VCN- The EU-Vietnam Free Trade Agreement (EVFTA) will likely take effect in July 2020, opening up many opportunities to boost exports for Vietnamese goods, especially Vietnam's advantageous products such as textiles, footwear, agricultural products, and aquatic products.
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|Fishery is assessed to have many opportunities to promote exports when the EVFTA comes into effect. Photo: Nguyen Thanh|
Push for exports
The European Parliament on February 12 approved the EVFTA with 401 votes in favour, equivalent to 63.3 percent.
Minister of Industry and Trade Tran Tuan Anh said the European Parliament's approval for the EVFTA is of great significance as it is a US$18 trillion market with large potential for Vietnamese goods.
The EU is one of Vietnam’s major trading partners. Trade between Vietnam and the EU is supportive rather competitive. Therefore, if the EVFTA is enacted, it will be a "big push" for Vietnam's exports.
With a commitment to eliminate import taxes up to nearly 100 percent of tariff and trade value approved by both sides, the opportunity to increase exports for Vietnam's strong products such as textiles, footwear, agro-fishery agricultural products (including rice, sugar, honey, vegetables and fruits), wooden furniture, etc is remarkable.
Notably, this is considered the highest commitment level in FTAs Vietnam has ever signed. This makes sense when currently only more than 42 percent of Vietnam's exports to the EU enjoy 0 percent tax rate under the Generalized Systems of Preferences (GSP).
About the time EVFTA agreement comes into effect, Tran Tuan Anh said the difference of the EVFTA compared to other agreements that Vietnam has signed is that the agreement is set to be effective soon. After the European Parliament voted to ratify the agreement on 12 February, the last procedure left is that the European Council will ratify the agreement.
The Vietnamese side will wait until the next session of the National Assembly in April and May and the President on the basis of the Government's proposal will be present it to the National Assembly for approval.
If all goes as expected, the agreement will be approved by Vietnam’s National Assembly in May, the legal procedures of the two sides will be very fast and the agreement will come into effect from July 2020.
Action programme issued soon
The Ministry of Industry and Trade identified that an important task in the upcoming time 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.
According to Minister Tran Tuan Anh, 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 coordinate with the Ministry of Agriculture and Rural Development to meet requirements and promote exports. The export target of $300 billion this year is difficult but this is an opportunity for Vietnam to access the new market.
“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,” Anh said.
Vietnam continues in the deep integration period and will continue to implement more in-depth commitments with a higher level than before. 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, protection of domestic production trend of importing countries and regulations on trade remedies.
To successfully realise the opportunities as well as overcome challenges and pressures brought about by FTAs, Minister Anh said the urgent task is to improve the competitiveness of enterprises.
Vietnamese businesses must 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.
According to research by the Ministry of Planning and Investment, EVFTA will help Vietnam's export turnover to the EU increase by about 20 percent by 2020; 42.7 percent in 2025 and 44.37 percent in 2030. At the same time, imports from the EU will also increase but lower rate than exports, about 15.28 percent in 2020; 33.06 percent in 2025 and 36.7 percent in 2030.
In terms of macro, EVFTA will help increase Vietnam's GDP by of 2.18-3.25 percent (2019-2023); 4.57-5.30 percent (year 2024-2028) and 7.07-7.72 percent (year 2029-2033) on average.
By Thanh Nguyen/ Huyen Trang