Workers produce apparel for export at the factory of the Duc Giang garment company in Long Bien district, Hanoi (Photo: VNA) Hanoi (VNA) – Insiders have recommended Vietnam payattention to developing weaving and other production activities supporting thetextile-garment sector to make best use of the EVFTA, a freshly-inked freetrade agreement with the European Union.
In 2018, the textile-garment sector postedyear-on-year exports growth of more than 16 percent to surpass 36 billion USD,making Vietnam the world’s third biggest exporter of these products, afterChina and India.
Based on these figures, the Vietnam Textile andApparel Association (VITAS) believes the export target of 40 billion USD for2019 is achievable, thanks in part to FTAs, including the one with the EU – thesecond biggest market for Vietnamese textile and garment products.
VITAS Chairman Vu Duc Giang said the EVFTA,signed in Hanoi on June 30, promises apparel export potential of more than 100billion USD annually. Textiles and garments shipped to the EU are currentlysubject to export tariffs of 9.6 percent, but when the EVFTA takes effect, therate will be gradually reduced to zero percent in seven years.
He noted most of the countries exportingtextiles and garments to the EU don’t have FTAs with the bloc. Therefore, ifVietnamese firms meet origin requirements, the EVFTA will open up enormous opportunitiesfor exports.
[Infographics: EVFTA implementation roadmap]
Managing Director of the Vietnam NationalTextile and Garment Group Cao Huu Hieu said that to be exempt from tariffs,apparel products must satisfy two conditions: the fabric used to make apparelmust hail from Vietnam or the EU, and the production process must be carriedout in Vietnam or the EU.
However, the EVFTA is also flexible, he said,elaborating that apparel products can also benefit from preferential tariffsunder this deal if the material fabric comes from the countries that have FTAswith both the EU and Vietnam, such as the Republic of Korea.
VITAS Chairman Giang pointed out that althoughthe rules of origin in the EVFTA are not as strict as in the Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnamese firmsstill face several challenges because most of them have just engaged in cuttingand sewing steps while not producing fabric and yarn. Additionally, mostproduction materials still come from China, which doesn’t have a trade dealwith the EU.
To capitalise on the EVFTA, he urged domesticbusinesses to develop weaving and the supporting industry to provide materialsfor the sector.
They also need to use more fabric from theRepublic of Korea to make use of the trade pact pending the supportingindustry’s development. Under the EVFTA, companies can also import materialsfrom Europe to improve their products’ quality and value, he added.
According to Director General of the Garment 10Corporation Than Duc Viet, his company has high hopes for the EVFTA, and hasmade preparations to capitalise on this deal.
Exports now account for 80 percent of Garment10’s total revenue, with 45 percent of export turnover from the US, 35 percentfrom Europe, and 10 percent from Japan. These figures will change when FTAscome into force as the firm will receive more orders, he noted, adding that thebusiness has made plans to connect its domestic supply chain to satisfy originrequirements.-VNA
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