Implementing trade agreements effectively, challenging Vietnamese businesses

DNHN - Vietnamese companies have gradually realized their commitments in trade agreements, especially new-generation Free Trade Agreements (FTAs). However, challenges remain in the effective use of these trades.

Increase trade

The Ministry of Industry and Trade has taken measures to help businesses take advantage of opportunities from deals to promote exports to markets of FTA-signing countries. MsNguyen Cam Trang, Deputy Director of the Department of Foreign Trade, Ministry of Industry and Trade, said that the most recent new-generation FTAs ​​such as the EU-Vietnam Free Trade Agreement (EVFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the UK-Vietnam Free Trade Agreement (UKVFTA) have been proven to be in force.

The EVFTA has made significant contributions to the economic development of both sides. In 2021, bilateral trade turnover increase by 14.8% to 63.6 billion USD. Of the total, Vietnam's exports to the EU reached US$45.8 billion, up 14.2 per cent year-on-year, while imports reached US$17.9 billion, up 16.5 per cent from the previous year. UKVFTA, which comes into effect on 1 May 2021, has also shed light on Vietnam's economic picture.

FTAs have contributed to transforming Vietnam's export structure in a positive direction when increasing the proportion of processed goods and reducing the proportion of primary and raw exports.

Competition looms

Trade agreements created a competitive advantage for the Vietnamese exported goodsunfavourable conditions for the penetration of Vietnamese goods into export markets, but also many challenges.

The Regional Comprehensive Economic Partnership (RCEP), which took effect on January 1, 2022, has contributed to promoting Vietnam's a trade and investment with ASEAN countries and five partners (Australia, New Zealand, Japan, China and Korea). However, the effective implementation of the trade agreement may face more challenges because the economic structure of RCEP member countries is similar to that of Vietnam. Luong Hoang Thai, Director of the Multilateral Trade Policy Department, Ministry of Industry and Trade said. "It takes years to inspect the benefits of RCEP and it may not be as significant as the CPTPP and EVFTA".

Due to easier trades of goods among RCEP members, Vietnamese companies may face more competition in both domestic and export markets. Failure to adapt the o new competition mayturn opportunities into challenges.

The EU applies strict quality standards, including regulations on food safety, traceability and prodlabellingling to imported goods. Currently, the default maximum residue limit (MRL) of 0.01 mg/kg is applied to many pesticides, which is a low threshold. In addition, the EVFTA is the EU's first EVFTA in the region but it is negotiating trade agreements with other countries in the region. Therefore, Vietnamese companies need to make the most of opportunities from EVFTA to create a strong position, at the same time enhance investment attraction, promote technology transfer to participating more deeply in the global supply chain.

Mai Anh