FTA Index helps measure the effectiveness of FTA implementation

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Cai Mep port cluster. Photo: VNA

Need for measurement tools

In practice, the implementation and utilization of FTAs ​​are still uneven among localities. For example, the rate of preferential utilization is still limited. In localities, although the attention and support for businesses to take advantage of FTAs ​​has improved significantly, the outcome still very modest. In particular, there is a lack of a detailed, transparent, specific and continuous mechanism to measure the results of FTA implementation that requires stronger and more effective measurement, evaluation and solutions from FTA enforcement management agencies.

In 2022, the Ministry of Industry and Trade has developed a Project on the set of indicators to assess the implementation results of FTAs ​​(FTA Index). Currently, the FTA Index is in the process of being finalized and will be announced as soon as possible.

Ms. Nguyen Thi Lan Phuong, Deputy Head of the WTO and FTA Department, Multilateral Trade Policy Department (Ministry of Industry and Trade) said that this is the first set of indicators to assess the implementation results of FTAs ​​in Vietnam. The FTA Index will measure indicators on propaganda and information dissemination of localities; access to legal documents of enterprises; utilization of FTAs ​​and support for local enterprises... "The launch of the FTA Index is the first step in the process of promoting the effective utilization of FTAs. The ranking will be a tool to help provinces and cities to recognize and improve further," Ms. Phuong informed.

Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy Research, said that the birth of the FTA Index is very practical, adding to other indexes to a picture of the development, reform and adaptation process of stakeholders, especially enterprises in the new context.

“Stakeholders, not only the Central Government and local authorities but also enterprises and those affected by these policies and international commitments, will see whether they have taken advantage of them well and where the shortcomings lie. This index is intended for localities to review and learn from other localities or places, creating positive and meaningful changes in implementation and opening up for integration. However, the index is not a panacea to solve all the problems we face, but it will help examine what stakeholders need to improve to take better advantage of FTAs,” Mr. Vo Tri Thanh assessed.

Local representative, Mr. Nguyen The Hiep, Deputy Director of Hanoi Department of Industry and Trade, said that the city has implemented many programs to support businesses to take advantage of FTAs ​​to increase exports. In the first 11 months of 2024, Hanoi's export turnover reached about 17.5 billion USD, in which export markets participating in FTAs ​​all grew strongly compared to 2023.

However, the scale and value in the proportion of Hanoi's export turnover to markets with FTAs ​​are not large, only from 15% to 30%. Therefore, the FTA Index will have a positive impact on Hanoi and Hanoi's businesses in taking advantage of signed FTAs. Therefore, the FTA Index needs to ensure that it is complete, comprehensive, synchronous, feasible, and easy to implement for management agencies and businesses. Clarity and transparency will promote and encourage creativity in implementing the indicators.

Creating motivation to improve the effectiveness of FTA implementation

From the perspective of a policy implementation consultant, Mr. Nguyen Minh Khoi, Tony Blair Institute for Global Change (TBI) said that the Government and ministries, branches and localities are improving the implementation of FTAs ​​to bring benefits to people and businesses. The clearest indicator reflecting Vietnam's efforts to implement free trade agreements is the level of utilization of FTA agreements in Vietnam. If in 2023, Vietnam's utilization rate was about 33%, in 2024 it rate is about 37%.

According to Mr. Nguyen Minh Khoi, the construction of the FTA Index is something very new and different from international experience, which are exposed to both disadvantages and advantages. The former is there is lack of international experience to learn from, to be able to apply in the context of Vietnam. Meanwhile, the later is that we are going ahead, taking a proactive and creative approach.

The representative of the Multilateral Trade Policy Department shared the desire to build a synchronous software system that can quickly calculate the FTA Index, shorten the time and connect with the electronic information Portal on FTAs.

“In the coming time, we will have to complete the FTA Index to report to the Prime Minister and evaluate the implementation situation of localities, which is considered the first step in the process of building the FTA Index. We expect that in the future, the FTA Index will not only be measured annually but will move to quarterly or real-time evaluation, thereby helping the central government, localities, industry associations, and businesses to adjust policies more quickly, in line with the needs of businesses and people”.