Opportunities to Expand Markets
Vietnam sees enormous opportunities to boost exports to emerging markets after it signs trade agreements such as CPTPP, EAEU and EVFTA.
According to the Ministry of Industry and Trade, Vietnamese goods have many more opportunities to enter new markets after many important FTAs take effect. Many markets and partners already signed trade agreements with Vietnam which reportedly supplement each other’s import-export structure. Vietnamese companies will enjoy huge tariff cuts when shipping their products to CPTPP member countries.
Trade agreements have positive impacts on competitiveness improvement and export market development, facilitate export and import market restructuring, bring more opportunities to join regional and global supply chains for local firms, and inspire industrial development support.
Eurasian Economic Union (EAEU)
The Eurasian Economic Union (EAEU) consists of five member states: Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. This region has special economic and political relations with Vietnam. After two years of enforcing the free trade agreement, two-way trade increased significantly, averaging nearly 30% per year, especially with the Russian market. In 2018, Vietnam’s trade value with the EAEU reached nearly US$5 billion, representing a 28.7% growth over 2017. Of the sum, Vietnam’s exports to the EAEU reached US$2.7 billion, up 12%, while its imports from the EAEU valued US$2.28 billion, up 56%. Vietnam’s bilateral relations with the four remaining EAEU member countries are still modest, accounting for only 3% of the total trade value between Vietnam and the EAEU block.
EFTA
The European Free Trade Association (EFTA) consists of four member states, namely Switzerland, Norway, Iceland and Liechtenstein. Vietnam’s trade value with the EFTA mainly comes from Switzerland and Norway, as Iceland and Liechtenstein account for a negligible value. According to preliminary statistics from the General Department of Vietnam Customs, in 2018, Vietnam’s total trade value with the EFTA was US$1.32 billion. The country’s trade flow with EFTA member states is relatively stable. Except for 2016 when precious metal prices soared, Vietnam usually runs a trade surplus with these countries.
CPTPP
Apart from traditional partners such as Japan and the EU, Vietnam’s trade relations with four CPTPP member countries, Canada, Chile, Mexico and Peru, have developed significantly. Of these, Vietnam has the first FTA ties with Canada, Mexico and Peru.
The two-way trade value between Vietnam and Canada totaled US$3.87 billion in 2018, of which Vietnam’s shipments to Canada valued US$3.01 billion, up 11% against 2017, and its imports rose 7.44% to US$858.9 million. Vietnam always posts a rising trade surplus with Canada. Vietnam-originated products imported into Canada are entitled to Canada’s Generalized System of Preferences (GSP) while Canada-originated goods imported into Vietnam enjoy the most-favored-nation (MFN) tariff regime.
Chile is experiencing a sustainable and inclusive economic recovery, with gross domestic product (GDP) forecast to grow 3.25 - 4.25% in 2019 and from 3 - 4% in 2020. In 2018, two-way trade turnover amounted at US$1.09 billion, down 15.12% against 2017. Vietnam’s exports fell 21.8% to US$781.71 million, while its imports looked up 8.4% to US$306.61 million. Chile is currently the third largest export market of Vietnam in Latin America after Mexico and Brazil. Vietnam's main exports to Chile are consumer goods such as footwear, apparels, clinker and cement, wooden furniture and rice. Chile pledged to remove 95.1% of total tariff lines upon the effective date of CPTPP and 99.9% in the 8th year.
Mexico is Vietnam’s third largest trading partner in Latin America after Brazil and Argentina. In 2018, Vietnam's export value to this market reached US$2.24 billion. Its major exports to Mexico included telephones, footwear, computers, textiles and garments. With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Mexico is committed to abolishing 77% of total tariff lines right from January 14, equivalent to 36.5% of its import value from Vietnam and 98% of tariff lines in the 10th year of CPTPP enforcement.
Peru is considered a potential, relatively suitable market for Vietnam, as 75% of the former’s importers and exporters are classified as small or medium in size. Vietnamese products can easily make inroads into this market as well as its neighbors like Ecuador, Colombia, Bolivia and Brazil. Currently, the two-way trade value is quite modest. In 2018, Vietnam’s exports to this market amounted at US$250 million. The CPTPP Agreement, expected to come into effect in 2019 in Peru, promises to give a strong boost to the two countries' trade relations. Peru is committed to eliminating 81% of its tariff lines.
Huong Ly
Vietnamese
