FTAs help Vietnam generate “tens of billions of USD” per year: Trade ministry
The implementation of free trade agreements (FTAs) has had a positive impact on Vietnam's exports, imports, and investment attraction.
Vietnam's exports to CPTPP and EVFTA member countries are increasing by tens of billions of dollars annually, according to a report by the Ministry of Industry and Trade (MoIT).
| Vietnamese fruits in an Australian supermarket. Photo: Hoai Nam/The Hanoi Times |
Vietnam has signed and implemented several new generation FTAs, including CPTPP, EVFTA, and UKVFTA. It also recently signed a free trade agreement with Israel, its first FTA with a West Asian country. This agreement provides an opportunity to reduce tariffs on up to 92% of Vietnamese goods exported to Israel.
In 2022, the volume of trade with CPTPP member countries increased by more than 14% year-on-year, reaching US$104.5 billion. In particular, Vietnam's exports to CPTPP countries experienced significant growth, such as Canada with an increase of over 20% and Brunei with an impressive increase of 163%.
As for the EVFTA, trade between Vietnam and European Union (EU) countries exceeded $62.2 billion last year, marking a growth of more than 9% compared to 2021. EU countries imported nearly $47 billion worth of Vietnamese goods in the same year, an increase of nearly 17% compared to the previous year.
With the UK, Vietnam achieved a trade surplus of more than $5.3 billion in 2022 after more than a year the UK-VFTA agreement took effect.
While these new generation FTAs contribute tens of billions of dollars annually to Vietnam's exports, the MoIT points out that challenges remain in fully realizing their potential. At present, few Vietnamese enterprises are utilizing FTA incentives, with approximately 5% capitalizing on CPTPP, nearly 26% on EVFTA, and about 24% on UKVFTA.
The FDI sector continues to hold a dominant share in the export of high-value products, while domestic enterprises are mainly engaged in processing or exporting raw materials and semi-finished goods.
"Emerging enterprises have recently entered certain segments of the supply chain, but their ability to meet export quality, food safety, and technical requirements remains limited, especially in the face of escalating technical barriers in many countries that manifest as non-tariff barriers," the ministry said.
As a result, the number of Vietnamese enterprises that have developed their own brands for export to FTA markets remains insufficient. In addition, business-to-business links are somewhat fragmented, and instances of unfair competition such as product dumping persist.
To address these challenges and to effectively reap the benefits of FTAs, the MoIT proposes to allocate special funds to help enterprises capitalize on these agreements. To this end, the State Bank of Vietnam, ministries, and relevant agencies should work together with commercial banks to secure appropriate sources of credit and favorable interest rates for enterprises seeking to enhance their production capabilities.
At the same time, enterprises themselves should increase their access to green credit resources so that they can quickly meet the higher standards required by export markets, the ministry said.
The MoIT recommends that the government formulate comprehensive policies that facilitate companies' access to and use of domestic raw materials, thereby meeting the specified origin criteria outlined in each trade agreement.
