11:04 | 05/06/2015 Cooperation
(VEN) - The Eurasian Economic Union-Vietnam Free Trade Agreement (EEUV-FTA) signed on May 29 promises to create tremendous growth in economic cooperation among member countries. The EEUV-FTA is the second major agreement in 2015 after the Korea-Vietnam Free Trade Agreement (KVFTA).
Focusing on trade in goods
After the EEUV-FTA takes effect, more than 90 percent of tariff lines will be reduced to zero percent. The Eurasian Economic Union (EEU) will immediately exempt Vietnamese key categories of goods from taxes such as garments and textiles, footwear, agricultural products, seafood and electronic ware.
Vietnam will open its market with a roadmap for some livestock products, machinery and equipment and vehicles from the EEU, directly contributing to persifying the domestic consumer market. Vietnam will immediately open the market for milk, milk products and cereal products from the EEU as the union’s agricultural production mainly serves domestic needs and does not focus on exports. Therefore, the Vietnamese agricultural sector will not be significantly affected by the EEUV-FTA in the first five years.
Vietnam currently imports oil, gas and steel from the EEU and is achieving a trade surplus. Almost all products between the two sides are complementary goods. After the EEUV-FTA comes into effect, the union’s goods will compete with other partners in the Vietnamese market, enabling Vietnamese businesses and people to have more choices in terms of types and prices.
Trade turnover between the two sides is expected to reach US$10-12 billion by 2020, a three-fold increase compared to 2014. Vietnamese exports to the union would increase by 18-20 percent per year in terms of turnover.
Other contents in the EEUV-FTA such as intellectual property, competition and sustainable development mainly bring cooperative meaning and not exceed Vietnam’s commitments in the World Trade Organization (WTO), the signed FTAs and those which are being conducted negotiations, creating favorable conditions for deeper cooperation between the two sides in the future.
According to Chairman of the Board of the Eurasian Economic Commission Viktor Khristenko, the EEUV-FTA will help Vietnamese businesses enter the consumer markets in the five countries with around 180 million people and the gross domestic product (GDP) of more than US$2.5 trillion. Vietnam will enjoy more incentives in promoting exports to, trade with and investment in the union’s member countries.
Vietnamese Prime Minister Nguyen Tan Dung said that the EEUV-FTA would also provide opportunities for member countries. In addition to entering the Vietnamese market, the union will expand the relationship with Association of Southeast Asian Nations (ASEAN) countries with more than 600 million people and the GDP of around US$2.5 trillion. In addition, Vietnam is accelerating the conclusion of negotiations on FTAs with major partners. Therefore, businesses in the union will have favorable opportunities to enter many major economies worldwide.
The EEUV-FTA will create an important prerequisite for Vietnam to promote trade with and investment in the Commonwealth of Independent States (CIS) where many countries are expressing their wishes to become a member of the EEU.
The EEUV-FTA was signed by Vietnamese Prime Minister Nguyen Tan Dung and his Russian, Armenian, Belarusian, Kazakh and Kyrgyz counterparts on May 29, 2015 in Kazakhstan after more than two years of negotiations. This is the first FTA signed between the EEU and the third party when the EEU was looking to strengthen their presence in the Asian market and chose Vietnam to be their strategic partner.
Russian embassy in Vietnam counselor igor S.Bayazov:
Breakthrough to promote commercial growth
We hope that the signing of the Eurasian Economic Union-Vietnam Free Trade Agreement (EEUV-FTA) will promote the exchange of goods, services, investment, technology and skilled human resources. Thanks to the signing, the two-way trade turnover would reach US$10 billion by 2020.
To make the most of the opportunities from the EEUV-FTA, Russia is determined to expand cooperation with Vietnam in traditional fields, especially oil, gas and energy. In addition to the 17 joint projects with total investment capital of more than US$20 million focusing on engineering, energy, mineral mining and light industry, the two sides will cooperate to expand and upgrade the Dung Quat Refinery and work together to construct the Ninh Thuan 1 Nuclear Power Plant. Russia will foster an increased number of its investment projects in Vietnam which exceeded 100 projects with total capital of almost US$2 billion in 2014.
Belarusian ambassador to Vietnam Sadokho Valery
Trade turnover to increase by 2-3-fold
After the EEUV-FTA takes effect, many categories of goods will enjoy tariff reduction. Therefore, trade turnover between Vietnam and Belarus is expected to increase by 2-3-fold. The EEUV-FTA will also help improve the competitiveness of Vietnamese and Belarusian goods. Belarus has some investment cooperation projects in garments and coffee processing in Vietnam. Joint-venture products between the two countries have been widely sold in Belarus and those products will have more chances to enter the EEU market which is a home of around 180 million people.
Vietnamese chief technical negotiator Dang Hoang Hai:
Opportunities for Vietnam to increase exports
The EEU which includes five countries with a population of around 180 million people and the gross domestic product (GDP) of more than US$2.5 trillion is a very promising market for Vietnam. The signing of the EEUV-FTA will open up ample opportunities for Vietnamese businesses to promote exports. However, they will face difficulties such as the geographical distance between Vietnam and the EEU’s member countries. Moreover, this market is not familiar to Vietnamese businesses. Therefore, businesses need to pay special attention to the product quality and transport costs of exports to this market.
By Thu Hang