The next-generation FTA with the EU is believed to pave the way for Vietnam to diversify export markets and ease reliance on China.
Not putting all eggs into one basket
The EU Parliament has ratified the EU-Vietnam FTA.m which needs the ratification of the Vietnamese National Assembly to take effect.
To date, Vietnam has signed 17 FTAs and EVFTA is one of the two next-generation agreements.
According to Pham Tat Thang, senior researcher of the Ministry of Industry and Trade (MOIT), EVFTA is an agreement with the highest level commitments on market opening. Therefore, EVFTA opens opportunities for Vietnam to diversify the markets and not rely on China or any other market.
|EVFTA confirms Vietnam's geopolitical position in Southeast Asia. The country and Singapore have become the focal points for the European economy to penetrate Southeast Asia.|
EVFTA confirms Vietnam's geopolitical position in Southeast Asia. The country and Singapore have become the focal points for the European economy to penetrate Southeast Asia.
It is expected that modern technologies and capital flow from Europe will come to Vietnam, especially in high technology, agriculture, mechanical engineering and information technology.
Meanwhile, the EU hopes that the agreement will open a path for it to undertake government programs and infrastructure projects, especially in aviation and seaport sectors.
Above all, since the EU is one of the high-end markets in the world, the agreement will prompt Vietnam to carry out institutional reform to open the market and integrate with the world.
Thang said Vietnam’s export turnover from every market (the US, EU, China and ASEAN) needs to account for one-fourth to one-fifth of its total export turnover.
“Vietnam should not put all eggs into one basket, it should not rely too much on one market,” Thang said, adding that Vietnam has gained success recently in expanding markets.
Dragon fruit, for example, is mostly exported to China. Vietnam recently negotiated to export dragon fruit to the US market as well. Dragon fruit is also exported to Australia and some businesses have begun exporting the fruit to India.
Preferences in FTA
Although EVFTA will bring great opportunities to Vietnam’s products, Thang said that it won’t be easy to enjoy preferential tariffs if Vietnam’s enterprises cannot meet the standards and technical barriers set by the EU.
He also warned that if enterprises cannot improve their capability and the quality of products, they will not only fail to enter the EU market, but also lose the home market.
According to the General Department of Customs (GDC), in 2019, the total import/export turnover between Vietnam and the EU with 28 member countries was $56.4 billion, or 11 percent of Vietnam’s total import/export turnover.
European companies are eager to grasp new business and investment opportunities from the EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement.
Businesses in logistics and agricultural processing are embracing ambitious expansion plans to effectively cash in on opportunities from the EU-Vietnam Free Trade Agreement (EVFTA).