13:19 | 10/06/2020 Industry
(VEN) - Luong Hoang Thai, Director of the Ministry of Industry and Trade’s Multilateral Trade Policy Department, talked with the media about the EU-Vietnam Free Trade Agreement (EVFTA) and its role in the post pandemic economic recovery.
Could you indicate specific steps that Vietnam and the EU should complete to bring the EVFTA into effect?
On the first working day of its ninth session, the 14th-tenure National Assembly (NA) discussed the EVFTA to prepare for the ratification of the agreement. The Ministry of Industry and Trade (MoIT) had submitted to the government a report on the EVFTA. The government then reported its content to the President and the NA, including the necessity of ensuring effective implementation of the trade deal. The report consists of two major parts: 1) legal problems that Vietnam needs to resolve to fulfill its obligations; and 2) specific steps that the government should complete to bring the agreement to life.
It is up to the NA to make the final decision on EVFTA ratification on Vietnam’s part. The NA will issue a resolution to complete the ratification process. The two sides will confirm to each other the time for the agreement to take effect - that will be the first day of the second month after the NA issues the ratification document. If the resolution is issued in late May 2020, the two sides will identify the effective date of the agreement two months after that.
The EVFTA is sprinting towards enforcement. This is good news for the Vietnamese business community in the context of the Covid-19 impact on the economy. Which sector will be the first to benefit from the agreement when it takes effect?
Studies by the Ministry of Planning and Investment and the World Bank (WB) show that textile, garment, leather, footwear and farm produce, especially tropical agricultural products that are Vietnam’s strength, will be the first beneficiaries of the EVFTA.
The agreement will contribute to creating a more favorable business environment, helping promote trade, investment and create new supply chains. Countries are trying to diversify supply chains, and these efforts are especially strong in the EU. This trend has strengthened following changes resulting from the Covid-19 pandemic.
Unlike major economies such as the US with Mexico being a traditional supply market, the EU cannot find any supply source from nearby economies. As one of the first developing countries to have a free trade agreement with the EU, Vietnam is in a very good position to become part of sustainable supply chains. This will help it promote trade, investment and relations in other fields with the EU.
How has Vietnam, as a supplier of goods, met EU demand?
Vietnam is confident of its competitiveness and ability to supply goods to its trading partners. Although major partners such as the US, the EU and Japan have also contracted with other suppliers, Vietnam is in a very good position. Vietnam has reformed its economy and enhanced the competitiveness of various kinds of goods. While many other countries have restricted the export of medical supplies such as facemasks during the Covid-19 pandemic, Vietnam has proved a reliable partner in international relations.
Vietnam has also moved ahead of other countries in removing barriers to farm produce and medical supply exports. It has proved to be a leading supplier of various kinds of goods. In the future, we can expect export opportunities for not only advantageous products such as textiles, garments, leather and footwear, but also high-tech products.
What do you think of the EVFTA’s impact on Vietnam’s competitive advantages and interests?
Studies forecast a positive impact of the agreement on the Vietnamese economy. In its latest study, the WB forecast the EVFTA could help about 800,000 Vietnamese people escape poverty more quickly compared with a scenario without the trade deal.
The Ministry of Planning and Investment predicted that over the next five years, the EVFTA can contribute 0.5-percentage point to Vietnam’s GDP growth annually, much more than other FTAs do, even the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
However, Vietnam needs to resolve various problems to realize this prediction. Rapid and major changes in the global economy require state authorities to take new approaches to making the most of opportunities presented by new-generation FTAs, in general, and the EVFTA, in particular.
|Key Vietnamese exports to the EU will benefit from the EVFTA when it takes effect.|
Recorded by Thu Phuong & Nguyen Huong