more strategic thinking and creativity in order to seek opportunities for cooperation and bringing Vietnamese branded products into the EU.

Despite the great opportunity, Ms. Miriam Garcia Ferrer, also pointed out that to enjoy tariff benefits and boost exports, Vietnamese businesses have to improve quality and meet market standards in accordance with FTA commitments.

Mr. Jean Jacques Bouflet, Vice President of EuroCham Vietnam also warned that the rules of origin of goods will only apply to Vietnamese products, so businesses will have to consider each specific case to enjoy a tax reduction.

Mr. Tran Dinh Luan, Deputy Director of the General Department of Fisheries (Ministry of Agriculture and Rural Development) said that: The Ministry of Agriculture and Rural Development has guided the production sectors and associations to coordinate the organization of seminars and conferences to study more insightfully about CPTPP and EVFTA. With better understanding of all these new agreements, the industry will have orientation and development strategies while businesses will also have a more effective market approach.

With well-established experience in exporting to various high demanding markets, Ms. Nguyen Ngo Vi Tam, General Director of Vinh Hoan Joint Stock Company, affirmed that market demand is a driving force for enterprises to change and Vinh Hoan does not consider the standard as a barrier but an objective to overcome to attempt. Accordingly, Vinh Hoan has been proactive in 50% of processing materials and associated with farming households to ensure raw materials meeting the standards of the production chain and markets.