If the Vietnam - EU Free Trade Agreement (FTA) is signed, at least 90 per cent of exports will be granted zero tax. This will be a great opportunity for Vietnam’s key export industries to make breakthroughs in the EU market; especially timber and forest product manufacturing and processing industries.
In 2012, the wood processing industry was considered to be a bright spot on the picture of agricultural product export of Vietnam. Although key export markets slashed woodwork imports, Vietnam still managed to earn US$4.5 billion in exports, up 19 per cent compared to 2011. The European Union (EU) is the second largest furniture importer of Vietnam after the United States. Especially, the FSC(Forest Stewardship Council)-certified lumbers like acacia, eucalyptus and teak are always attractive to EU consumers because of sustainability, environmental friendliness, guaranteed quality and reasonable price. Therefore, Vietnam - EU FTA will have a positive impact, enhance understanding, and deepen penetration into markets of related parties by liberalising and facilitating trade in goods, gradually lifting trade barriers, creating a favourable environment to enhance investment, harmonious development, and expansion of global trade.
Mr Huynh Van Hanh, Vice Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said wood processing industries of Vietnam and the EU are mutually complementary. The EU is the second largest importer of Vietnam’s wooden products while it is also a major supplier of woodworking machinery in the world. Thus, Vietnam - EU FTA will have a huge effect on both sides. Specifically, EU exports to Vietnam will increase, especially high-tech woodworking machinery at more reasonable prices, which will help boost labour productivity and production efficiency of wood companies.
Besides, after Vietnam - EU FTA is inked, more EU investors will come to Vietnam, thus helping the latter to raise its role and position in global woodwork value chain and enhance general output capacity and national competitive advantage for Vietnam thanks to increased two-way trade turnover, upgraded quality of infrastructure services, and reduced production costs among others.
Mr Nguyen Van Tham, Vice President of the Binh Dinh Timber and Forest Products Association, said, most of HS 94-code wooden furniture imported into the EU is free of tax and only a few are imposed the tariff of 4 per cent. He said "This is why when we negotiate the FTA, we want all wood items to be levied zero tax.”
Mr Nguyen Ton Quyen, Vice President of Vietnam Timber and Forestry Products Association (Viforest), said when granted the Generalised System of Preferences (GSP), tariff rates imposed on wood products are similar to those after the FTA is signed. However, the FTA will make Vietnamese companies feel secure because they will never fear the EU will exclude them from the GSP list as they usually do. Mr Nguyen Van Tham said FTA is not merely referred to tax cut, tariff reduction, trade barrier elimination, and investment increase. He said the Vietnam - EU FTA will impact existing problems and limitations of Vietnam - a developing country with low development levels in many aspects. Tax cuts will attract more foreign investors to Vietnam to avoid taxes in their countries. Foreign companies are forecast to easily overwhelm local wood processing enterprises.
In addition, Vietnam has to shift the legal framework towards protection of intellectual property rights and geographical indications for domestic products, and enforcement of environmental and labour laws in a complete and effective manner. This will increasingly interest EU investors to invest in Vietnam as growing expense and responsibility burdens on local businesses will weaken their product competitiveness on export markets.
Mr Huynh Van Hanh said Vietnamese wood companies do not understanding thoroughly agricultural safeguard measures, antidumping and countervailing duties, technical barriers to trade. Meanwhile, the enforcement of these laws in Vietnam is limited, leading to difficulty in settling disputes with foreign countries in the future. FTA usually has indefinite validity but the Vietnamese economy will gradually reach equal treatments as the EU, which will result in fierce competition between Vietnam and EU businesses, including wood companies. Thus, he recommended "Specific roadmap determination and updatability and adjustability to Vietnam - EU FTA is necessary in the future."
My Chau
Vietnamese
