July 10, 2020 20:41

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EVFTA - a golden opportunity to exploit a market of US$18,000 billion

08:14 | 31/05/2020

VCN- It is expected that the Vietnam-EU Free Trade Agreement (EVFTA) will be approved by the National Assembly on May 28 and take effect as early as July 20, 2020. It is forecast that the agreement will contribute to boosting the export of goods to the EU market, helping to significantly offset lossesof exports in the first half of the year due to the impact of the Covid-19 pandemic.

evfta a golden opportunity to exploit a market of us 18000 billion Agricultural sector keen to capitalise on EVFTA opportunities
evfta a golden opportunity to exploit a market of us 18000 billion Time to build a synchronous roadmap and perfect institutions to make good use of EVFTA
evfta a golden opportunity to exploit a market of us 18000 billion Plummeting exports hit hard by COVID-19 impact during first half of May
evfta a golden opportunity to exploit a market of us 18000 billion
Textile is a typical industry with many opportunities to boost exports to the EU market when the EVFTA takes effect. Photo: N. Thanh

Exports increase immediately by 20%

According to the Ministry of Industry and Trade, domestic enterprises have been struggling in the European market due to competition from other large-scale industries around the world, especially China. Product pricesof Vietnam are usually 10-20% higher than other countries. As a result,Vietnam's market share of goods in the EU is modest.Meanwhile, the EU is the second largest import market in the world. Every year, EU imports about US$2,338 billion.While Vietnam's export market share in the EU is only about 2% with more than 42% of Vietnam's export turnover to the EU enjoying 0% tax rate under the Universal Preferential Tariff (GSP).

On the macro side, EVFTA contributes to Vietnam's GDP increasing at an average of 2.18 - 3.25% (2019 - 2023); 4.57 - 5.30% (2024 - 2028) and 7.07 - 7.72% (2029 - 2033).

From the perspective of import goods, imports from the EU also increased at a lower rate than exports, namely about 15.28% in 2020; 33.06% in 2025 and 36.7% in 2030. Vietnamese enterprises will benefit from imported goods and raw materials with good and stable quality at a more reasonable prices from the EU.

The Ministry of Industry and Trade assessed that the increasingchancesofour country's exports are huge due to the strong commitment on opening markets and eliminating import taxes by nearly 100% of the tariffs in the EVFTA, especially for those advantageous items such as textiles, footwear, agricultural and fishery products, wooden products, etc.

Research shows that the EVFTA will help Vietnam's export turnover to the EU increase by about 20% by 2020; 42.7% in 2025 and 44.37% in 2030 compared to no agreement.

“Thus, in the post-pandemic period, if the EVFTA is put into effect, Vietnamese enterprises will have a great advantage from reducing or eliminating tariff barriers on the EU market to exploit the market of US$18,000 billion,”the Ministry of Industry and Trade representative emphasized.

Around the benefits that EVFTA brings, National Assembly delegate Hoang Van Cuong (Hanoi) said that the agreement opened up many favorable conditions for Vietnamese goods to enter the EU market, such as the standard of origin of goodswas more extensive; the materials used in countries signing FTAs with the EU were approved as Japan, South Korea and Singapore.

“The second point is that goods exchanged between Vietnam and the EU are mostly complementary goods, not antagonistic and competing goods.For example, in the field of textile and apparel, both sides have strengths, but the EU's strength is design and branding, while Vietnam's strength is the production process and process of machining.Therefore, this is a very good opportunity for Vietnam to build and develop intrinsic strengthindustriesof Vietnam such as agricultural products, aquatic products, seafood, textiles, footwear, and wood processing towards creatinga closed supply chain throughout the country,” delegate Hoang Van Cuong analyzed.

Identify product strengths to take advantage

Looking at the ability to take advantage of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to learn from experience for the EVFTA, delegate Hoang Van Cuong stated that Vietnam set a high expectation thatVietnamese goods would enter the countries of the CPTPPwhen the National Assembly passed the CPTPPnearly two years ago. However, after over a year of implementation (CPTPP took effect with Vietnam from January 14, 2019- reporter),up to now, Vietnam's export turnover to the CPTPP countries had increased by only 7.2%, while overall export of the whole country increased by 8.4%. That means Vietnam had not benefited from this agreement.

“Therefore, I think that the Government needs to immediately determinewhich Vietnamese goods and products are capable of participating in the export market to the EU market are strong products, thereby assessing theresponsivenessofthese products for technical requirementsand standards, where those goods reach, which works to meet EU standards.What does the Government have to do in terms of policies and institutions to help enterprises meet those standards and which products and goodsthat enterprises need to try to invest to participatein this market? I hope this time we act soon and synchronously so that Vietnamese enterprises and Vietnamese goods have enough capacity to create their own tickets to join the EVFTA playground,” emphasized Hoang Van Cuong.

Regarding the utilization of EVFTA and the Investment Protection Agreement (EVIPA), National Assembly deputy Truong Trong Nghia (HCMC) likened that when EVFTA and EVIPA took effect, it was the beginning of the "race", not "party".

Without using successfully,Vietnam could still lag behind, stuck in the middle-income trap.

“At that time,someone will benefit these two agreements,we take on debt. In this race, the Government is expected to learn from the experience of the 20-year integration processto have drastic strategies, changes of institutions to take advantage of the golden opportunities, to promote Vietnam to join developed countries in the world in the next few decades,” said Truong Trong Nghia.

evfta a golden opportunity to exploit a market of us 18000 billion EVFTA and to-do things

VCN - To make best use of opportunities, especially to promote the export of goods to the ...

Deep into the issue of improving competitiveness and developing human resources to make good use of opportunities from EVFTA, Minister of Industry and Trade Tran Tuan Anh shared: “We have designed and prepared important contents in building support programs, improving competitiveness, applying technologies for banks and enterprises. In particular, small and medium enterprises are always the main subjects. Therefore, all of these solutions will be included in a Government’scomprehensive action planwith the role of ministries, branches and in all aspects.”


By Thanh Nguyen/ Binh Minh