illustrative image (Source: VNA)

Moscow (VNA) – The free trade agreement (FTA) between Vietnam and the Eurasia Economic Union (EAEU), which came into force on October 5, 2016, provides both opportunities and challenges for Vietnamese businesses, Vietnamese Trade Counsellor in Russia Duong Hoang Minh said in an interview granted to the Vietnam News Agency.

He noted that the FTA, signed on May 29, 2015 in Kazakhstan, is the first of its kind that the EAEU, including Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, has sealed with the third country. It is also the first trade pact that Vietnam inked with traditional partners of the former Soviet Union.

This is a new-generation agreement covering all economic-trade cooperation fields between Vietnam and the EAEU, he said, adding that apart from facilitating trade of goods via tariff reduction, the deal also features commitments of the signatories to intellectual property protection, sustainable development, e-commerce, government procurement, and competition.

The EAEU pledged to offer numerous incentives for Vietnamese staples such as farm produce, seafood, garment-textile, footwear and woodwork, he said.

In return, Vietnam vowed to open its market for some EAEU animal husbandry products and industrial ones like machinery, equipment, and vehicles, he said, adding that such goods will not compete with locally-made products but contribute to diversifying the local market.

According to experts, after the agreement entered into force, two-way trade is likely to reach 10-12 billion USD by 2020 compared to 4 billion USD at present.

Minh said the EAEU is a large and potential market with a population of over 180 million along with rich natural resources, total gross domestic product (GDP) of over 2 trillion USD, and foreign trade turnover of around 1 trillion USD.

As nearly 60 percent of tax lines are eliminated and reduced after the FTA took effect, Vietnamese goods have more advantages in the market, especially seafood, apparel and footwear.

Additionally, Vietnam also sees a good chance to invest in the fields of the union’s strength such as mineral processing and exploitation, energy, machinery and chemicals.

Through the trade pact, Vietnam is able to expand investment in the EAEU member counties in light industry, oil processing and exploitation as well as update the latest technologies to improve competitiveness, said Minh.

However, to benefit from the FTA, he noted that Vietnamese firms should study carefully regulations on the certificate of origin; enhance participation in trade promotion programmes, trade fairs and exhibitions; map out plans to increase competitiveness; and strengthen relations with Vietnamese banks to address payment difficulties.-VNA