Vietnam nears implementation of historic trade pact with EU

13:00 | 27/06/2020 Trade

(VEN) - Vietnam’s National Assembly ratified the EU-Vietnam Free Trade Agreement (EVFTA) on June 8, opening the way for implementation of the historic deal this summer. Vietnam hopes the ambitious plan, which eliminates almost 99 percent of customs duties between Vietnam and the EU, will help the country overcome its Covid-19 induced export slump.

vietnam nears implementation of historic trade pact with eu

EVFTA to help Vietnamese exports

According to the Ministry of Industry and Trade, the EVFTA is expected to strongly boost Vietnam’s exports in the second half of 2020, and businesses are hoping implementation will start as soon as possible.

According to the General Department of Vietnam Customs, although the country’s exports in the first five months of 2020 grew well compared to the same period last year, those to EU markets fell to US$12.9 billion, down 12 percent. The EVFTA is expected to increase Vietnam’s export value to the agreement’s markets.

Nguyen Thi Thu Trang, Director of the WTO and International Trade Center under the Vietnam Chamber of Commerce and Industry (VCCI), predicted Vietnam would not achieve its 2020 economic growth target, but the EVFTA implementation will boost the Vietnamese economy in the context of the pandemic.

Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Business Association, said domestic enterprises are still struggling in the EU market due to competition from large-scale foreign enterprises, especially from China. The Covid-19 pandemic has affected exports in general and those to the EU in particular. The EVFTA is expected to boost export growth as soon as it takes effect, he said. Businesses should keep their eyes on the agreement’s implementation to prepare appropriate production and trade strategies, and strengthen online promotion of trade and business connectivity to maintain and develop markets as soon as the pandemic is controlled, Hung said.

Ready for implementation

National Assembly deputies voted to approve the EVFTA on June 8. The industry and trade sector and provincial and city departments of industry and trade have prepared EVFTA promotion plans.

Improvement of the business environment, institutions and laws in accordance with international practices is important for Vietnam to accelerate development. The Ministry of Industry and Trade has a plan to strengthen EVFTA dissemination among relevant organizations, businesses, ministries, sectors and localities. Vietnam will also review, amend and supplement its legal documents to ensure efficient EVFTA realization.

The government will provide programs to improve business competitiveness, promote technology application in industries and enterprises, especially small and medium enterprises, and support industries and commodities directly affected by the agreement.

According to Nguyen Duc Binh, Director of VCCI’s Small & Medium Sized Enterprises Promotion Center (SMEPC), Vietnam will have more advantages than Thailand, Indonesia and Malaysia when the EVFTA comes into effect. He advised small and medium businesses to get information about the EVFTA implementation from the government, the VCCI, business associations, and conferences and seminars.

Nguyen Tien Chuong, Chairman of the Dong Nai Import-Export Association, said 30 percent of the association’s members are Vietnamese enterprises, and although they have been directly exporting goods, they remain considerably weaker than foreign invested enterprises. The association will provide its members with market information and legal assistance, he said. Businesses need to take the initiative in market research and to recognize changes they have to make to compete, Chuong added.

Vietnam has signed more than 16 FTAs, of which 12 have taken effect and four are under negotiation. Like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EVFTA is a new generation FTA. Apart from trade promotion, these FTAs will promote innovation in the fields of electronic commerce or e-commerce, services and investment, help solve problems related to the environment and production conditions, and encourage inclusive growth, one of the United Nations’ sustainable development goals.

Ngoc Thao