Export "push" from new-generation FTAs

VCN - Effectively exploiting Free Trade Agreements (FTAs), especially new-generation FTAs, is one of the important reasons for exports to earn an impressive figure of over US$336 billion in 2021. This continues to be seen as a key driving force contributing to realizing the export target of over US$356 billion in 2022.
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The establishment of RCEP has connected four FTAs of ASEAN (ASEAN-China FTA; ASEAN-Korea FTA; ASEAN-Japan FTA; ASEAN-Australia-New Zealand FTA).
The establishment of RCEP has connected four FTAs of ASEAN (ASEAN-China FTA; ASEAN-Korea FTA; ASEAN-Japan FTA; ASEAN-Australia-New Zealand FTA).

Exports increase sharply in markets with FTAs

Looking back on the process of exploiting and taking advantage of opportunities from FTAs to promote exports, Ms. Nguyen Cam Trang, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that new generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-EU FTA (EVFTA), and the Vietnam-UK FTA (UKVFTA) have initially brought certain results.

In terms of specific numbers, since the CPTTP took effect (January 14, 2019), export turnover to markets that are members of the CPTPP has grown rapidly. In 2021, exports to Canada increased by 19.5% and exports to Mexico increased by 46.1%.

Similarly, with the EVFTA, after nearly one and a half years of implementation, it has brought very positive results. In 2021, two-way trade will reach US$63.6 billion, up 14.8%. In which, Vietnam's exports to the EU reached US$45.8 billion, up 14.2%; EU exports to Vietnam reached US$17.9 billion, up 16.5%. The export turnover of Vietnam using Certificate of Origin (C/O) form EUR.1 is about US$7.8 billion. This shows that many Vietnamese enterprises have paid attention to taking advantage of opportunities from the EU's tariff reductions under the EVFTA.

It would be remiss to mention taking advantage of opportunities from new-generation FTAs without mentioning the UKVFTA Agreement. “The Government, ministries and sectors have made efforts to launch UKVFTA negotiations right after the UK officially leaves the EU so that businesses exporting to this market will not be interrupted. As a result, from January 1, 2021, Vietnam's exports to the UK have enjoyed preferential treatment under the UKVFTA. In 2021, Vietnam's exports to the UK had a high growth rate of 15.4%," said Ms. Trang.

From a business perspective, Mr. Ha Phuoc Loc, Deputy General Director of Da Nang Rubber Company (DRC), said that in 2021, the company's exports will reach more than US$110 million, an increase of more than 30% compared to 2020. The outstanding factors that help businesses stand firm and overcome difficulties caused by the Covid-19 pandemic are the incentives from the FTAs that Vietnam participates in.

"FTAs bring great export opportunities for enterprises, and at the same time, it is also a great competitive advantage of Vietnamese enterprises in global trade," said Mr. Loc.

Meet the origin requirements

According to Deputy Minister of Industry and Trade Tran Quoc Khanh, in 2022, FTAs, especially new-generation FTAs, have passed the initial implementation stage, businesses have gradually adapted to the FTA's commitments along with the import tax roadmap of partners to be eliminated or reduced.

This creates more competitive advantages for exports, creates conditions for Vietnamese goods to penetrate markets and partners with preferential tariffs, and promotes strong export growth.

"The price of export goods tends to increase, especially Vietnam's strong products, which will be an important driving force to increase export value," the leader of the Ministry of Industry and Trade said.

Besides the EVFTA, CPTPP, UKVFTA, the Regional Comprehensive Economic Partnership (RCEP) which took effect from January 1, 2021 is expected to create a stable and long-term export market for ASEAN countries and Vietnam in 2022.

Ms. Pham Quynh Mai, Deputy Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade), said that RCEP is the world's largest FTA, with a scale of 2.3 billion consumers, accounting for about 30% of the world's population, GDP of US$26.2 trillion, or about 30% of global GDP.

“The establishment of RCEP has connected ASEAN's four FTAs (ASEAN-China FTA; ASEAN-Korea FTA; ASEAN-Japan FTA; ASEAN-Australia-New Zealand-PV FTA) into a general agreement.

“The biggest benefit of RCEP is bringing a single set of rules of origin to the whole of ASEAN and four other partner countries. Thus, enterprises use one set of rules of origin of RCEP instead of using rules of origin of different agreements. This makes it easier for businesses not to have to understand many different regulations in the origin of the agreements," said Mai.

The Ministry of Industry and Trade has determined that one of the important tasks in 2022 is to focus on synchronously and effectively implementing the FTAs that have taken effect, in which, it is necessary to focus on taking advantage of the opportunities of important FTAs. such as: EVFTA, CPTPP, RCEP, to step up the diversification of export markets and products, and to restructure export industries effectively.

“Focusing on developing exports to new export markets and products, boosting exports through digital platforms,” said Deputy Minister Tran Quoc Khanh.

To better take advantage of opportunities from FTAs, Ms. Nguyen Cam Trang noted: “The government, ministries and sectors have made efforts to sign FTAs, opening up opportunities in terms of tariffs for businesses when exporting. The necessary condition is the efforts of enterprises in self-innovating and improving their competitiveness to create products that meet the requirements of the import market, thereby taking advantage of incentives.”

Referring to the New Zealand market (a member of the CPTPP and RCEP Agreements), the representative of the Vietnam Trade Office in New Zealand said that when investing and doing business in New Zealand, businesses need to determine whether the product has undergone changes or transformations necessary to be considered as originating in the country in which the preference is sought. Because in each FTA that New Zealand signed with partners, there are different methods or criteria of origin. Goods qualifying for origin from a particular country or group of countries must fall under one of the origin criteria set forth under a specific trade agreement or preference scheme.

Believing high expectations on FTAs ​​in the export of wood and wood products in 2022, Mr. Le Minh Thien, Chairman of Binh Dinh Timber and Forest Products Association, expressed his wish that the state management agency would create favorable conditions. It is best for the wood industry business community to have enough time to adapt and comply with all regulations and requirements according to the roadmap for implementing commitments in FTAs, especially the EVFTA.

Commitment level of tariffs in new-generation FTAs comes under scrutiny Commitment level of tariffs in new-generation FTAs comes under scrutiny

“In addition, in 2022, wood industry enterprises still face many difficulties such as a lack of shipping vessels leading to increased logistics costs and increased input material costs. To maintain production and growth, it is necessary to have support from the Government, the Ministry of Industry and Trade and relevant ministries and branches to remove difficulties in seaport infrastructure, cut fees in the field of goods and sea services, increase the number of containers and ships to support the reduction of sea freight rates for the US, UK and EU routes," Mr. Thien said.

By Duc Quang/Bui Diep

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