Cashing in on benefits from EU agreement

18:00 | 30/06/2019
The signing of EU-Vietnam trade and investment agreements last weekend is expected to bring unprecedented benefits to people and businesses on both sides. Minister of Industry and Trade Tran Tuan Anh shared with VIR’s Phuong Thu the significance to Vietnam’s international integration and explained how businesses cash in on the opportunities ahead.
cashing in on benefits from eu agreement
Minister of Industry and Trade Tran Tuan Anh

The EU-Vietnam Free Trade Agreement (EVFTA) is one of several major new-generation agreements Vietnam has signed with the international ­community. What is the significance of the deal to the country’s international economic integration, as well as to Vietnam-EU bilateral co-operation?

Leveraging the negotiation outcomes, the commitment for sweeping market openness in the EVFTA will surely push up bilateral trade relations in a more comprehensive manner.

In the trade field, nearly all customs duties imposed on Vietnamese exports to the EU will be eliminated after a fairly short roadmap of at most seven years. Until now, this is the highest level that a trading partner has ­dedicated to Vietnam compared to other FTAs Vietnam has signed. Thereby, when coming into force, the EVFTA will provide a major impetus to Vietnam’s exports, helping to ­diversify both export markets and ­products, particularly regarding ­agricultural and seafood items in which the country has abundant competitive advantages.

In addition, the commitment on ensuring impartial treatment and protection towards investment and investor rights of each side through the Investment Protection Agreement will contribute to building a local pro-business and transparent regulatory environment, from there helping Vietnam to further attract investors from the EU as well countries from outside the bloc.

Based on the EU’s potential and scale, Vietnam has the opportunity to attract investment from Europe ­vigorously and become an ideal venue for trade and investment networking between the EU and the ASEAN. These positive impacts will be ramped up with the implementation of the ASEAN Economic Community and a raft of other important FTAs such as those with the Eurasian Economic Union, with South Korea, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

What are the potential benefits to ­Vietnam’s key export products following the enforcement of the EVFTA?

The commitment on sweeping ­market openness via the EVFTA will drive forth trade relations, widening the market for Vietnamese exports into the EU, particularly the products we have advantage in. These include textiles and clothing, footwear, agricultural produce such as rice, sugar, honey, vegetables and fruits, and also seafood, wooden furniture and machinery, automobiles, and alcoholic beverages.

Almost all Vietnamese exports to the EU will be exempt from import ­duties right after the EVFTA comes into force or after a short roadmap. This is a record tax incentive Vietnam has reached with any FTA the country has signed up until now.

This is more significant in the ­context that only around 42 per cent of the country’s export value to the EU is ­eligible for zero per cent import duty in light of the General System of ­Preferences (GSP).

In the near future, when the country has reached a certain level of economic development, the GSP scheme will no longer exist. By that time, Vietnamese companies could be struggling in the EU market unless the FTA becomes ­effective.

What should Vietnamese businesses do to realise the benefits from the ­agreement, and what is the Ministry of Industry and Trade’s (MoIT) plan to support businesses in cashing in on the opportunities effectively?

The EVFTA will surely open enormous opportunities in trade, ­investment, and new co-operation for businesses on both sides. For ­Vietnamese businesses, our negotiators tried to provide full information as well as sought advice from diverse business associations in the hope the negotiation results best served business needs. During the input gathering process, the textile and clothing, footwear, and seafood associations along with many other businesses have expressed special ­attention.

The preparations from the part of businesses, however, vary greatly. Big companies have seemingly made better ­preparations compared to small- and medium-sizes ones (SMEs). Likewise, export businesses have been more active in preparations compared to those bearing competition pressure from the EU after the signing of the agreement.

Hence, to optimise the profits the EVFTA could bring, local businesses, ­particularly SMEs need to become proactive in preparations that must be comprehensive and involve diverse stages, from studying the opportunities and market challenges to seeking ­solutions to improve quality, product packaging, and bringing forth competitive advantages. It is noteworthy that to avail of these EVFTA advantages, local businesses must assure their products meet EU principles on product origin, technical specifications, and food hygiene ­standards.

Vietnam has engaged in ­international economic integration for a long time so far. Policymakers have been learning along the way, striving to pen policies on integration that serves the benefits of local people and enterprises, and gearing the society towards ­sustainable development.

The MoIT will realise the prime minister’s decision for approval of an overall ­action programme, doing our utmost to spread knowledge of the EVFTA, both its advantages and challenges, to ­people and to businesses.

Based on the action plan, we will continue working on plans for ­implementation, gradually perfecting the relevant regulatory system to match with the integration commitments we have signed.

As an authorised management agency, our responsibility not only refers to regulatory system perfection, but also involves administration and economic management, and realising plans on restructuring economic sectors to boost state management efficiency and improve the local business ­environment, linking closely to ­integration commitments.

The EVFTA aims for sustainable ­development and high labour ­standards, so what will be the ­opportunities for Vietnam in the ­renewable energy field?

The EVFTA features different ­requirements on innovation geared ­towards sustainable development across economic, environmental, and social fields. Of those, energy, ­particularly clean energy, is not only the common target of Vietnam and the EU, but it also reflects the Vietnamese ­government’s commitment for green and sustainable development. Vietnam, therefore, is one of the ­nations initialising the realisation of commitments related to environmental protection.

Over past years, we have witnessed strong engagement of EU businesses in Vietnam’s renewable energy projects. With the signing of the EVFTA and the Investment Protection Agreement, the MoIT trusts the ­vigorous development of the country’s green and renewable energy sector in the upcoming time, providing the ­fulcrum for the country to remain steadfast in the sustainable ­development journey.

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