Aside from enjoying preferential tariffs brought about by the European-Vietnam Free Trade Agreement (EVFTA), local steel firms have been urged to update their technologies whilst meeting rules on product origin in order to make inroads into the EU market.
According to the Vietnam Steel Association (VSA), the EU market accounts for a mere 4.2% of total Vietnamese steel exports, while traditional markets such as ASEAN and China still make up a large proportion, representing approximately 55% and 19%, respectively.
Trinh Khoi Nguyen, VSA vice president, noted that the stringent standards set out by the EU market have forced local steel manufacturers to renovate their production procedures and change their business mindsets to penetrate the demanding European market.
Nguyen outlined that consumption demand within the EU can’t be considered as large as emerging markets like China or other developing countries, adding that domestic enterprises must compete with strong rivals in the steel sector such as firms from Japan and the Republic of Korea as a way of penetrating the stringent market.
Nguyen Manh Tuan, general director of Hoa Phat Steel Pipe Joint Stock Company JSC, revealed that the company has applied quality control software in accordance to ISO 9001: 2015 in an effort to improve overall product quality whilst expanding into the EU market.
Experts have therefore underscored the importance of strengthening forecast work with regard to market trends and striving to gain greater insights into technical barriers to trade from EU member states to provide stakeholders with an early warning on getting involved in the production value chain so as to take full advantage of opportunities brought about by the trade pact.
Nguyen Van Sua, a steel industry expert, pointed out how local firms face hurdles in export activities due to the novel coronavirus pandemic which has disrupted global supply chains and trade flow throughout EU countries since the beginning of the year. Indeed, aside from meeting product origin requirements, domestic businesses must also have clear information about trade remedy lawsuits to minimise the damage when attempting to make inroads into the EU market.
Pham Quynh Mai, deputy head of the Multilateral Trade Policy Department, said the Ministry of Industry and Trade will be focusing on strengthening the dissemination about different aspects of the EVFTA among relevant stakeholders, improving institutional reform, and enhancing connectivity among relevant ministries and agencies for the effective implementation of the trade agreement in the near future.