The recently signed free trade agreement (FTA) between Vietnam and the Eurasia Economic Union (EAEU) seeks to double bilateral trade to US$7 billion by 2015 and reach US$10 billion by 2020.
The FTA, signed May 29 in Burabai, Kazakhstan after more than two years of negotiations, marks a milestone in the relationship between Vietnam and EAEU members.
The pact marks Vietnam’s deepened integration into the international market and represents the first deal the EAEU – including Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan – has signed with a third side.
It includes tariff liberalization between Vietnam and the EAEU that will reduce or eliminate import customs duties for the majority of goods and services traded between the sides.
At the same time, the parties will keep tariff protection for the most sensitive items, which will protect the interests of consumers and entrepreneurs, according to Deputy Minister of Industry and Trade (MoIT) Tran Tuan Anh.
Red carpet rolling out for exports
According to Deputy Minister Anh, the specific industries that will benefit the most from the agreement include agriculture, marine (aquatics), textiles, footwear, and wood furniture and furnishings.
The tariffs on aquatic products, footwear and some textile items will be completely eliminated as soon as the agreement comes into effect Anh said while tariff reductions will be phased in over a period of three, five and 10 years on other exports.
Most notably the EAEU member countries agreed to entirely eliminate tariffs on all types of marine products including wild caught fish and seafood, farm raised shrimp, prawns and other aquaculture products.
For its part, Vietnam has agreed to open its market for a limited number of meat, poultry and dairy products. In addition tariffs on transportation vehicles and industrial machinery and equipment will be removed.
According to the MoIT's European Market Department, these items do not compete with Vietnamese goods and will contribute to further persifying the domestic consumption market.
The Vietnam Textile and Apparel Association (Vitas) in turn reports that Vietnam's garment sector will be the biggest beneficiary as the agreement will make it easier for the industry to attract foreign investment.
A survey by the General Statistics Office (GSO) indicates that the footwear industry is already receiving benefits as 55.7% of the companies in the industry surveyed report orders in the second quarter have already risen.
However, Anh expressed concern for Vietnam's steel industry. He said the steel industry will be a big challenge for Vietnam, which is at risk of being overshadowed by competing with the second largest steel superpower in the world, especially Russia.
Therefore, the Deputy Minister stressed Vietnam accept only a partial opening of the steel industry. During negotiations, the MoIT has considered the maximum benefit for the domestic steel industry, and there are protection measures on tariff barriers in the future.
However, in the long run, in the global integration process the steel industry must self step up to meet the challenges of globalization head on.
"The nation can support this sector in the early stages but in the long term, businesses in the industry themselves must step up to the challenge and learn how to effectively compete with foreign firms", Anh stressed./.