Non-tariff barriers might hinder free trade flow

Non-tariff measures included in free trade agreements (FTAs) were the highlight of a seminar held in central Da Nang city on October 29.

Participating economists agreed that joining a range of FTAs will help Vietnam meet new opportunities, particularly preferential tariffs for export and a flow of foreign investment. Domestic business, however, will face tougher technical and origin barriers, including those concerning specific packaging-labelling-marking and product quality.

Deputy Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh said Vietnam could capitalise on the recently-signed Trans-Pacific Partnership (TPP), as bloc members such as the US, Japan and Australia are expanding their import markets for agricultural produce, garment-textiles, woodwork products and footwear.

The US contributes half the value generated by Vietnam’s garment-textiles shipped abroad. After the TPP, current 17.3 percent tariffs issued on the goods will be eliminated.

China, Japan and the Republic of Korea are also prominent partners of Vietnam with bilateral trade revenues reaching 13.3 billion USD, 13.7 billion USD and 6.6 billion USD in 2013, respectively.

Nevertheless, export turnovers recorded with the three markets have fallen short of their potential, said Dang Thanh Phuong, an expert from the European Trade Policy and Investment Support Project (EU-MUTRAP).

She pointed to technical specifications as reasons behind the underperformance, because the local criteria are largely under common standards. Many export companies are small-scale and have inadequate competencies to fulfil the requirements of foreign importers.

To improve capacity, domestic enterprises ought to expand export markets and overhaul their production from the materials selection and processing to packaging and shipping. Research and development units are necessary for large enterprises to make their products eligible for export despite non-tariff barriers.

Standard technical system needs to be devised while export criteria set by import nations should become more accessible.-VNA