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International economic integration: It is "Blossoming" in 2018, isn’t it?

09:44 | 16/02/2018

VCN- The year of 2018 is considered as a milestone in the process of international economic integration, posing a series of opportunities, but challenges are also coming. If there is enough effort, successful integration will be quite feasible.

international economic integration it is blossoming in 2018 isnt it
Textile is one of the typical industries that make good use of opportunities from FTAs. Photo: Nguyen Thanh.

A series of commitments come in force

Assessing the "appearance" of international economic integration this year, answering the Customs reporter’s interview, Minister of Industry and Trade, Tran Tuan Anh said: With the implementation of the Free Trade Agreement (FTA), benefits always go along with difficulties and challenges. Along with enjoying tariff reduction commitments from partner countries, Vietnam must give commitments to open adequate market for them.

2018 is an important year with many important commitments for Vietnam within the framework of the FTAs, and they will be effective with a commitment to cut tariffs on many sensitive items such as cars, motorcycles and components within ASEAN. In addition, some FTAs may be signed, such as the Partnership for Comprehensive Poverty and Transnational Partnership (CPTPP), or as effective as the Vietnam-EU FTA (EVFTA).

According to Minister Tran Tuan Anh, the signing of the CPTPP Agreement or the implementation of the EVFTA Agreement will have a positive impact on domestic trade and investment because these are the FTAs with the largest trading partners for Vietnam. The signing and implementation of these agreements will contribute to accelerating the export of goods to major markets such as the EU, Japan, Australia, Canada and Mexico, as well as attracting foreign investment in the sectors. This is an area in which Vietnam is in need of development and has a competitive advantage in exporting.

In the implementation of commitments on tariff elimination under ASEAN, on many sensitive items such as automobiles, motorbikes, spare parts for motor vehicles, vegetable oils, fruits refrigerators, air conditioners, milk and dairy products, will be able to make the domestic industry more competitive from imports," said Tran Tuan Anh.

Further analysis around the story of international economic integration, Vice Minister of Industry and Trade Do Thang Hai stated that in participating in FTA, Vietnam accepted fair play for a better economy. Generally, the only incentive that Vietnam enjoys as a developing country is a grace period of 5-10 years, depending on the commodity. This is the only opportunity for Vietnam to take advantage of for reform and enhancement of capacity. After that time, Vietnam will play on a "playground" with stronger partners. 2018 is a very important turning point in the roadmap for implementing Vietnam's international economic integration commitments. Within the framework of ASEAN it is to fully implement commitments to cut 98% of tariffs, except for petrol by 2024 to 0%. With partners such as Korea, Japan and Australia, this is also the time when the transition period ends, starting to cut taxes on sensitive category items. Therefore, besides negotiation of the new agreement, the coordination of effective implementation of signed agreements is very important.

Looking back to the next step

Opportunities are clear, if there is clear direction, and this requires strong efforts from both state management and the business community to overcome the shortcomings. In this way, it is possible to set expectations for 2018 to be the year of successful international integration.

Looking back at the recent economic integration process, one of the sources that has reduced the efficiency of the integration is the lack of coordination among different levels, sectors, localities and enterprises. This is reflected in the fact that the process of international economic integration is considered one-sided, short-term and local. In the process of integration and innovation in the country, the policy has not been implemented synchronously. In addition, the international economic integration has not been closely linked to integration in other fields. Institutionally, many experts say that Vietnam needs to focus more on the implementation of the system of norms and mechanisms of enforcement, supervision and handling of violations. Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM), said, "Some key points to make are; institutional reform, improvement of the business environment, state management of enterprises for focusing on solving their internal problems, and promoting enterprises to take advantage of opportunities that the FTA brings. Taking advantage of FTA opportunities, Vietnam has many opportunities to succeed in 2018.”

Enterprises are important in the process for Vietnam’s international economic integration. From this perspective, Le Tien Truong, General Director of Vietnam Textile and Garment Group (Vinatex) commented, that in the current context of deep integration, apart from continuing to make good use of opportunities from existing FTAs. Vinatex continues to urge central agencies and ministries to promote new FTAs, especially for the agreement of CPTPP and to implement the EVFTA early, while maintaining and improving the quality of business consultations in the process of negotiation. Mr. Truong also made a proposal that for the Eurasian Economic Co-operation market particularly, the State Bank of Vietnam has agreed on the payment of enterprises in the Union to officially pass the banking system, so as to reduce risks for businesses and for promoting faster market development. "This is a very important potential market. If Vietnam textile and garment is exploited well, this sector can obtain another market worth over $ 1 billion. On the side of Vinatex, it has pledged to continue to improve its capabilities, grasp international law, and analyze its competitiveness in order to take the initiative in integration and to make valuable proposals to the Government’s negotiation delegations and the International Cooperation Committee," Truong stressed.

period (19.4% / year), but in the context of the world economy it was affected by the global financial crisis. This factor still makes a strong impression. In addition, imported goods are oriented to better serve the needs of investment and domestic production. As a result, the rate of average import growth reached 15.1% per year in the period 2007-2017, significantly lower than the period 2000-2006 (21.1% per year).

In line with the trend trade goods expansion, Vietnam's economy has also reached for greater openness. Foreign direct investment in Vietnam has increased sharply since 2007, significantly adding resources to socio-economic development. With the implementation of the comprehensive international integration policy the focus is on international economic integration, and the country's position continues to improve significantly. Three comprehensive strategic partnerships, 15 strategic partnerships and 12 comprehensive partnerships in Viet Nam were established in 2007-2017.

By Thanh Nguyễn/Bui Diep