Int'l Cooperation

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Vietnam - EAEU FTA Eyeing US$10 Billion Trade Value

Posted: Tuesday, October 11, 2016

The Free Trade Agreement signed by Vietnam and the Eurasian Economic Union (EAEU) was set to officially take effect from October 5, 2016.
The FTA between Vietnam and the EAEU with five countries including Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan was started in March 2013. After eight official rounds of negotiations and many mid-term meetings, the agreement was signed by the Prime Ministers of signatory countries on May 29, 2015.
The agreement includes the following chapters: Legal issues, trade in goods, trade protectionism measures, sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), intellectual property protection, competition, trade in services and investment, e-commerce, rules of origin and customs authorities, and sustainable development.
The agreement also includes the early notification to each other of changes in trade regulations and lays the foundation for close cooperation between customs authorities and public authorities.
Mr Dang Hoang Hai, Director of European Market Department under the Ministry of Industry and Trade, said, this is the first Eurasian union free trade deal with a signatory from a non-member state and the first between Vietnam and an economic union. This is a comprehensive cooperation agreement which open up all investment and service fields.
EAEU is a potential, attractive and diverse market of foods, drinks and consumer goods. Vietnam - EAEU FTA creates an impetus for both sides to open the market and attract the interest of each other. The bolstered cooperation aimed to realise the target trade turnover of US$10 billion by 2020. Particularly, as the first country to sign an FTA with the union, Vietnam will benefit while other countries are subject to MFN tariffs.
Vietnam can reach a market with an annual GDP of nearly US$2.2 trillion and a population of 183 million while EAEU countries will have the opportunity to approach the Vietnamese market with more than 90 million people. Both sides agreed to boost exchange and cooperation in a bid to eliminate hindering factors to create the best conditions for development.
According to Russian customs authorities, the bilateral trade value grossed US$3.9 billion in 2015, up 4 per cent over 2014. The value reached US$2 billion in the first seven months of this year, up 11 per cent year on year. Vietnam has become the biggest trade partner of Russia in ASEAN.
Nearly 80 per cent of Vietnam’s exports to Russia are consumer goods, agricultural products, light industrial products such as telephone, apparels, footwear, fruits, coffee, cashew nuts and pepper. Russia is imposing embargo on some agricultural products and foodstuffs from Western countries and this is an opportunity for Vietnamese commodities to fill the gaps.
Over 85 per cent of Vietnam’s imports from Russia are essential commodities for domestic production such as petroleum, fertiliser, steel ingot, machinery, tools and accessories, seafood, coal and rubber.
In 2014, Vietnam spent US$138 million on imports from Belarus, of which seafood accounted for 26 per cent, followed by rubber with 20 per cent, telephone with 16 per cent, rice with 14 per cent and cassava with 10 per cent
As for Kazakhstan, more than 90 per cent of its export value to Vietnam came from nonferrous metals. Other exports to Vietnam include salt, sulphur, earth, stone and plaster. Vietnam also ships fruits and cereals (accounting for 20 - 25 per cent of its export value to this market), footwear (15 per cent), and boilers and mechanical equipment (15 per cent).
Mr Tran Thanh Hai warned against difficulties Vietnamese exporters may face in this market, including stiff competition from other rivals with similar products, shipping, payment and expensive L/C fees at Russian banks.
Huong Ly

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