Vietnam’s with FTAs: Boon or Bane?
Vietnamese enterprises can either adapt and move up the global supply chain, or stand by while imported goods flood the country’s market while 2018 brings newer and bigger free trade agreements (FTAs). As from MoIT information, from 2018 onward, 85 per cent of Vietnamese exports will be subject to significantly lowered tariff levels of zero to 5 per cent.
Vietnamese businesses will benefit more from bilateral and multilateral FTAs with partner countries such as Hong Kong, Japan and the Republic of Korea (RoK). Domestic enterprises focus on meeting standards set by the Vietnam-Korea FTA (VKFTA) and the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP), since they offer more special tariff treatments at fewer standard requirements than others. The origin rules would encourage the country to produce locally, rather than importing materials and parts.
Currently, the Vietnamese textile and apparel industry has to import 70 per cent of its raw materials, 42 per cent of which come from China and the rest from ASEAN and the RoK.
Imports eligible for zero tariffs mainly come from ASEAN-related trade agreements, though pacts signed with Japan, China, RoK and the Eurasian Economic Coalition also boast a significant amount, according to 2017 year-end reports from the General Department of Vietnam Customs (GDVC).
Similarly, the Vietnam’s Special Preferential Tariff Schedule for the Implementation of the ASEAN Goods Trade Agreement between 2018 and 2022 indicates a drop of 0.9 per cent in average tariff levels across all imports from 2017’s number, as calculated by the GDVC.
The MoIT had made efforts to cut administrative procedures to help domestic enterprises take advantage of tariff preferences and rules of origin with hope that if domestic businesses understand and follow these FTAs’ rules of origin, they will be able to take advantage of upcoming opportunities to enhance added value and ensure sustainable growth.
Source: Vietnam News