Vietnam and Israel to Sign Free Trade Agreement

Vietnam and Israel conclude the negotiations for their free trade agreement, which lasted for seven years with 12 rounds. Photo: Israel’s Economic & Trade Mission in Vietnam

Vietnam and Israel on April 2 declared the end of talks for their Free Trade Agreement (FTA), paving the way for the two nations to sign the pact in 2021, according to the Vietnam News Agency (VNA). This agreement is anticipated to provide an impetus to the economic ties between Vietnam and Israel.

The Vietnamese Minister of Industry and Trade, Nguyen Hong Dien, and Israeli Minister of Economy and Industry, Nir Barkat, both made an announcement at a working session during the former’s current visit to Israel.

A Bilateral Free Trade Agreement (BFTA) is a type of economic agreement between two countries that eliminates most barriers to trade activities, including tariffs, import quotas, and non-tariff restrictions such as technical standards, sanitary standards and phytosanitary measures. This type of agreement is designed to promote bilateral trade between the two countries and foster economic growth.

After taking effect, the Free Trade Agreement (FTA) will stimulate trade exchange between the two countries and significantly boost bilateral import and export turnover.

Vietnam is a major exporter of agricultural products such as rice, coffee, tea, and rubber. Meanwhile, Israel is renowned for its high-tech products such as microchips, semiconductors, and computer software. The two nations have different economic strengths, which means that they can benefit from each other in terms of trade. By complementing each other’s products, Vietnam and Israel can increase their exports and generate more revenue.

Israel and Vietnam have an opportunity to mutually benefit from their different economic strengths. While Vietnam is a major exporter of agricultural products, such as rice, coffee, tea, and rubber, Israel is renowned for its high-tech products including microchips, semiconductors, and computer software. This means that rather than competing directly, the two countries can complement each other’s product structure, allowing them to increase their exports and generate more revenue. By trading with each other and taking advantage of their respective strengths, both countries can benefit from each other and create a more prosperous future.

Dien asserted that the mutual economies and increasing two-way trade would gain substantially from the agreement, which had taken seven years and 12 rounds of negotiations to come to fruition.

He proposed that the two sides intensify coordination and delegation exchanges to identify and advance cooperation opportunities in trade and investment. He also encouraged Israeli businesses to invest in Vietnam in areas such as industry, high-tech agriculture, information technology, green production, and industrial infrastructure.

The announcement was made at a working session on April 2 between Vietnamese Minister of Industry and Trade Nguyen Hong Dien and Israeli Minister of Economy and Industry Nir Barkat during the former’s ongoing visit to the Middle East nation. Photo: VNA

Dien also urged Israel to share its expertise and technology in the fields of digital economy, digital transformation, and energy transition. This could play a pivotal role in driving forward progress and achieving sustainable development.

For his part, Barkat agreed to maintain cooperation and exchange activities between the two ministries, as well as trade promotion programs to facilitate the operation of their enterprises, thus allowing them to maximize the VIFTA when it is implemented.

Vietnam and Israel officially established diplomatic relations in 1993, when Israel opened an embassy in Hanoi. Subsequently, in 2009, Vietnam opened an embassy in Tel Aviv, thus cementing the two nations’ diplomatic ties.

Vietnamese Party and State leaders have consistently shown strong support and provided every possible assistance for the steady development of bilateral trade and economic relations between the two countries, including the establishment of the Vietnam–India Free Trade Agreement (VIFTA), labor cooperation in agriculture, collaboration in innovation and entrepreneurship, as well as the exchange of collective economic models and measures to combat the effects of epidemics.

According to the Vietnamese Ministry of Industry and Trade, Israel is Vietnam’s third-biggest importer and fifth-largest trade partner in the West Asian region.

Last year, the bilateral trade between the two countries reached an impressive figure of USD 2.2 billion, witnessing a year-on-year growth of 17.9%. Out of this, Vietnam’s exports stood at USD 785.7 million, while its imports totaled to USD 1.4 billion.

At a working session between Vietnamese Minister of Industry and Trade Nguyen Hong Dien and Israeli Minister of Economy and Industry Nir Barkat in Israel. Photo: Israel’s Economic & Trade Mission in Vietnam

The Vietnamese community in Israel currently numbers approximately 500 people, and that doesn’t include the hundreds of students who visit each year to take advantage of the agricultural trainee cooperation program.

The 30th anniversary of the Vietnam-Israel diplomatic relations in 2023 will mark a significant milestone in the two countries’ partnership, providing a unique opportunity for the Vietnamese Embassy in the Western Asian nation to step up economic-diplomacy-related activities. In particular, Ambassador Ly Duc Trung expressed his hope that the two countries would work together to expedite the approval of a bilateral free trade agreement during a 2022 interview with the Vietnam News Agency (VNA).

Both parties wish to finalize the negotiations of all topics that have been discussed over the last 11 years so that they may sign and execute the VIFTA, which would bring advantageous outcomes for both sides.

This year, the embassy is striving to bring the Vietnam-Israel trade growth to a staggering USD 3 billion in the quickest possible time.

Trung stated that, in addition, the embassy will continue collaborating with Israeli ministries and associations to resolve any obstructions which may be encountered during negotiations of a labor cooperation agreement in the agricultural field, thus opening up the potential market in the foreseeable future.