Vietnamese businesses told to prepare for exploiting EU market

VietNamNet Bridge – News that Vietnam and the EU will kick start the negotiation for a Free Trade Agreement (FTA) in the time to come is good news for Vietnamese businesses. They have been told to immediately start preparations in order to successfully exploit the EU market.

News that Vietnam and the EU will kick start the negotiation for a Free Trade Agreement in the time to come is good news for Vietnamese businesses

On October 4, 2010, in Brussels, Vietnamese Prime Minister Nguyen Tan Dung had a talk with the EC chair Jose Manuel Barroso and witnessed the initialing of the frame Partnership and Cooperation Agreement (PCA). At the talk, the Vietnamese delegation and the EU came to an agreement that the bilateral negotiation for the FTA between Vietnam and EU will soon commence, after the technical team finishes its work, and the EU soon recognizes Vietnam’s market economy.

Prior to that, Stefaan Depypere, a senior official from the EU Trade Directorate met with Vietnamese reporters during his business- trip to Vietnam to evaluate the criteria for a market economy. He said that once an FTA is established between the EU and Vietnam, Vietnamese enterprises will see bigger opportunities in the EU market.

An official from the Department of Trade Policies for European Markets under the Ministry of Industry and Trade said that the main formula for FTAs is 90/10, which means that 90 percent of tax lines will be lowered to zero percent within 10 years of FTA implementation. As such, with the sharp tariff reduction, it is clear that both European and Vietnamese reap benefits when exploiting each other’s markets.

Though government agencies are still preparing for the negotiations for the agreement, trade experts have urged Vietnamese enterprises to be well prepared to grab the opportunities which will come when the FTA is signed.

According to MOIT, in the two way trade with the EU and Vietnam, Vietnam is exporting more than it is importing from the bloc. However, the trade surplus tends to decrease, since the import growth rate from the EU tends to be higher than the export growth rate to EU countries. Vietnamese enterprises now bear harder pressure from the enterprises coming from the countries which have joined the EU bloc.

“These are the countries which have the production industries similar to Vietnam, while their enterprises prove to be very competitive. If an FTE is set up, it is very likely that these enterprises will boost their exports to Vietnam, thus putting bigger pressure on Vietnamese enterprises,” said Nguyen Canh Cuong, Deputy Director of the Department of Trade Policies for European Market.

During the negotiations for FTA, Vietnamese agencies will have to reach agreements with the EU in many issues. The complexity of FTA, especially the FTA with a bloc of 27 members and different trade policies followed by different governments, will require the Vietnamese to make careful preparations.

Cuong said he can learn from the implementation of the FTAs that Vietnam signed before that Vietnamese enterprises always are slower than the foreign counterparts in taking full advantage of the FTAs. Therefore, Cuong also thinks that if the FTA with the EU is signed, European enterprises will be quicker in exploring Vietnam’s market.

Deputy Minister of Industry and Trade Tran Quoc Khanh said at the meeting earlier this week that technical preparations are being made to get ready for the negotiations for FTA.

Source: Dau tu