|A production line of the Viet Nam-Korea Ex-Import Garment Joinstock Company in Hoa Binh Province. The Viet Nam-EU Free Trade Agreement (FTA) that is expected to conclude by the end of 2014, would provide many tax preferentials for key Vietnamese commodities such as garments and textiles, leather, footwear and food. — VNA/VNS Photo Trong Dat
HCM CITY (VNS)— Vietnamese enterprises were urged to contribute their opinions about the upcoming EU -Viet Nam Free Trade Agreement (FTA) that is under negotiation, a workshop heard yesterday in HCM City.
The EU is one of Viet Nam's leading trade and investment partners.
Last year, it emerged as the largest importer of Vietnamese products with total value of US$20.3 billion, a year-on-year increase of 22.5 per cent, accounting for 17.7 per cent of the country's total exports.
Currently, Viet Nam and the EU are negotiating an FTA, with two negotiation rounds completed and the third negotiation round planned for next month, said Jean Jacques Bouflet, minister counsellor of the EU delegation to Viet Nam.
The two sides are expected to conclude the FTA by the end of 2014, Bouflet spoke at the Viet Nam-EU Free Trade Agreement workshop co-organised by the European Trade Policy and Investment Support Project (EU-MUTRAP) and the Viet Nam Chamber of Commerce and Industry's HCM City branch co-organised by the European Trade Policy and Investment Support Project (EU-MUTRAP) and the Viet Nam Chamber of Commerce and Industry's HCM City branch.
The event provided information about the impacts of the FTA on key sectors, and described the opportunities and challenges that enterprises may encounter once it enters into force.
Bouflet said the FTA would help reduce up to 90 per cent of tariff lines on Vietnamese exports to the EU to zero, including those for some important key commodities such as garments and textiles, leather, footwear and food, which are currently still high for Viet Nam, even though the country enjoys benefits from the Generalised System of Preferences (GSP).
Import tax reductions in line with the FTA would facilitate Vietnamese exporters and help them increase exports to the EU, especially products facing fierce competition from foreign rivals like China and others that have yet to sign an FTA with EU, according to Bouflet.
In turn, the FTA would enable Viet Nam to benefit from high-quality imports and increase technological transfer, according to Claudio Dordi, Technical Assistance Team Leader of the EU-MUTRAP Project.
Increased high-quality imports would in return help raise the quality of Viet Nam's exports, and improve companies' competitiveness in the long-term, he said.
In addition, he said participating in the FTA would increase EU investment in Viet Nam.
Besides such advantages, the Viet Nam–EU FTA would also present challenges, including requirements on rules of origin and technical barriers, for Viet Nam companies, delegates said.
Le Trieu Dung, deputy head of the Department of Multi-lateral Trade Policy under the Ministry of Industry and Trade, said "to enjoy tax incentives, local companies must meet strict rules of origin of raw materials and accessories required by the EU."
However, this is a big hurdle for enterprises since they still relied on material imports.
"There are some technical issues that could be a big challenge for Vietnamese enterprises," Bouflet said. "If Vietnamese companies want to sell products to the EU market, they must have updated technical and health standards and the expectation of EU consumers."
Dung as well as other delegates called on local enterprises to keep track and provide input on FTA negotiations.
They have also urged domestic enterprises to change the structure of their product lines exported to the EU market so they can enjoy more benefits when the FTA goes into effect.
Independence in raw-material sourcing, improvement of governance capacity and competitive capacity are among issues that Vietnamese enterprises should take into account, according to Nguyen Van Tuan, deputy secretary general of the Viet Nam Textile and Apparel Association. — VNS