Chance to Boost Trade, Investment between Vietnam and EFTA

EFTA is a free trade area consisting of four small states (Switzerland, Norway, Iceland and Liechtenstein) with a total population of 13 million but a GDP of US$883 billion, a merchandise trade turnover of US$522 billion, and an ex-association FDI capital of US$977 billion. EFTA is the third largest trade partner of Europe, only after the United States and China. EFTA has to date concluded 22 FTAs with 31 countries and territories. Over the past 50 years, EFTA has shown its adaptability to actual economic and political circumstances. EFTA has also contributed significantly to economic development of its member states and promote free trade.

 In the past time, trade relations between Vietnam and four EFTA member countries continuously made remarkable progresses. Specially, economic, commercial and investment relations between Vietnam and EFTA member states expand stably, showing that EFTA member states and Vietnam are supporting each other in many aspects. Being regarded as a potential partner of the EFTA, Vietnam exports its garments, textiles, footwear, seafood, coffee, handicrafts, plastic products to EFTA countries and imports machines, plastic materials, fertilisers, electrical equipment inter alia there. According to a Vietnamese report, its trade revenue with the EFTA reached US$2.6 billion in 2008 and jumped to US$3.4 billion in 2010.

 

To promote mutual trade and investment relations, Vietnam and the EFTA established the Joint Feasibility Study Group on FTA between Vietnam and EFTA countries in mid-2010 to look at the feasibility of an FTA for the two sides, build up the schedule and contents of negotiations as well as evaluate opportunities and challenges arising from this FTA. At this workshop, the research team presented a general report and concluded that, in the current context of economic and commercial relations, negotiations for the conclusion of an FTA between Vietnam and the EFTA will create favourable for strengthening and expanding relations and boost Vietnam’s goods export to the EFTA market in particular and the Europe market in general, and bring in benefits for both sides when they integrate more deeply into the global economy.

 

Mr Nguyen Canh Cuong, Deputy Director of European Market Department under the Vietnamese Ministry of Industry and Trade, said: With an average annual GDP growth of 7-8 percent, abundant human resources, political stability and open investment environment, Vietnam is indeed a promising partner. The expansion of free trade cooperation with other countries and other regions in the world is very necessary for Vietnam at the present time. But, the country will also find out solutions to balance interests when it negotiates with a region with higher levels, with its immediate focus on insight research on opportunities and challenges facing Vietnam if the negotiations for the establishment of Vietnam - EFTA free trade area are started.

 

Mr Ngo Chung Khanh, Director of the WTO Division of the Multilateral Trade Policy Department under the Vietnamese Ministry of Industry and Trade, said multifaceted relations between Vietnam and EFTA member states are mature enough for the start of free trade agreement negotiations that benefit both sides. The conclusion of a Vietnam and EFTA FTA will offer Vietnamese enterprises more opportunities to access the EFTA market, expand production, boost growth of export-driven industries like garment, textile, leather, footwear, household appliance, interior furniture, flowers and seafood. More importantly, expansive trade, modern technology and resources of the EFTA will enter Vietnam with business and investment projects. They will help Vietnam create more jobs and incomes for workers, restructure the workforce where the proportion of workers in industrial service sectors will increase, and add more incomes for the State Budget. However, according to Mr Khanh, Vietnam is vulnerable to the rise of inflation, especially when global prices of commodity prices are climbing up; hence, the free trade expansion with the EFTA will bear potential challenges. Furthermore, this mechanism will bring more pressures on import managers and domestic companies as they have to compete with more foreign manufacturers and service providers, causing adverse impacts on short- and medium-term competitiveness of domestic goods. For that reason, Vietnam also needs to weigh up negative impacts to have appropriate response measures.

Mr Didier Chambovey, Deputy General Secretary of the EFTA, said: Vietnam is a dynamic economy. The EFTA readily recognises the market status of Vietnamese economy and ensures mutual benefits when the FTA is concluded. He said the Joint Study Group will submit a general report to the Vietnamese Government in June this year or so for consideration of Vietnam - EFTA free trade agreement negations.