The Free Trade Agreement (FTA) is a double-edged sword as it brings bothopportunities and challenges to Vietnamese exports, said economicexperts.
Dr. Nguyen Minh Phong from the HanoiInstitute of Socio-economic Development said that the FTA signing hasprovided Vietnam with an equal position on all aspects with membercountries in the agreement and as a result, the country’s exports haveseen remarkable improvements in turnover, products and markets year byyear, except 2009 when the world suffered an economic crisis.
According to the Ministry of Industry and Trade (MoIT), Vietnam ’stotal export turnover reached nearly 63 billion USD in 2008, doublingthe figure of 2005, and increased to over 71.6 billion USD in 2010.
The FTA has not only affected Vietnam ’s export turnovers but alsohelped create impressive developments in economic cooperation betweenVietnam and other countries.
The impacts of theVietnam-US Bilateral Trade Agreement (BTA), an agreement similar to theFTA, on the two countries’ economic relations were cited as an example.
In 1995, two-way trade between Vietnam and theUS reached only 450 million USD but rose to 18 billion USD 15 yearslater. Vietnam ’s exports to the US earned over 12 billion USD in2009, ten times higher than the figure of 2002 when the BTA took effect.At present, the US is Vietnam ’s largest export market andinvestor.
After the US , Vietnam ’s export toASEAN has also remarkably increased with 11 billion USD in 2010, up 19percent over the previous year. The result was attributable to a taxreduction to 0-5 percent for almost all commodities exported to theASEAN market as committed in the ASEAN-China Free Trade Agreement, whichbecame effective in early 2010.
Similarly,commitments on tariff preferences in the Vietnam-Japan EconomicPartnership Agreement, which come into effect in October 2009, helpedVietnam earn 1.2 billion USD from garment exports to Japan for thefirst time in 2010, an increase of 20 percent against the previous year.
Regarding challenges for Vietnam , Phong notedthat the first challenge Vietnam is facing is the risk of anincreasing trade deficit due to weak competitiveness and restrictions onprice, technology and product structure.
In 2008,Vietnam ’s trade deficit was 17.5 billion USD, quadrupling the figure of2005, and mainly from China , which accounts for over 90 percent ofVietnam ’s total annual trade deficit since 2005.
In the coming time, Phong said that FTAs will have greater influence onVietnam’s export activities as the agreements’ deep tax reductionroadmaps are approaching deadlines, trade liberalisation will be clearerand technical barriers will become more diversified and complex.
To overcome this challenge, Vietnam should speed up its economicrestructuring, develop supporting industries, areas and products whereit has a competitive edge, and improve its import-export structure andposition in the global value chain, he stressed.
According to MoIT, Vietnam hasn’t yet signed a FTA with any singlecountry but joined ASEAN to sign and implement a series of FTAs with sixpartners in East Asia, including the ASEAN-China FTA (ACFTA), theASEAN-Korea FTA (AKFTA), the ASEAN-Japan Comprehensive EconomicPartnership Agreement (AJCEP), the ASEAN-India FTA (AIFTA), and theASEAN-Australia-New Zealand FTA (AANZFTA).
Atpresent, Vietnam is joining in negotiations on several other FTAs,including the Trans-Pacific Partnership Agreement (TPP), the ASEAN-EUFree Trade Agreement, the Comprehensive Economic Partnership Agreementwith Japan, the Vietnam-Chile Bilateral FTA and the Vietnam-EU BilateralFTA./.
Dr. Nguyen Minh Phong from the HanoiInstitute of Socio-economic Development said that the FTA signing hasprovided Vietnam with an equal position on all aspects with membercountries in the agreement and as a result, the country’s exports haveseen remarkable improvements in turnover, products and markets year byyear, except 2009 when the world suffered an economic crisis.
According to the Ministry of Industry and Trade (MoIT), Vietnam ’stotal export turnover reached nearly 63 billion USD in 2008, doublingthe figure of 2005, and increased to over 71.6 billion USD in 2010.
The FTA has not only affected Vietnam ’s export turnovers but alsohelped create impressive developments in economic cooperation betweenVietnam and other countries.
The impacts of theVietnam-US Bilateral Trade Agreement (BTA), an agreement similar to theFTA, on the two countries’ economic relations were cited as an example.
In 1995, two-way trade between Vietnam and theUS reached only 450 million USD but rose to 18 billion USD 15 yearslater. Vietnam ’s exports to the US earned over 12 billion USD in2009, ten times higher than the figure of 2002 when the BTA took effect.At present, the US is Vietnam ’s largest export market andinvestor.
After the US , Vietnam ’s export toASEAN has also remarkably increased with 11 billion USD in 2010, up 19percent over the previous year. The result was attributable to a taxreduction to 0-5 percent for almost all commodities exported to theASEAN market as committed in the ASEAN-China Free Trade Agreement, whichbecame effective in early 2010.
Similarly,commitments on tariff preferences in the Vietnam-Japan EconomicPartnership Agreement, which come into effect in October 2009, helpedVietnam earn 1.2 billion USD from garment exports to Japan for thefirst time in 2010, an increase of 20 percent against the previous year.
Regarding challenges for Vietnam , Phong notedthat the first challenge Vietnam is facing is the risk of anincreasing trade deficit due to weak competitiveness and restrictions onprice, technology and product structure.
In 2008,Vietnam ’s trade deficit was 17.5 billion USD, quadrupling the figure of2005, and mainly from China , which accounts for over 90 percent ofVietnam ’s total annual trade deficit since 2005.
In the coming time, Phong said that FTAs will have greater influence onVietnam’s export activities as the agreements’ deep tax reductionroadmaps are approaching deadlines, trade liberalisation will be clearerand technical barriers will become more diversified and complex.
To overcome this challenge, Vietnam should speed up its economicrestructuring, develop supporting industries, areas and products whereit has a competitive edge, and improve its import-export structure andposition in the global value chain, he stressed.
According to MoIT, Vietnam hasn’t yet signed a FTA with any singlecountry but joined ASEAN to sign and implement a series of FTAs with sixpartners in East Asia, including the ASEAN-China FTA (ACFTA), theASEAN-Korea FTA (AKFTA), the ASEAN-Japan Comprehensive EconomicPartnership Agreement (AJCEP), the ASEAN-India FTA (AIFTA), and theASEAN-Australia-New Zealand FTA (AANZFTA).
Atpresent, Vietnam is joining in negotiations on several other FTAs,including the Trans-Pacific Partnership Agreement (TPP), the ASEAN-EUFree Trade Agreement, the Comprehensive Economic Partnership Agreementwith Japan, the Vietnam-Chile Bilateral FTA and the Vietnam-EU BilateralFTA./.
