Free trade activities not only open up opportunities for trade and investment cooperation but also attract resources and transfer modern production technology, helping businesses participate more deeply in the advanced production chains of large enterprises in the world.
Wide export door
According to the assessment of the Department of Multilateral Trade Policy (Ministry of Industry and Trade), in 2023, the conclusion of FTA negotiations with Israel and the signing of the record on the conclusion of conditional negotiations with the UAE have opened the door to foreign markets of Middle Eastern countries with a GDP of about 2,000 billion USD.
Up to now, Vietnam has successfully signed 16 FTAs, making Vietnam one of the most open economies and has trade relations in the free trade area with more than 60 economies.
In addition, the implementation of signed FTAs has been expanding the market door for exported goods, providing an opportunity for Vietnam to connect and participate more deeply in the value chain and global production network.
For example, for CPTPP, the rate of using CPTPP Certificates of Origin (CPTPP C/Os) of most of Vietnam’s key export products continues to grow positively and significantly compared to previous years. For example: rice increased by over 2,503%, cassava and cassava products increased by over 3,648%, machinery, equipment, tools and other spare parts increased by 134.68%, chemicals and chemical products increased by 66.96%.
Or in the implementation of the Free Trade Agreement between Vietnam and the United Kingdom of Great Britain and Northern Ireland (UKVFTA), Mr. Ngo Chung Khanh, Deputy Director of the Multilateral Trade Policy Department, said that 2021 – one year after the UKVFTA takes effect, growth from both directions increased very strongly. In particular, exports from the UK to Vietnam grew by 24%, exports from Vietnam to the UK increased by 19%. In 2023, although exports to many major markets decreased significantly, exports to the UK still increased by about 1.9%, imports from the UK to Vietnam still growed by nearly 3%. Notably, a key export industry of Vietnam to the UK still maintains double-digit growth momentum.
On the contrary, Mr. Bob Fletcher, Director of Global Trade and Customs Services, Deloitte Vietnam, said that the agreement brings significant benefits to British businesses in Vietnam, including tariff reduction and expand market access. This helps British products become more competitive in the Vietnamese market and the amount of goods exported from the UK to Vietnam also increases significantly.
In particular, the UKVFTA Agreement also creates a more transparent and accessible business environment for British businesses planning to establish, invest, and do business in Vietnam. Currently, the UK is ranked 15th out of 143 countries with direct investment activities in Vietnam.
Mr. Tran Van Hieu, Director of DACE Agricultural Development and Environmental Consulting Company Limited, said that after Brexit, the volume of export goods of businesses to this market decreased from 10% to 2-3%. However, immediately after the UKVFTA Agreement, exports grew again. Up to now, the amount of goods exported to the UK accounts for 9-10%, and has recovered to the previous level.
Besides, according to Mr. Bob Fletcher, Vietnamese businesses also benefit when participating in cooperation in technology transfer, supply chain and brand building with British businesses. Vietnamese businesses can take advantage of the network and international market expertise of British businesses to expand exports to new markets, diversify customers and increase export revenue. Besides, through cooperation, Vietnamese businesses have the opportunity to access advanced technologies, thereby improving competitiveness and productivity.
Take advantage of market demand
The benefits of increasing export value are also clearly shown in the implementation of the CPTPP Agreement. Mr. Bui Tuan Hoan, Head of the Americas Department, Europe – Americas Market Department (Ministry of Industry and Trade) said that since the CPTPP Agreement took effect, Vietnam’s exports to CPTPP member countries in the Americas region grow strongly. There are 4 American countries participating in CPTPP: Canada, Mexico, Peru and Chile, of which Chile has a bilateral FTA with Vietnam; Canada, Mexico and Peru are three markets that have FTA relations with Vietnam for the first time, so the tariff incentives in CPTPP have a very positive impact on Vietnam’s export activities to these markets.
From a market perspective, this is a market with a lot of potential and room for Vietnamese export goods. For example, Canada is an import-dependent market with a total import turnover of about 500 billion USD/year, belonging to the group of 15 countries with large import turnover in the world. Although the import scale is only equivalent to 10% of the US market, the purchasing power as well as the average import turnover per capita is twice that of the US. The need to import consumer food products is very diverse because Canada has many immigrants and each community has different tastes and preferences.
Similarly, the Mexican market with a large population of about 130 million people has an annual import demand of about 400 billion USD. Mexico is considered the gateway for Vietnamese goods to enter Central and North America and the back door to enter the US market.
According to the European – American Market Department, Peru is also a relatively suitable market for the level, scale and approach of Vietnamese businesses because 75% of Peru’s import-export enterprises are medium-sized enterprises. In particular, from the Peruvian market our goods can penetrate into other neighboring countries such as Colombia, Ecuador, Peru, Bolovia and the very large West of Brazil.
It can be seen that FTAs are creating opportunities for Vietnamese businesses to increase exports, while creating competitive pressure for businesses in the local area. The Department of Multilateral Trade Policy said that in the coming time, it will continue to effectively implement the signed FTAs; simultaneously, actively participate in negotiating ASEAN – Canada FTA, Vietnam – EFTA FTA, upgrading ASEAN – China FTA to 3.0, ASEAN – India FTA and completing Vietnam – UAE FTA negotiations with a focus on removing non-tariffs barriers on Vietnamese export goods, continuing to expand export opportunities for Vietnamese goods.
Source: Customs News