EU FTA brings hope

Addressing a forum in Hanoi on September 21 to discuss Vietnam and ASEAN’s trade integration with the EU, head of Ministry of Industry and Trade (MoIT)’s Multilateral Trade Policy Department Luong Hoang Thai said the FTAs, either setting on regional or country basis, looked at fostering international integration and bringing practical benefits to relevant countries and enterprises.

“If  the FTA between Vietnam-EU was inked, at least 90 per cent of Vietnam’s export items bound to EU market would become tax free, paving the way for made-in-Vietnam products to strongly make inroads in EU’s 27 member countries’ markets,” Thai said.

MoIT figures show that in 2011, Vietnam was EU’s firth largest trading partner among ASEAN countries, with bilateral trade turnover reaching 18 billion euros, of which Vietnam exported to EU12.8 billion euros and imported from EU 5.2 billion euros.

In the year ending July, the EU was Vietnam’s second largest export market with a total export value of $11 billion, making up 17.1 per cent of the country’s total export value.

According to head of EU delegation in Vietnam Franz Jessen, the signing of FTA would have positive impacts on both sides’ economies. Vietnamese export firms would step into EU market more easily whereas EU products flowing into Vietnamese market would fuel competition in the home market and consumers would be major beneficiaries.

“The signing of the FTA with EU will help the textile clothing sector deepen presence in EU market since current 12 per cent tariff will be reduced to zero per cent,” said Vietnam National Textile Garment Group’s deputy general director Le Tien Truong.

The footwear industry is in a similar situation as 12.4 per cent average tariff EU imposed on made-in-Vietnam footwear items would be cut to zero per cent, bettering the footwear sector’s competitive edge as well as export value.

As for seafood sector, zero per cent tax rate instead of current average 10.8 per cent once the FTA with EU was signed could help Vietnamese seafood better cope with similar export items from other countries into EU markets.

However, the FTA would not only bring advantages and both policy-makers and businesses were well aware of this.

Vietnam mainly exports food and raw products into EU market, so that if some products drop food sanitation requirements it would have chain effects on export of other items. Besides, EU levies high technical and quality standards on imported items which may be out of reach to many local firms, according to deputy head of MoIT’s European Market Department Tran Ngoc Quan.

“The FTA bringing opportunities or challenges chiefly depends on firms’ initiative and competence, so that Vietnamese firms need to map out suitable integration trajectories,” Quan affirmed.