Monday, February 17, 2020
With EVFTA, Vietnam's exports will have access to an extremely large market of up to USD 18,000 billion of 27 EU member countries, Which will immediately fill the gap that the Chinese market has just created.
EVFTA: Motivation For Vietnam's Export Growth. Credit: VietnamCredit
Many industries will enjoy high export growth
The European Parliament has officially ratified the European Union Vietnam Free Trade Agreement (EVFTA). This agreement will come into effect soon if the Vietnamese National Assembly passes it at the next National Assembly Meeting. Accordingly, many products will enjoy the preferential tax rate of 0% immediately and more than 99% of tariff lines will be removed according to the roadmap, creating favorable conditions for many goods which have had strengths in exporting to the EU market such as textile, footwear, agriculture, fisheries, wood products, including products of electronics or processing and manufacturing industries, etc.
When answering questions about export opportunities and the possibility of achieving the export value target of USD 300 billion in 2020 set by the Government when the free trade agreement between Vietnam and the EU is implemented, the Ministry Minister of Industry and Trade Tran Tuan Anh said that the EU is an extremely large market with a scale of up to USD 18,000 billion of 27 member countries. However, the share of Vietnam's exports to the EU is not commensurate with its potential.
Although Vietnam's export to the EU has grown rapidly in recent years, it only reached about USD 41.5 billion in 2019. When the EVFTA comes into effect, the tariff incentives will create huge opportunities for export of Vietnamese goods to this market, as well as a condition for Vietnamese goods to increase competitiveness in terms of price.
Currently, only about 40% of Vietnam's total exports to the EU enjoy the 0% tax incentive. For the remaining 60%, Vietnam is competing with other exporting countries to the EU which are given very significant tax preferential rates.
According to economist Dr. Vo Tri Thanh, businesses and people are the subjects of EVFTA. With great complementarity, this agreement will bring win-win benefits to both parties: Vietnam and the European Union (EU).
Ms. Nguyen Thi Huyen - Director of Vietnam Cinnamon Production and Export Company said that from actual production and export of cinnamon and anise products to the EU market for many years, her company is ready to export more to the EU market to seize the opportunity of enjoying reduced import duties from 14% to 0% when EVFTA takes effect.
According to Mr. Pham Van Cuong, General Director of G.O.C Export Food Processing Joint Stock Company, the European Union (EU) is a fastidious market and applies very high standards for imported products. Therefore, meeting EU standards will be an opportunity for businesses to improve their management and corporate governance as well as open opportunities in other markets.
“When businesses set product standards for export to the EU, they are upgrading their own management systems. Now our company only has 2 people doing logistics that carry out import and export of about 4,000 containers of goods every year. And when the goods are exported to the EU, it is very easy for us to export to other markets such as the markets of the US, Japan, and Korea, etc. because if we have a very good quality management system, other markets can place their trusts in our own products. When we have a good quality management system, we can sell goods to the whole world” Mr. Cuong said.
According to calculations by the Ministry of Planning and Investment, Vietnam's export turnover to the EU will increase by about 20% in 2020, about 42.7% in 2025 and about 44.37% in 2030 compared to the previous years when there was no EVFTA.
The export growth rate of some agricultural products to the EU in 2025 is estimated as follows: rice increases by 65%, sugar increases by 8%, pork increases by 4%, forestry products increase by 3%, cattle and poultry meat increases by 4%, beverages and tobacco increase by 5%. Products of manufacturing and processing industries will increase as follows: textile (67%), apparel (81%), leather and footwear (99%). Service groups will also increase: water transport (100%), air transport (141%), finance and insurance (21%), and other business services (80%).