EU Market: Opportunities and Challenges

Speaking at the workshop, Mr Ta Hoang Linh, Deputy Director of Vietnam Trade Promotion Agency (VIETRADE), said trade plays a very important role in the economic development strategy of Vietnam and this has been reflected through a series of bilateral and multilateral agreements, including Vietnam-EU FTA. These agreements contribute greatly to the trade of the two economies. EU is one of the main export markets of Vietnam, but the market has highest demands for protection of the customers' rights through a variety of measures and protection policies.

 

Supporting this perspective, Mr Tran Ngoc Quan, Deputy Director of the European Market Department (MOIT), stressed that the EU is the second largest export market of Vietnam; this region accounts for a large proportion of trade between Vietnam and Europe. The export turnover to EU has accounted for 90.08 per cent.

 

According to trade statistics, in the first 6 months of 2016, the total exports and imports from Vietnam to the EU reached US$21.2 trillion, up 9.05 per cent over the same period last year, of which the exports from Vietnam was US$16.2 billion (up 8.68 per cent) and Vietnam imported over US$4.97 billion (up 10.28 per cent).

 

The main export items of Vietnam to the EU market in 2015 and the first 6 months of 2016 are still the traditional products such as textiles, footwear, coffee, seafood, and computers. In particular, exports of spare parts and accessories have reached over US$9.7 billion. This commodity groups account for 75 per cent of total export turnover of Vietnam to the EU market. Some other goods, whose turnover is not large but still maintain steady growth rates of 5-10 per cent per year include plastic products, wood and wood products, bags, suitcases, umbrellas, pepper and cashew nuts. The imports from the EU members are mostly domestic products such as machinery, equipment and tools, milk and dairy products.

 

According to Mr Tran Ngoc Quan, besides opening up opportunities for major exports of Vietnam, the FTA will help increase the technology transfer and training courses for Vietnam enterprises. The Vietnamese goods will be also exported to other countries around the world. The free trade agreement between Vietnam and EU will help increase by 4-6 per cent the annual export turnover of Vietnam to the EU, excluding the annual increasing portion.

 

However, besides the opportunity, some challenges include compliance with the transparency and very high protection of consumer rights through a variety of measures and policies. Along with that, the quality of services and goods in this market is more demanding, and consumers cannot accept below average quality goods. Therefore, the products of these enterprises that lack social responsibility and environment friendliness cannot exist in the EU market.

 

Through recommendations for businesses on the mandatory provision of certificates of origin (C/O) when exporting to the EU market through the new generation FTAs, the representative of the Certificate of Origin Division of the Export and Import Department (MOIT) affirms that the regulations on the Certificate of Origin is an important content of the FTA to help businesses take advantage of tax incentives.

 

The representative of the Import and Export Department (MOIT) also recommended that businesses should learn thoroughly about the characteristics of this market to take the strategy and set specific plans to meet the strict requirements of the consumers. The enterprises themselves should actively update information and accumulate knowledge to meet the requirements of the C/O and quality requirements of the importer.

Besides, trade promotion activities, advertising, and trade connectivity should be the next focus to improve product quality and corporate reputation. The ministries and agencies should also strengthen training programmes promptly and regularly for enterprises, to support them to increase trade opportunities.