Econ
FTA Vietnam – EAEU offers opportunities along with challenges
The FTA Vietnam - Eurasian Economic Union (EAEU) has created opportunities for Vietnamese and Hanoi’s exports of seafood, coffee, rubber, cashew nuts, pepper, textiles and footwear.
However, to take full advantage of the FTA, it’s necessary for exporters to understand the unique regulations of this market.
The countries of the Eurasian Economic Union ( Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan) have a combined GDP of nearly 2200 billion USD and a total population of 200 million people. Under the FTA, Vietnamese exporters of seafood, wood furniture and textiles would cash in on the tariff reduction to 0%.
Seafood export is supposed to profit the most from the FTA. According to Truong Hoang Hai, the General Secretary of the Hanoi Support Industries Association, Vietnam’s fisheries will be more competitive when enjoying 0% import tariff. As long as the delivery, hygiene, and quality of seafood such as shrimp and fish are ensured, Vietnamese seafood would be widely accepted in this market.
“The Vietnamese commodities, in turn, will face stiff competition from EAEU imports”, said Ngo Chung Khanh, the Deputy Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade). Khanh added that the government has opened up the market, the enterprises should take advantage of it. However, despite coming into effect for almost a year (October 5, 2016) but so far, few Vietnamese businesses have knowledge about the Vietnam – EUEA FTA.
Experts warn Vietnamese exporters to pay attention to the protective measures under the Vietnam – EAEU FTA to woodware and textile & garment . The tariff is reduced to 0% from 20% offering Vietnam opportunities to boost export, especially textile & garment. However, Khanh warned that a shirt price at 10 USD now reduced to 8 USD will produce many potential risks. As of present, in spite of tariff at 18-25%, Vietnam is the second largest supplier of textiles and apparel to the US market, in turn reducing the China’s share in this market from 60% to 42%. Therefore, countries in EAEU express their concern that opening the market for Vietnam’s products will increase difficulties for local enterprises. “A zero import duty will no longer be applied to Vietnam’s garment & textile export if the turnover exceeds the average turnover that Vietnam exported to the region in three years from 2011 to 2013. “If Vietnamese exports exceed this volume, EAEU will set the duty back to 20%” Khanh said.
Not only introducing the cap on turnover, EAEU also applied unique requirements of origin. As such, the Vietnam – EAEU FTA forbids dividing shipping consignment, so containers must be shipped directly and wholly from Vietnam to an EAEU member, even if it belongs to a multinational company with factories in different countries. Moreover, the FTA also requires origin certificate as prerequisite condition for favorable treatment. This is one of the biggest challenges that enterprises must pay attention to, in order to minimize risks.
The countries of the Eurasian Economic Union ( Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan) have a combined GDP of nearly 2200 billion USD and a total population of 200 million people. Under the FTA, Vietnamese exporters of seafood, wood furniture and textiles would cash in on the tariff reduction to 0%.
Food processing at CaMau Foods & Fishery JSC.
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“The Vietnamese commodities, in turn, will face stiff competition from EAEU imports”, said Ngo Chung Khanh, the Deputy Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade). Khanh added that the government has opened up the market, the enterprises should take advantage of it. However, despite coming into effect for almost a year (October 5, 2016) but so far, few Vietnamese businesses have knowledge about the Vietnam – EUEA FTA.
Experts warn Vietnamese exporters to pay attention to the protective measures under the Vietnam – EAEU FTA to woodware and textile & garment . The tariff is reduced to 0% from 20% offering Vietnam opportunities to boost export, especially textile & garment. However, Khanh warned that a shirt price at 10 USD now reduced to 8 USD will produce many potential risks. As of present, in spite of tariff at 18-25%, Vietnam is the second largest supplier of textiles and apparel to the US market, in turn reducing the China’s share in this market from 60% to 42%. Therefore, countries in EAEU express their concern that opening the market for Vietnam’s products will increase difficulties for local enterprises. “A zero import duty will no longer be applied to Vietnam’s garment & textile export if the turnover exceeds the average turnover that Vietnam exported to the region in three years from 2011 to 2013. “If Vietnamese exports exceed this volume, EAEU will set the duty back to 20%” Khanh said.
Not only introducing the cap on turnover, EAEU also applied unique requirements of origin. As such, the Vietnam – EAEU FTA forbids dividing shipping consignment, so containers must be shipped directly and wholly from Vietnam to an EAEU member, even if it belongs to a multinational company with factories in different countries. Moreover, the FTA also requires origin certificate as prerequisite condition for favorable treatment. This is one of the biggest challenges that enterprises must pay attention to, in order to minimize risks.
