Vietnam becomes first Southeast Asian country to sign FTA with Israel
The move is expected to significantly boost the two-way trade turnover, which is expected to reach US$3 billion in the near future.
Vietnam and Israel signed a free trade agreement (FTA) on July 26 during Vietnamese Deputy Prime Minister Tran Luu Quang's visit.
|Minister of Industry and Trade Nguyen Hong Dien and Israel's Minister of Economy and Industry Nir Barket at the signing ceremony. Source: MoIT
Vietnam and Israel have reached an important milestone by signing the first free trade agreement between a Middle Eastern country and a Southeast Asian nation, according to a statement from the Ministry of Industry and Trade.
The Vietnam-Israel Free Trade Agreement (VIFTA) comprises 15 chapters and several annexes and sets out comprehensive commitments on trade in goods, services, investment, rules of origin, technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), customs, trade remedies, government procurement, and legal and institutional arrangements.
Both countries have committed to reducing tariffs according to a specified roadmap, with Vietnam agreeing to cut tariffs on 85.8% of goods and Israel committing to an even higher level of 92.7% of the total number of tariff lines. This move is expected to significantly boost two-way trade turnover, which will soon reach US$3 billion.
VIFTA will provide a significant boost to Vietnamese businesses, enabling them to expand exports and gain access to cutting-edge goods and services from Israel at more competitive costs. It will also make it easier for Vietnamese companies to tap into markets in the Middle East, North Africa and Southern Europe.
On the other hand, Israeli companies will gain access to lucrative markets in Southeast Asia, the Asia-Pacific region and other major economies through Vietnam's participation in 16 free trade agreements.
Israel is one of Vietnam's most important trade, investment, and labor partners in the Middle East, currently ranking as Vietnam's third-largest export market and fifth-largest trading partner.
Bilateral trade between Vietnam and Israel witnessed significant growth last year, with import-export turnover reaching $2.2 billion, an impressive 18% increase from the previous year. Vietnam's exports to Israel amounted to nearly $786 million, while imports reached $1.4 billion.
With 16 bilateral and multilateral free trade agreements signed to date, Vietnam has experienced remarkable trade growth. In 2022, the country's import and export turnover rose to a record high of $732.5 billion, representing a significant rise of 9.5% compared to 2021.
Vietnam's active engagement in trade negotiations continues, with the country currently involved in discussions for three additional free trade agreements: Vietnam - EFTA (Switzerland, Norway, Ireland, and Liechtenstein), ASEAN - Canada, and a trade agreement with the UAE. These negotiations demonstrate Vietnam's commitment to further expanding its trade relations and economic ties.
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