VCN- Talking with the press about the impact of the impact of the EU-Vietnam Free Trade Agreement (EVFTA) on Vietnam’s economy, Minister of Industry and Trade Tran Tuan Anh said that when implemented, EVFTA will be a push for exports. The agreement plays an important role with many commodities facing difficulties in the export market due to the impact of the Covid-19 epidemic.
|Customs statistics on imports and exports between Vietnam with EVFTA member states|
|EVFTA EVFTA will be a great push for exportscreates more opportunities for garment and textile sector|
|VCCI President: EVFTA will help move up value chains|
|Minister of Industry and Trade Tran Tuan Anh|
On December 12, the European Parliament approved the EVFTA. With positive results, when is the EVFTA expected to officially take effect?
The difference between the EVFTA and other agreements signed by Vietnam is that the agreement may come into effect quickly. After the European Parliament votes to approve the agreement, the Council of Europe will approve it.
Vietnam will wait until the next session of the National Assembly in April and May, and basedon the Government’s proposal, the President will present it to the National Assembly for approval. If all works go as expected, the agreement will be approved in May, the legal procedures of the two sides will be implemented quickly, and the agreement may take effect in July.
How do you assess the impact of the EVFTA on Vietnam’s exports in the near future?
The approval of the European Parliament for the EVFTA is ofgreat significance as it is a US$18 trillion market with large potential for Vietnamese goods. Especially, as Vietnam’s agricultural products, fishery products, textiles and garments face difficulties in exportsdue to the impact of the Covid-19 epidemic, the approval of the EVFTA is more significant.
The EU is one of the Vietnam’s major trading partners. The import-export structure between Vietnam and the EU is largely complementary and less direct competition. Therefore, if the EVFTA comes into effect, it will be a great push for Vietnam’s exports. With a commitment to eliminate import taxes on up to nearly 100 percent of tariff and trade value approved by both sides, the opportunity to increase exports for Vietnam's major products such as textiles, footwear, agro-fishery agricultural products (including rice, sugar, honey, vegetables and fruit), wooden furniture, etc is remarkable.
Notably, the level of commitments in the EVFTA can be considered the highest level Vietnam has achieved among its FTAs. This is even more significant when only 42 percent of Vietnamese exports to the EU currently enjoy zero tariffs under the Generalised System of Preferences (GSP).
Some have said that there are many opportunities to boost exports of goods from the EVFTA, but making use of opportunities is not easy because businesses will face non-tariff barriers. What do you think about this?
Vietnam continues in the deep integration period and will continue to implement more in-depth commitments with a higher level. In addition to opportunities, the implementation of FTAs, especially new generation FTAs, also poses many challenges for Vietnamese businesses and the economy such as competition pressure, protectionist trends for domestic production of the importing countries and regulations on trade remedies.
To overcome “non-tariff barriers”, it is not only anincrease in production capacity, but also must restructure effectively, implement commitments effectively, especially commitments related to legal reforms as well as basic conditions on the sustainable development environment and conditions of workers.
|Export turnover to the EU and other regions in 2019, unit US billion. Chart: T.B|
What do you recommend to the business community to make best use of the EVFTA and other FTAs ?
To concretise effectively opportunities and overcome challenges and pressures from FTAs, the urgent issue is to improve the competitiveness of businesses. Vietnamese firmsmust change their thinking to adapt to the new context, learn, capture information and be flexible in accessing and taking advantage of opportunities. Along with that, investment in building high quality human resources is very important and indispensable. Only when businesses meet conditions and standards of importing markets and criteria of origin as committed will preferential tariffs be effective to promote exports and contribute to the country’s economic growth.
How will the Ministry of Industry and Trade prepare for the implementation of EVFTA?
The Ministry of Industry and Trade identified that an important task is to review the action plan and report to the Government so that as soon as the EVFTA is approved by the National Assembly, the action programme is also signed and issued.
The Ministry of Industry and Trade will work with other ministries and agencies to review and revise Vietnam's legal framework as appropriate because there are many provisions and contents in Vietnam's laws and regulations that need to be amended to comply with integration commitments and ensure legal scope over the country.The Ministry of Industry and Trade will continue to negotiate to expand markets and build a mechanism for certification and quarantine of plants and animals between Vietnam and the EU. Specifically, the ministry will workwith the Ministry of Agriculture and Rural Development to meet requirements and promote exports.
The greater the preferential treatments on trade and investment are, the greater the risks of smuggling goods, investment violations, origin fraud and trade fraud. Therefore, our institutional reforms in the figh against fraud need to be strengthened and set out in the framework of the agreement implementation.
|According to the Ministry of Planning and Investment, the EVFTA Agreement will help Vietnam's export turnover to the EU increase by about 20 percent in 2020; 42.7 percent in 2025 and 44.37 percent in 2030 compared to without the agreement. Import turnover from the EU will increase but slower than export turnover, about 15.28 percent in 2020; 33.06 percent in 2025 and 36.7 percent in 2030. On the macro side, the EVFTA will contribute to the increase of Vietnam's GDP by an average of 2.18-3.25 percent (in 2019-2023); 4.57-5.30 percent (in 2024-2028) and 7.07-7.72 percent (in 2029-2033).|
By Thanh Nguyen/Ngoc Loan