Nation readies for EU trade pact
Viet Nam News
Nation readies for EU trade pact
3 March 2011
HA NOI — Vietnamese trade associations need to begin considering what concessions key sectors are willing to make in exchange for tariff reductions from the European Union, as the Free Trade Agreement with the EU comes up for negotiations.
Such was the message delivered by the seminar entiled "Viet Nam-EU Free Trade Agreement Negotiations: Opportunities and Challenges for Viet Nam", held yesterday in Ha Noi by the Viet Nam Chamber of Commerce and Industry, with the support of the Multilateral Trade Assistance Project III (MUTRAP III).
The negotiation of an FTA was seen as an important opportunity to discuss and deal with problems faced by Vietnamese exporters in accessing the EU market. The FTA would include provisions on services, industrial sectors, protection of intellectual property, public procurement, unfair competition, transparency of regulations and sustainable development, e.g., environmental and social rights.
Specific commitments would likely be negotiated to eliminate non-tariff trade barriers applicable to automobiles, pharmaceuticals and electronics.
MUTRAP expert Claudio Dordi told the seminar that the EU already applied relatively low tariffs on imports, and that the average tariffs applied by the EU on imports from Viet Nam had been steadily decreasing. In 2009, they averaged around 4.1 per cent, although higher average tariffs were applied to some products, e.g., apparel and clothing (11.7 per cent), seafood (10.8 per cent) and footwear (12.4 per cent).
The elimination of tariffs that would come about under the FTA would therefore provide important advantages to Viet Nam in comparison to competitors, in the EU markets, Dordi said.
Meanwhile, Viet Nam’s tariffs on exports from the EU are also quite low – 3.4 per cent on machinery, 2 per cent on pharmaceuticals, 2 per cent on iron, 1.3 per cent on optical and medical equipment, and 0 per cent on aircraft. However, there are high tariff peaks on specific products, from 10 per cent on pharmaceuticals to 90 per cent for automobiles.
In conceding some of these tariffs, Viet Nam would also gain on the import side, as import duties would be reduced on EU exports of strategic materials needed by the domestic industrial sector to upgrade technology and increase productivity and competitiveness. Viet Nam would be able to obtain high-quality materials at a cheaper cost.
"Reseach on FTAs that the EU has signed with developing countries like Viet Nam has shown that FTAs have consistently positive impacts on bilateral trade," said the secretary of the Chamber of Commerce and Industry’s International Trade Policy Consulting Council, Nguyen Thi Thu Trang.
The EU-Mexico FTA, for example, increased trade between the two countries by 207 per cent between 1999 and 2008, and worker and technology transfers were also significantly improved, Trang said.
The biggest gains for Viet Nam would come from increased EU investment in support industries in Viet Nam, as well as increased Vietnamese exports to the EU, and from cheaper strategic imports from the EU that would enable Viet Nam to upgrade its technology, some representatives said.
Viet Nam is an export-driven economy and the EU is one of the nation’s key commercial partners. Exports to the EU reach US$12.6 billion in 2009, accounting for 14 per cent of gross domestic product and representing about 17 per cent of all exports.
Liberalisation of trade would cut the trade deficit and even improve State budget revenue, as revenues from increased imports would exceed the losses due to tariff reductions, Trang said. — VNS
