VN’s FTAs: Boon or Bane?

As 2018 brings newer and bigger free trade agreements (FTAs), Vietnamese enterprises are faced with tough choices. They can either adapt and move up the global supply chain, or stand by while imported goods flood the country’s market. Tran Thanh Hai, Deputy Director of the Ministry of Industry and Trade’s (MoIT) Import-Export Department, told Vietnam News Agency (VNA) that from 2018 onward, 85 per cent of Vietnamese exports will be subject to significantly lowered tariff levels of zero to 5 per cent. As part of the Government’s policy to increase economic self-reliance and promote sustainable imports and exports, exports of Vietnamese goods to FTA markets grew strongly in 2017, contributing US$213.8 billion to the year’s turnover of $408 billion, per the MoIT’s data. Hai was optimistic that Vietnamese businesses will benefit more from bilateral and multilateral FTAs with partner countries such as Hong Kong, Japan and the Republic of Korea (RoK). Nonetheless, Hai admitted that the process of raising Vietnamese exports’ value might not be as easy as expected. Since each FTA is tailor-made to suit member countries’ needs, they have different levels of commitments and standards. For example, he was greatly concerned by the fact that a Vietnamese automobile company would only be able to enjoy a zero per cent tax rate when exporting to ASEAN countries if their products have at least 40 per cent of components originating in Viet Nam. Therefore, Hai suggested domestic enterprises focus on meeting standards set by the Vietnam-Korea FTA (VKFTA) and the… [Read full story]


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