Optimising the benefits from Vietnam-EAEU FTA

By Tuan Minh

Jul 28, 2016 / 10:20 AM

On July 27, a workshop held in Hanoi for businesses to discuss the methods to optimise the benefits from Vietnam-EAEU FTA.

Import tax on 4,959 types of goods from the Eurasian Economic Union (EAEU) countries will be reduced to zero immediately when the free trade agreement (FTA) between Vietnam and the union takes effect this year. In 2018, 144 more tariff lines will be eliminated, raising the number of zero-tax lines to 5,103, or 54 percent of the total. The agreement will abolish 90% of tax lines, equivalent to 90 percent of bilateral trade turnover. The pact is expected to increase trade revenue between Vietnam and the EAEU to 10 billion USD in 2020 from the current yearly average of 4 billion USD.

The EAEU, which comprises Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, signed the FTA with Vietnam in May 2015. This was the first FTA signed between the EAEU and an external partner. Economic experts have suggested Vietnam thoroughly assess the impacts that the Vietnam-Eurasian Economic Union (EAEU) free trade agreement (FTA) may exert on specific sectors and markets, in a bid to fully enjoy the benefits brought about by the pact.

Dang Hoang Hai, Head of the Ministry of Industry and Trade’s European Market Department said as it is the first FTA signed between the EAEU and an external partner, the deal would offer a huge opportunity for domestic enterprises. The agreement spans a range of fields, from trade to sustainable development and intellectual property, that aims to introduce EAEU member markets and the export opportunities afforded by the deal.

If the pact comes into force this year as scheduled, it will allow Vietnam to access the big Eurasian market soon, he said, adding that Vietnamese goods like garments-textiles, farm produce, leather and footwear will enjoy substantial benefits thanks to tariff preferences. However, local businesses should mull the agreement’s contents relating to their products and rules of origin, Hai suggested.

Nguyen Khanh Ngoc, the Department’s Deputy Head, proposed that enterprises set up their own warehouses in order to cut transportation costs, explaining that geographical distance remains a challenge hindering efforts to penetrate these markets. Apart from observing strict regulations prescribed in the agreement, Vietnamese businesses should map out plans to compete with their rivals in the foreign countries fairly, with special attention paid to product price and quality, Ngoc said.

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