New-generation FTAs - Impulse for Vietnam’s exports

Hanoi (VNA) – Foreign trade turnover in the first quarter of 2021 increased by more than 24 percent from the same period last year, with export up 22 percent and import 26.3 percent, and the trade surplus was estimated at over 2 billion USD.

These positive outcomes indicate a strong recovery of goods production and trading in Vietnam although the COVID-19 pandemic remains complex in many countries around the world.

The free trade agreements (FTAs) that have taken effect in the recent past are considered major contributors to this achievement.

For example, thanks to the EU - Vietnam FTA (EVFTA), taking effect in August 2020, shipments to the EU have been accelerated, growing 18 percent during the January - March period.

Likewise, export to other members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) also rose fast in Q1 such as Canada (13.7 percent), Australia (17 percent), Chile (25.6 percent), Mexico (12.7 percent), and New Zealand (35.1 percent).

Assoc. Prof. Dr Pham Tat Thang, former official at the Vietnam Institute of Strategy and Policy for Industry and Trade under the Ministry of Industry and Trade, said the relatively good capitalisation of advantages generated by FTAs will continue giving an important boost to export in the time ahead.

Silverlining

In an interview granted to VietnamPlus, Thang said export and import have always been a silverlining in the economy over the past years.

In particular, Vietnam’s attainment of positive results in trade in 2020 and Q1 of this year could be viewed as a miracle since the country has managed to obtain the Government’s “twin targets”, which are concurrently curbing the pandemic and developing the economy, he said.

He went on to say that protectionism has been on the rise in recent years, but Vietnam stays persistent in opening its economy, especially via the 16 FTAs it has signed, including the EVFTA and the CPTPP that gather a large number of major partners.

The country has immediately taken action to seize opportunities created by those deals.

However, Thang pointed out, most of the businesses that have made use of the FTAs are major firms and those paying attention to building their brands in international markets. Meanwhile, most of the small- and medium-sized enterprises have yet to optimise FTAs.

That requires stronger connectivity in the business circle to grasp chances brought about by the signed FTAs.

The global COVID-19 pandemic has caused disruption to supply chains, directly affecting the industries that rely on imported materials such as the textile - garment and footwear sectors.

Yet, businesses in these industries have managed to recover their supply chains, thus keeping their exportation uninterrupted and substantially contributing to the economy, according to the expert.

Of the total shipments, the proportions of many items with high added value have increased. A similar trend could also be seen in the export of the commodities serving the digital economy and medical equipment, he remarked.

The Government is working to attract more foreign direct investment (FDI), especially from large enterprises that are shifting their manufacturing facilities, and Vietnam is now one of the attractive destinations for them.

However, it is also necessary to promote links between domestic and foreign firms so that Vietnamese businesses can export their goods via foreign partners’ distribution networks and import advanced technology under FTAs, particularly the EVFTA and the CPTPP.

If the country succeeds in doing so, it will be able to simultaneously attract high-quality FDI and encourage local enterprises to develop and make up an appropriate proportion in the trade as a whole, Thang added./.