The Free Trade Agreement (FTA) will create long-term strategic benefits for Vietnam in the EU, which is home to 27 countries and a population of 490 million.

The remarks were made by Dang Hoang Hai, head of the European Department under the Ministry of Industry and Trade, at a May 29 seminar co-organised by the Vietnam Chamber of Commerce and Industry’s Ho Chi Minh City chapter and the EU Delegation to Vietnam.

Vietnam and the EU support rather than compete with each other in trade, he said, adding that the former chiefly imports machinery, equipment, garment, materials, leather, chemicals, pharmaceuticals, steel and fertiliser.

Once the FTA is signed at the end of 2014, it may allow Vietnamese enterprises to purchase materials at suitable prices, thus increasing the competitiveness of the country’s exports, he noted.

He urged local businesses to pay more attention to technical standards and food hygiene as well as tax barriers.

Sharing his views, Colin Kinghorn, head of Mekong Sub-region and Indonesia at Ipsos Group, said Vietnam will have to compete directly with EU enterprises when the FTA is finalised.

He suggested Vietnamese enterprises coordinate with each other to raise their products’ competitiveness while making the best use of the supply chain to gain a firm foothold for Vietnamese products in the EU market.

The Vietnam-EU FTA will open up market opportunities and Vietnamese businesses should turn challenges from competition into opportunities to access advanced technology that helps modernise production processes and improve product quality, he said.

According to Hai, exports to the EU make up 17 percent of the country’s total export revenue. The figure is expected to climb to 20 percent in the time to come.

Over the last decade, two-way trade between Vietnam and the EU experienced a sixfold increase, from 4.99 billion USD in 2002 to 29.1 billion USD in 2012.

Last year, the EU surpassed the US to become Vietnam’s second largest trade partner and a leading importer of Vietnamese commodities.

The Southeast Asian country shipped 20.3 billion USD worth of goods to the EU, up 22.71 percent over the previous year.

In the first quarter of this year, the figure was 4.34 billion USD, representing a year-on-year rise of 27.18 percent.

Jean-Jacques Bouflet, Minister Counsellor of the EU Delegation to Vietnam, said the EU-Vietnam FTA will allow Vietnamese businesses to enjoy a zero percent tax rate for 90 percent of tax lines within seven years, and at the same time open up more opportunities for investment activities and technological transfer.

Besides, Vietnam is expected to lure more foreign direct investment to produce exports destined for the EU.

Since the end of 2012, the two sides have conducted three negotiations in various areas such as trade, services, Sanitary and Phytosanitary (SPS), technical barriers and sustainable development, he said.-VNA