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According to statistics from the Chilean Trade Commission, between January and May 2014 Chilean exports to Vietnam were valued at $149.1 million, while imports from Vietnam were $126 million, up 20.3 per cent compared to the same period of 2013.
These figures state that this year, after the free trade agreement (FTA) came into force, net exports between Chile and Vietnam were almost balanced, while in previous years there has been trade surplus in favour of the South American country.
Two-way trade turnover between Vietnam and Chile last year reached $540.4 million, with Vietnam racking up a $99.2 million trade deficit with Chile. Vietnam's main exports were footwear, apparel, computers and electronics and its main imports were bronze ore, animal feed, timber, paper pulp and wine according to Vietnam’s General Department of Customs.
Ngo Van Phong, from the Department for the American Market at the Ministry of Industry and Trade said that the Vietnam-Chile free trade deal had prompted trade growth between the two countries.
“For the past few years, both countries have been working closely together to strengthen and enhance their bilateral trade relationship. A clear reflection of this is that since 2008 trade has increased consistently at an average rate of 26 per cent, reaching more than $500 million. The tariff reductions granted by the FTA have had a positive impact on our bilateral trade,” said Diego Torres, head of the Asia-Pacific at the Chilean Ministry of Foreign Affairs in a recent workshop held in Hanoi last week.
He added that during the first three months of the FTA, bilateral trade increased by 17 per cent. Today, Vietnam imports more than 3,000 products which could be imported from Chile, such as mandarins, frozen meat and related products, almonds, fresh oranges, and electrical conductors.”
Under the Vietnam-Chile FTA agreement, 87.8 per cent of goods exported from Chile will enjoy preferential taxes over the next 15 years. Vietnam in turn will benefit from a low-to-zero tax rate for its key export products such as garments, seafood, coffee, tea, computers and spare parts.
“We expect [the FTA with Chile] to allow us to take advantage of other Latin American countries and the countries with which Chile has already inked FTAs with,” said Nguyen Thi Thu Trang, WTO Centre director of Vietnam Chamber of Commerce and Industry.
She explained that since Chile had signed FTAs with about 20 countries including the US and Canada, Vietnamese producers could set up factories in Chile and increase their exports to these countries by taking advantage of FTA tariff cuts.
However, Torres said “The FTA has proven to be helpful in the reduction of tariffs. However, with the implementation of the agreement, Chile and Vietnam have the possibility to host specific committees in order to tackle non-tariff barriers (NTB) — including sanitary requirements and other regulatory measures—which hinder increases in trade and product diversification.”