FTAs boost Vietnam-Latin America trade

FTAs boost Vietnam-Latin America trade

Trade between Vietnam and Latin America has experienced impressive growth thanks to efficient implementation of free trade agreements (FTAs).

Tremendous growth

In the first 10 months of 2022, trade between Vietnam and Latin American countries reached US$18.7 billion (up 10.5 percent from the same period in 2021), including Vietnam’s exports worth US$10.2 billion (up 5.3 percent) and Vietnam's imports worth US$8.6 billion (up 17.3 percent). Apart from major markets of Brazil, Mexico, Argentina and Chile, newly emerging markets of Panama, Colombia and Peru have become bright spots in Vietnam's trade with Latin America.

Vietnamese and Latin American enterprises explore business cooperation opportunities

In terms of Vietnam’s trade exchange, Latin America has always been among the markets with the highest growth. Not only a potential export market for Vietnam's key products such as garment and textile, footwear, and agricultural and aquatic products, Latin America is also an important source of raw materials for the Vietnamese processing industry with such products as corn, soybean, and animal feed.

Vietnam and its Latin American partners are efficiently implementing free trade deals to create leverage in economic, trade and investment ties, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-Chile Free Trade Agreement and the Vietnam-Cuba Trade Agreement, which have all been boosting trade and investment relations.

Phan Minh Thong, Chair of Phuc Sinh Group, a successful exporter to Latin America, said his group has sold goods to Colombia, Chile, Peru, and Mexico and imported a number of items from these countries. Phuc Sinh also bought pepper from Brazil, he added. In 2019, before the pandemic, Phuc Sinh exported goods worth US$830,000 to Latin American markets, with the value growing more than 450 percent to reach US$4.6 million in 2021. The Latin American market has its own unique, interesting business and indigenous cultures, and market approach suitable to this market would help exporters improve their niches and efficiency, Thong said.

Not only a potential importer of Vietnamese garment, textile and footwear, Latin America is also an important source of raw materials for Vietnam’s processing industry with such products as corn and soybean

Major room for trade

Despite its growth, the US$21.4-billion bilateral trade accounts for only three percent of Vietnam’s global trade, suggesting major room for trade development with Latin America.

Ngo Manh Khoi, Head of the Vietnam Trade Office in Argentina, said Argentina is one of the four members of the Southern Common Market (MERCOSUR) with nearly 300 million residents and a gross domestic product (GDP) of US$2.2 trillion, which has a high demand for textiles, garments and agricultural products. Argentina imports 45 million tonnes of coffee each year, 80 percent from Brazil. In recent years, Vietnamese coffee enterprises have surveyed the Argentinian market and see potential opportunities to increase coffee exports, he said.

However, according to Phan Minh Thong, Chair of Phuc Sinh Group, the cost of transportation to Latin American markets is too high, importers often make deferred payments, and the language barrier is also a problem, as Spanish is more popular than English in these markets.

Thong advised exporters to Latin America to study their customers, norms, standards and regulations/trade barriers of regional markets if they are to reach favorable, efficient trade.

Vo Thi Phuong Lan, Chair and General Director of Amerasian Shipping Logistics Corp (ASL) recommends that enterprises choose shipping lines going directly to Latin American ports such as those in Mexico, Cuba, and Argentina, and leading logistics companies that offer package solutions to save time and reduce costs.

VietNam Economic News