FTA to boost textile firms

European Union delegation economic and politics advisor Juan Jose Almagro Herador said the Vietnam-EU free trade agreement (FTA), now under negotiation, would greatly benefit Vietnam's key export sectors such as footwear, garment-textile and seafood since with the FTA ratification, these exports would have their import duties into EU countries eased. For the textile-garment sector, the rate will be reduced from 12 to zero per cent.

"Local textile-garment firms also have an opportunity to import production machinery and equipment from EU countries at cheaper prices, inspiring the sector to gain a better status in EU market," said Herador.

A firm with 70 per cent of products going to EU market, Bac Giang Garment Joint Stock Company expected the FTA would help local firms boost export value to EU.

Alongside promoting export, the FTA would help Vietnam's textile and garment sector scaled up its competitive edge in the world marketplace, said the company's general director Nguyen Huu Phai.

Local firms, however, worry about conditions they must satisfy to qualify to EU tax incentives such as local material usage requirements.

Textile and garment products making a foray into the EU market are mostly made under export processing contracts with low added values and source materials from South Korea, China or Taiwan, said Dap Cau Garment Joint Stock Company's general director Nguyen Dang Luan.

The proportion of export products up to scratch would be low, if EU required export products to source local materials, said Luan.

Besides, to enter EU market, made-in-Vietnam export products must satisfy requirements of not a single EU country but all 27 EU members.

According to trade experts, trade barriers or strict quality requirements importers demand from exporters in global trade were inevitable. To qualify to those preferences and deepen international integration, local export sectors have no other option than forge ahead and confirm their status in the world market.

Until present, Vietnam had signed FTAs with South Korea and Japan. Statistics show that Vietnam's export value, including that of textile and garment items, to these markets sharply rose since the ratification of these FTAs. In 2010, Vietnam's textile and garment export to Japan rose more than 20 per cent against 2009 and made up around 10 per cent market share in Japan.