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If Covid-19 is controlled in the second quarter and made good use of EVFTA, Vietnam's annual exports are forecast to reach the set target. Photo: N.Linh

Trade surplus but not praise worthy

According to the General Department of Customs (Ministry of Finance), in the first fifteen days of April, export turnover is only $8.26 billion, sharply dropping to over $4.7 billion comparing to the second half of March. Accumulated from the beginning of the year to April 15, the total export turnover was over $71.6 billion, while the import was over $69.1 billion, so Vietnam still achieved a trade surplus of about $2.5 billion.

Considering exporting separately, from the beginning of the year, the general trend is difficult. Even evaluating the first quarter of 2020, the Ministry of Industry and Trade also emphasized that export growth in the first quarter of 2020 was the lowest level in the period since2003. Generally, for the first quarter of 2020, the export turnover is estimated at $59.1 billion, an increase of only 0.5% over the same period in 2019 (the same period increased by 5.2%).

Talking to reporters from Customs Newspaper, looking at the "picture" of export goods, economist Le Quoc Phuong said amid a pandemic, exports of the first quarter of this year were the gloomiest in recent years. In 2009, export of the whole year recorded negative growth, but the first quarter of 2009 also grew higher than this year.

“Notably, although Vietnam has a trade surplus, it was not due to a sharp increase in exports but because of decliningimports and interruptions due to the pandemic. Trade surplus in this context is not praiseworthy,”said expert Le Quoc Phuong.

However, this expert said there were still a few bright spots. That is Vietnam's export growth rate, though it is low (0.5% in the first quarter), but much higher than that of other countries because countries are falling into negative export growth. Besides, while the export of many commodities declined, there aresome items seeing export growth, such as phones and electronic components; machinery, equipment and spare parts; wood and wood products; and rice.

It is notable thatsince 2018, domestic enterprises have recorded a strong rise in exports. While export of FDI enterprises decreased, those of domestic enterprises increased. Data from the Ministry of Industry and Trade shows that, in the total export value estimated at $59.1 billion in the first quarter, the domestic enterprises sector was estimated at $18.65 billion, up 8.7%. The FDI sector decreased by 2.9% compared to the same period last year.

Expecting from EVFTA

Talking about the situation of exporting goods in the future, the Ministry of Industry and Trade said that there are also positive expectations. Typically, the anti-dumping tax rate on the US market decreased, resulting in the equivalent recognition of the food safety management and control system on Pangasius published by the US Department of Agriculture as a favorable basis helping Vietnam's seafood products to improve their competitiveness.

In particular, the incentives of the CPTPP and EVFTA are expected to have effects to promote domestic production. Recently, Vietnam has summarized one year of implementation of the CPTPP, which has basically gained certain benefits on trade and investment from this agreement. When the EVFTA comes into effect (expected in July 2020), it will resonate to create motivation for businesses to develop sustainably.

With the EVFTA alone, nearly 100% of Vietnam's export turnover to the EU will be eliminated import tax after a short journey. Minister of Industry and Trade Tran Tuan Anh said: “So far, this is the highest level of commitment that a partner has offered us in a signed FTA. This benefit is especially meaningful when the EU is continuously one of the two largest export markets of our country.”

According to trade expert Pham Tat Thang: If the EU contains the Covid-19 epidemic in the second quarter to start the third and fourth quarter to restore production activities, EVFTA will be awide door to bring goods to the EU market. The EU market needs to import items such as textiles, footwear, furniture, especially phones, electronic components. These are all items with large export turnover, the key of Vietnam.

Based on such analysis, expert Pham Tat Thang said that if the Covid-19 epidemic was controlled in the second quarter, even if the export of the second quarter was "flat", Vietnam could make good use of the EVFTA and can still compensate for previous losses, "meet the target" as set out goals (export growth in 2020 is 7-8% compared to 2019).

Around the story of utilizing FTAs ​​in general and the EVFTA in particular to promote exports, according to Le Quoc Phuong, other FTAs ​​have committed to reduce taxes for a long time, reduce in some items with a roadmap of dozens of years, but the EVFTA has a very fast and strong commitment to tax reduction. If taking advantage of this agreement, there is a lot of hope to promote the export of goods because the EU is a large and potential market.

Does EVFTA help increase 146,000 jobs per year?

However, this expert also shared a cautious view that it is not natural that Vietnam can gain the potential from the EVFTA because the EU is a fastidious market that requires high quality goods, food hygiene and safety, labor and environmental requirements, etc. All these are pressures for Vietnamese enterprises to innovate and increase their competitiveness. The State must also have timely support to help businesses achieve that.