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Last updated: Wednesday, December 19, 2018

 

Making Good Use of Opportunities from FTAs

Posted: Thursday, July 26, 2018

Free Trade Agreements (FTAs) often focus on commodity trade issues and allow member countries to more easily access each other's market through reductions in tariffs and other trade barriers, if the products meet the requirements of the rules of origin.

In Vietnam, with the ongoing international economic integration process over the past 20 years, bilateral and multilateral FTAs have led to a series of tariff reduction programmes that have facilitated the development of commodity trading, contributing significantly to the level of openness in the economy. Trade with FTA partners now accounts for roughly 60 per cent of Vietnam's total international trade, and approximately 50 per cent of exports and 70 per cent of imports.

However, there is a problem that too few businesses have paid attention to international economic integration so the goods of Vietnamese enterprises benefiting from the FTA remain modest. According to the Ministry of Industry and Trade, only 35 per cent of Vietnamese export products are benefiting from FTAs. According to experts, many enterprises still do not have a full understanding of the rules of origin, so they are not entitled to enjoy the tariffs from 0 to 5 per cent provided by the FTAs.

The rules of origin in the FTAs that Vietnam has implemented are basically flexible, so it will be more difficult if enterprises do not learn to use them effectively, especially for new FTAs. On the other hand, due to the fact that many FTAs have been signed, the overlapping range also makes enterprises cautious in choosing the most appropriate and beneficial deals. While enjoying FTA preferential, businesses also have to spend a lot to comply with the procedures.

In order to make better use of the opportunities from FTAs, businesses need to be fully equipped with the knowledge and skills to use FTAs, thereby helping them gain better access to target markets. First of all, it is necessary to improve transparency and access to FTA-related information for enterprises, providing full information on policies and markets related to FTAs, while supporting the quickest resolution of difficulties and obstacles for enterprises in the process of implementing the procedures to enjoy preferential treatment. In addition, it is also necessary to promote cooperation and improve the business capacity of enterprises and industries.

Experts also suggested that, during the FTA negotiations, there should be close consultation with the relevant stakeholders, including the business community in order to anticipate difficulties and challenges that may arise when participating in a new market, thus helping to improve the efficiency of production and business through the ability to take advantage of FTAs in commodity trade.

NDO








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