A free trade agreement between Vietnam and the Russia, Belarus and Kazakhstan customs alliance is expected to reduce tariffs on Vietnamese goods exported to Russia.

Dang Hoang Hai, the director of the Ministry of Industry and Trade's European Market Department, said the agreement would reduce barriers to services and trade, simplify customs procedures and improve payment conditions.

It will also increase investment, tourism activities and the number of remittances.

The two sides are conducting research on the FTA's impact and final negotiations on the deal are expected soon.

Trade between Vietnam and Russia had great potential but had yet to be fully tapped, said Alexander Kardo-Sysoev of the Russian Trade Office in Vietnam .

He blamed the situation on a lack of information about each other's markets and geography.

" Vietnam mainly export raw materials and semi-processed farm produce, and their costs go up due to high transport expenses," he said.

He called for spreading the cost by increasing exports of value-added products and refined goods.

Hai said Russia is a promising market for wooden products, but the current high import tariff has prevented local companies from increasing their export to the market.

In addition, he said payment risks and taxes as well as non-tax barriers in Russia have discouraged Vietnamese businesses from entering the market.

Letters of credit are not popular in Russia , and Russian importers usually pay an advance of only 20-30 percent, posing a high risk for exporters saddled with unreliable clients, he explained.

He urged businesses to improve the quality of their exports as the Russian market requires high technical standards, even higher than the EU's.

Last year, two-way trade between Russia and Vietnam was worth 1.8 billion USD. The two countries have targeted 3 billion USD by 2012 and 10 billion USD by 2020.

Vietnam imported goods worth 353 million USD from Russia in the first six months of this year, mainly oil and petrol, steel, fertilisers, and equipment.

Vietnamese exports were worth 628 million USD, with the major items being seafood, textiles, footwear, agro-forestry products, and handicrafts./.