The BOOM in free trade agreements

10:40 | 11/02/2016 Trade

(VEN) - As many as 57 countries worldwide have recognized Vietnam as a market economy, followed by the US and the EU after the Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement take effect. Vietnamese businesses, goods and services will be treated more fairly in the international arena.

The BOOM in free trade agreements

Photo: Can Dung

1. Vietnam has actively participated in the global and regional economy with negotiations on more than 10 free trade agreements for greater trade liberalization compared to the Agreement on Common Effective Preferential Tariffs for the ASEAN Free Trade Area and the World Trade Organization.

Vietnam is a home of more than 93 million people with commitments for a wider opening of the market, after Singapore and Hong Kong, China in Asia. Various free trade agreements will have different impacts on the economy. For example, the Korea-Vietnam Free Trade Agreement (KVFTA) will affect trade turnover between the two countries, while multilateral free trade agreements will have effects on many countries.

The Eurasian Economic Union-Vietnam Free Trade Agreement (EEUV-FTA) will have effects on the market that has more than US$4 trillion in gross domestic product (GDP), owns high technologies and has high demand for consumer goods.

Meanwhile, the Trans-Pacific Partnership (TPP) will affect the market that is a home of around 800 million people, accounts for 40 percent of the world GDP and 30 percent of the global trade, and also has demand for high-quality consumer goods.

The EU-Vietnam Free Trade Agreement (EVFTA) will have effects on the capital market owning high-tech and using high-quality consumer goods that is a home of about 500 million people with GDP of around EUR17.3 trillion and incomes of EUR27,400 per capita a year.

The ASEAN Economic Community with more than 600 million people and GDP of nearly US$3 trillion is a place that Vietnam can promote economic cooperation with member countries in the bloc in addition to cooperation agreements in terms of culture and national security with the goal of building a prosperous community.

2. Vietnamese businesses are happy to see opportunities from the market with more than 50 countries including 28 EU countries, nine ASEAN countries, 11 TPP member countries, five Eurasian countries and the Republic of Korea. Almost all goods such as garments and textiles, footwear, consumer goods, agricultural products and seafood will enjoy preferential tariffs of zero to five percent, creating favorable conditions for expanding export markets and promoting high-tech goods imports.

Foreign direct investment in Vietnam will increase in order to make the most of advantages in terms of young workforce and competitive wages compared to China, the Republic of Korea, Thailand and Malaysia.

Trade barriers for Vietnamese goods will be limited at the lowest level, providing opportunities for Vietnam to promote exports and increase foreign currency reserves.

Strengthening imports of advanced technologies, the absorption of new management skills, promoting e-commerce at home and abroad and improving competitiveness of goods and services will also be mentioned.

As many as 57 countries have recognized Vietnam as a market economy, and the US and the EU will also recognize this economy after the TPP and the EVFTA take effect. Vietnamese businesses, goods and services will be treated more fairly in the international arena. In addition, international credit limits will be higher, while risks will fall. Anti-dumping and anti-subsidy lawsuits will be seriously considered following international regulations.

3. Vietnamese businesses must create favorable conditions for each other. Moreover, enhancing the role of associations to promote links and maintain the market share is necessary. Associations will undertake functions such as participating in lawsuits to maintain trade and production activities for necessary goods. For example, the US Seafood Products Association proposed to the government to issue conditions for Basa and Tra fish imports in this market.

Vietnamese businesses must strengthen the application of scientific and technological achievements, especially information technology in order to improve competitiveness. This has been seen as a decisive factor for the success of businesses.

Adopting new development strategies for goods and brands, promoting investment in advanced technologies, training human resources, expanding consumer markets, changing strategic thinking in trade activities, dominating the domestic market and registering brands and administration software are needed in the context of international economic integration.

4. International economic integration will offer big opportunities for businesses but also pose challenges. Businesses have to catch opportunities to make the most of capital markets, technologies, human resources to overcome difficulties. 

 

Luong Van Tu

Theo ven.vn