A footwear processing company in Binh Duong Province’s Di An town. (Photo: VNA) HCM City (VNA) - TheEU-Vietnam Free Trade Agreement (EVFTA), set to be signed next year, willbenefit both sides, a workshop heard in Ho Chi Minh City on November 28.
“The EU is a very importantpartner with significant impacts on the development of Vietnam,” said formertrade minister Truong Dinh Tuyen.
“The EVFTA has become moreimportant to the country after the US’s withdrawal from the TPP,” he noted.
Phan Duc Hieu, deputy director ofthe Central Institute for Economic Management, said the EVFTA negotiations wereconcluded in 2015, and this is the time for a general review and assessment ofthe deal.
Dr Claudio Dordi, team leader ofthe European Trade Policy and Investment Support Project (EU-MUTRAP), said:“There is still a lot of work to be done in Europe” due to several reasons.
Firstly, trade agreements andtrade negotiations are not really popular in western countries now, especiallywith US President Donald Trump’s policies creating uncertainties in globaltrade, he said.
Secondly, after a lot of jobswere lost in Europe to the economic downturn, EU countries are fearful ofcompetition from others, he said.
Thirdly, Europe prefers to dealwith countries that have a level playing field, he said.
Besides, there are several issuesrelated to sustainable development that need further assessment, but the twosides are working very hard to sign the agreement as early as next summer(around July or August), he added.
Once the agreement comes intoeffect, the EU will remove all import taxes on Vietnamese goods within sevenyears, while Vietnam will do so within 10 years.
This means many of Vietnam’s mainexport products will be able to enter the EU completely without tariffs, andexperts said this would be a huge boost to the country’s exports to the EU.
According to a study byEU-MUTRAP, the EVFTA can boost Vietnam’s GDP by 3.2 billion VND by 2020 and 7.2billion USD by 2030.
Its exports to the EU will riseto 42 billion USD by 2025 and 47 billion USD by 2030.
Fifty percent of the tariff lineson aquatic products will be removed right after the FTA takes effect.
There will be no tax on rice(with a quota of 20,000-30,000 tonnes a year).
Goods like coffee, pepper,cashew, honey, fresh vegetables, fruits and their processed products or juicewill also see tariffs removed instantly. They attract rather high tariffs atthe moment of up to 20 percent on some items.
Apparel and footwear are two of Vietnam’smajor export items to the EU, with shipments of 3.5 billion USD and 4 billionUSD a year.
They will see tariffs cut afterthe FTA takes effect. Wood and wood products, computers and electronic productsand components will also see rates cut.
Despite the tax breaks, the EU isa very demanding market in terms of quality, food hygiene and safety standardsand protection of consumer rights.
Therefore, Vietnamese businessesmust first upgrade their value chain and play by the rules of the EU,especially with respect to those on origin, experts warned.
“EVFTA will provide a lot ofimportant opportunities for Vietnamese business, but of course they should beable to exploit them,” Dr Dordi said.
He said Vietnamese businessesusually focus on the last part of production which has very little value. Forexample, if Vietnam produces garments from home-made fabrics rather than fromimports, it would benefits more from the EVFTA, he said.
“In general, many key exportsectors such as footwear, textiles and garments, fisheries, wood and woodenproducts are growing at slow speeds because most of the production in thesesectors is based on low value-added stage of production.”
They should upgrade their valuechain and start more “made in Vietnam” manufacturing, improve their capacity toproduce processed foods and high value-added products to take full advantage ofthe EVFTA, he added.
The workshop was held to discussthe potential impacts of the EVFTA.
The EU is an economic unionconsisting of 28 member states and a population of 508 million, with a total GDPof 18 trillion USD, making it the largest single market in the world.
It is one of Vietnam’s leadingtrade partners, accounting for 19 percent of the country’s exports.
Vietnam-EU exports were worth 20.6billion USD in 2015.-VNA
VNA
