FTAs provide vital platform for Vietnam’s economic recovery

FTAs provide vital platform for Vietnam’s economic recovery

In the context of the Covid-19 impact on the global economy and trade, free trade agreements (FTAs) provide not only leverage to promote trade but also an advantage for the Vietnamese business community. Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, talked about FTAs in an interview with Vietnam Economic News’ Thu Phuong and Hoa Quynh.

Vietnam’s garment and textile exports to Mexico have increased strongly since the CPTPP went into effect

What role do FTAs play?

The year 2021 marks a difficult year for the national economy in general and businesses in particular. However, there have been many bright spots in the gloomy economic picture. Vietnam’s export turnover has increased strongly, with export growth of more than 20 percent in the first eight months of the year. Growth has been recorded in not only traditional markets, such as China and ASEAN countries, but also markets with which Vietnam has FTAs.

Double-digit growth of Vietnam’s exports to Canada and Mexico has been maintained. Vietnam’s exports to Peru have also experienced impressive growth, while export growth to the EU reached about 12 percent in the first eight months of 2021.

Vietnam has also started importing raw materials, as reflected through an increase in import turnover. Vietnam’s import turnover of fabrics has increased significantly since the EU-Vietnam Free Trade Agreement (EVFTA) went into effect. Vietnamese businesses have made good use of incentives provided by the EVFTA to import fabric materials in order to meet EVFTA rules of origin and export finished products to the EU market. In addition, commodity imports from markets with which Vietnam has FTAs have contributed to the diversification of the domestic market.

Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade

What are the emerging opportunities and challenges?

More and more businesses will have a better, full and accurate understanding of FTAs. They will pay greater attention to markets with which Vietnam has FTAs, such as Canada, Mexico and Peru, offering opportunities for Vietnam’s export growth.

According to a 2020 report on the implementation of the EVFTA and the Comprehensive and Progress Agreement for Trans-Pacific Partnership (CPTPP), localities focused heavily on traditional markets, while exports to markets with which Vietnam has FTAs remained modest. This is also an opportunity for localities to pay more attention to coordination with businesses to make effective use of FTAs.

Vietnam is continuing its institutional reform commitments under the new-generation FTAs in an aim to boost exports and attract more investment from markets with which it has FTAs.

What programs and activities will the Ministry of Industry and Trade deploy?

In addition to cutting red tape, the Ministry of Industry and Trade will continue to strengthen information dissemination on FTAs to help businesses have a better, full and accurate understanding. The ministry has developed the Vietnam Free Trade Agreement Portal (FTAP) to help the domestic business community make the most of opportunities provided by trade deals to which Vietnam is a signatory.

The FTAP provides a smart online tool for businesses and others who wish to explore various FTA commitments regarding import duties, rules of origin, and services and investment. It also offers information and knowledge essential to foreign traders, such as market updates and local regulations on imports and exports as well as sustainable development.

The portal will keep up-to-date with information on all FTAs, helping businesses choose the trade deal that best provides them with opportunities to make effective use of incentives.

VietNam Economic News