Nearly 90 percent of tariff lines have been cut and reduced, with 59 percent abolished immediately as the Free Trade Agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) has taken effect since October 2016.
Shrimp processing for export
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It is an advantage for Vietnam when exporting goods to EAEU countries compared to other countries in the world. The aquatic sector will get the most from the agreement since the EAEU will reduce its import tax, from 10 percent to zero, for aquatic products from Vietnam, including processed ones.
Some of processed and canned products, such as tunas and shrimps, will enjoy preferential tax, but they are groups that Vietnam lacks of materials. Another five percent of tax lines will be applied on other seafood products that are not strength of Vietnam.
Agro-forestry products will get the least benefit. For rice, the EAEU has a set an initial quota of importing 10,000 tonnes of rice per year from Vietnam with zero tax. The above-quota amount will be levied the most-favoured nations (MFN) tax. In addition, Vietnam’s annual rice export volume is dependent on demand of EAEU countries.
The agreement will not reduce taxes for green tea packages weighed under 3 kg. Zero taxes are applied only for raw Vietnamese coffees and peppers while there will be no tax exemption or reduction for the processed products.
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.
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.
The report addressed technical aspects of the FTA, including tariff reduction schedules, legal frameworks, the role of the agreement in promoting trade between Vietnam and the 182-million population market of the EAEU as well as the economic benefits and impacts in terms of politics, geopolitics and policies that the FTA brings.
The FTA will open up numerous business opportunities for both sides as about 90 percent of items will experience reduced tariffs, 60 percent of which will have zero tariffs when the FTA officially takes effect. Vietnam is a key Southeast Asian partner to all member states of EAEU and the deal is intended to help the group penetrate Southeast Asian and Asian markets.
