Enhanced Benefits Await Vietnam with FTAs

FTAs have proven to be beneficial for socio-economic development in various regions of the country. They have particularly played a significant role in boosting trade value growth and expanding markets.

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The participation of Vietnam in various new-generation Free Trade Agreements (FTAs) such as CPTPP, EVFTA, and UKVFTA has opened up numerous opportunities for the country to expand and diversify its import and export markets, as well as attract foreign investments. These FTAs have had positive impacts on the socio-economic development of many localities in Vietnam, particularly in terms of promoting trade value growth and expanding market reach.

Assessing the benefits of participating in these new-generation FTAs, Do Thi Thuy Huong, an Executive Board Member of the Vietnam Electronics Industries Association, highlighted the support received by businesses regarding the latest updated standards of the German Supply Chain Due Diligence Act through the Ministry of Industry and Trade and VCCI. This Act, which applies from January 1, 2023, is aimed at improving supply chain reviews.

New-generation FTAs benefit Vietnamese people and businesses.

Huong further emphasized that, through the international integration facilitated by these FTAs, businesses in the Association have engaged in collaborative efforts with the Ministry of Industry and Trade, VCCI, and the German Development Cooperation Organization to promote their activities. In addition, through participation in key markets’ fairs and exhibitions, Vietnam is gradually paving the way for the production and export of electronic components and equipment.

To Thi Huong Lan, Deputy Director of the Thai Binh Department of Industry and Trade, shared how the utilization of FTAs has contributed to a 40% increase in the export turnover of local products, now accounting for a significant portion of the province’s total export turnover. The tariff incentives provided by FTAs have proven to be favorable and effective for businesses in Thai Binh.

Lan remarked, “Most of Thai Binh’s export products meet the origin criteria and regulations stipulated in the agreements, while also taking full advantage of incentives offered, particularly by the EVFTA. The Department has supported businesses exporting to Japan in capitalizing on tariff incentives as many enterprises previously did not comply with the regulations imposed by the ASEAN-Japan or Vietnam-Japan Agreements.”

While most markets experienced a decline in import-export turnover, with some seeing a decrease of up to 30%, the UK market witnessed an 11% growth. Phan Thi Thanh Xuan, General Secretary of the Vietnam Leather, Footwear and Handbags Association (Lefaso), confidently expressed that the export growth in the UK market has prevented a significant decline in Vietnam’s leather and footwear industry in 2023.

Xuan stated that the Association has been assisting Small and Medium Enterprises (SMEs) in enhancing the quality of their products, particularly those intended for export to the European market. Since this market imposes strict requirements on certification, Vietnam has not only expanded its exports to the UK but also to other markets worldwide.

Luong Hoang Thai, Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, emphasized that new-generation FTAs have yielded numerous negotiation outcomes that benefit the Vietnamese people and businesses. These agreements have created opportunities for Vietnamese enterprises to diversify their export markets, thereby avoiding excessive dependence on a single market.

However, despite the positive effects brought about by these FTAs, Vietnamese enterprises have yet to fully exploit the incentives provided by the agreements. The proportion of export turnover to FTA markets has fallen short of expectations. Additionally, the rate of utilizing preferential Certificates of Origin (C/O) incentives remains low, and the number of domestic enterprises exporting to FTA markets remains limited. Addressing these challenges requires greater efforts from governing bodies, associations, and businesses to access information and recognize the advantages provided by each FTA.

Hai Dang