FTA with Asian Economic Union - European: large door opened
after years of negotiations, the last date of 29-5, the Free Trade Agreement (FTA) between Vietnam and the Union Economy Asia - Europe (including Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan) were signed. Vietnam became the first country outside the Commonwealth of Independent States (CIS) have FTA, opens up great opportunities for export of goods.
90% of tariff lines to be cut to 0%
Like bilateral and multilateral FTA with many other partners, the FTA between Vietnam (VN) and Asian Economic Union - European (Union) interested mainly to 8 main areas of trade in goods; service; investment and movement of natural persons; rules of origin; government procurement; trade defense; customs cooperation and trade facilitation goods; intellectual property and regulatory issues and institutions. Importantly, with this FTA, catalog product mix of the two areas will complement and promote exports and imports, less exclusion as the FTA in ASEAN or ASEAN + ...
Immediately after the FTA VN and the Union was executed, 90% of tariff lines of both sides will be reduced to 0%, or 90% of bilateral trade. Agreement has also achieved the basic goal of VN in place, these are the goods in high-priority attention are achieving favorable conditions. Such as fisheries, VN has achieved almost 100% of the volume of goods exported to enjoy 0% tax rate. For textiles and footwear also achieved more than 80% rate has returned 0% tax rate, the remainder will be reduced according to the schedule commitments. In addition, many items have the advantage of export to other countries in the Union, such as agricultural products, furniture ... will also enjoy low tax rates.
The VN agreed to open the market with a roadmap for the Union for some livestock products, some industrial commodities including machinery, equipment, vehicles, iron and steel, petroleum ... Generally, these items are not directly competitive with goods VN, which contrary contribute to further diversification of the domestic consumer market. Such as milk and dairy products, some cereals ... though VN lifted tax but in the present context, agricultural production of the Union primarily serve local demand, not concentrated Should the forecast for exports in the first five years of implementation of the agreement, the agricultural sector will not be affected VN marked by the importation of agricultural products from the FTA.
Need to change perception of exports to Russia
According Initial price of the Union, when the agreement takes effect, exports and imports both sides will reach 10-12 billion USD in 2020 (in 2014 reached about $ 4 billion). According to estimates by VN, exports of VN into Union will increase by about 18% - 20% annually.
Recognizing the opportunity to increase exports to the Union, many businesses (DN) said long countries now in the Union, especially Russia which is a longtime partner VN but due to high tax rates that the average level of annual growth is very low. VN Textile Group has pointed out that, each year in the Union countries imported about $ 17 billion in textiles and clothing, but the market share of Vietnamese enterprises accounts for only 2%, with a value of $ 700 million due to the applied tariffs for goods under quota in this area is very high. But when the FTA, turnover can be increased to 50% thanks to many tariff lines are cut, so the competitiveness of textiles VN will be better. Many enterprises in the fisheries sector are also very glad to FTA was signed. As enterprises have advantages in exporting catfish, Duong Ngoc Minh, Chairman Hung Vuong Company, said Russia was the second largest market after the US company, therefore, the lifting of taxes when FTA force as a condition for accelerated export enterprises.
Besides favorable from the tax cuts, the FTA also poses many challenges as geographical distance between VN and the countries in the Union so far, shipping is not easy interests. The recommendation from the Ministry of Trade and Industry, enterprises need to study carefully the road survey of transport, storage yards and warehouses ... to ensure the best cost while maintaining the quality of goods. Understanding the rules and regulations of the partner countries also impact negatively on the success or failure of the export by each country has its own characteristics, there are technical barriers as well as its own regulations. The risks in payment from the CIS countries in general has diminished, but for many reasons, payments in foreign currencies such as EUR, USD remains difficult ...
With a successful business experience in Russia - Market Home Union forces, some companies share, the most important thing is to have strategic partners last, there is a strong commitment to quality Vietnamese goods in order to change the perception goods VN in Russia, the word "used, cheap "proceed to" good quality, acceptable price ". Need to see the importance of cohesion to the system of distributors in your country to find footholds for goods. Consumption as well as the income of the Russian population is now higher, so the demand for quality goods must have, if only compete on prices will not stabilize.
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