In the past few years, trade between Vietnam and EU has been on a continuous rise. The EU is currently Vietnam’s second biggest export market. In the first half of this year, the total import-export turnover to EU touched 21.2 billion USD, posting a 9.05 percent year-on-year rise. Of this, Vietnam’s exports to EU were worth 16.2 billion USD and imports were 4.97 billion USD, both recording an 8.68 percent and 10.28 percent increase, respectively, from the same period last year.
Vietnamese experts assess that the EU is an open market with an integrated legal framework for all its members which can offer more export opportunities to Vietnamese firms. It is expected that the annual growth rate of Vietnam’s export turnover to EU could be 4 to 6 percentage points higher once the EVFTA comes into effect. The EVFTA can help Vietnam promote the export of key products such as garments and textiles, leather shoes and seafood to one of the most developed economic regions in the world.
However, experts warn that Vietnamese companies had so far only been shipping raw materials therefore they can not take fully advantages of the EVFTA. Once the EVFTA agreement goes into effect, the EU will eliminate import duties on approximately 85.6 per cent of its tariffs lines on Vietnamese products. After seven years, 99 per cent of EU tariffs will be removed for Vietnamese products. Vietnamese textiles, footwear, and seafood products (except for canned tuna and fish balls) will incur no import duties within seven years after the agreement takes effect.
According to Mr. Truong Dinh Tuyen, former Minister of Commerce, said the EVFTA would mean greater export opportunities for Vietnamese firms as the EU market was bigger than the US and Japan in terms of marketshare and value.
However, a survey of the Central Institute for Economic Development (CIEM) shows that around 30 per cent of private firms had no plans in place to increase their business operations for their EU partners. Some did not even pay attention to renewal plans for long-term strategies.
In addition, the EU is a demanding market, and Vietnamese companies can face issues relating to assessment, retention, competition and domination of the market. According to Mr. Tran Quoc Khanh, Deputy minister of the Ministry of Industry and Trade (MoIT), Vietnamese businesses should be active in seeking information about markets to further penetrate into distribution systems abroad to improve their export turnove.
Moreover, Mr. Truong Dinh Tuyen said under the World Trade Organisation principles, the importing companies have the right to initiate anti-dumping duty and impose sanitary and phytosanitary (SPS) non-tariff barriers and technical barriers to trade (TBT).
Vietnamese companies also can be levied anti-dumping taxes if they focus on only one market. Domestic firms should come up with suitable policies to avoid concentrating on a certain market or a specific product.
Mr.Truong Dinh Tuyen advised Vietnamese firms to take part in exhibitions and fairs in the EU and visit supermarket chains in the EU to understand consumption habits. The most important thing to promote export is to pay attention to the quality of goods and meet international standards, Mr.Truong Dinh Tuyen added.
Mr.Valentin Tran, Exporting Director of Casino, said he was optimistic about Vietnam’s exports to the EU and that Vietnamese goods would benefit from zero tax. Firms should understand the market properly.
One of the Vietnamese firms’ top concern is the technology may not meet the requirements. Hence, the Vietnamese firms prefer to export raw products and letting EU firms package and label the products. This means that Vietnamese products could lose their trademark in the EU market if they did not register brand names and geographical location.
Vietnam’s strength of offering inexpensive products may no longer be an advantage once the EVFTA commitments are applicable. Product quality and trademark will be the decisive factors in the market.
Mr. Valentin Tran said that it will be useful if Vietnamese firms develop items that are in low supply instead of trying to offer similar products at lower costs.
According to Mr. Dang Hoang Hai, Director of EU Market Department under the MoIT, Vietnamese firms should know the tax cut roadmap under the EVFTA to make precise calculations for their products and draw up long-term export plans. Meanwhile, Mr. Bui Huy Son, Director of Vietnam Trade Promotion Agency under the MoIT, expressed that the country had the ability to conquer the EU market once the EVFTA takes effect but Vietnam have only two years left to improve its capacity through reforms of mechanism and policies in order to gain greater benefits from the EVFTA.
