At present, Vietnam exports five staples including footwear, garments and textiles, coffee, seafood and wooden furniture to the EU. The current tariff rate on Vietnam’s goods hover around 4.1 percent, but garments, seafood, and footwear have to pay tariffs of up to 11.7 percent, 10.8 percent and 12.4 percent respectively.
The EU which has 27 members with a total population of 500 million, the EU is the largest importer of garments and textiles in the world, making up half of the world’s import volume. The bloc’s garment and textile imports are expected to hit US$234.2 billion in 2013 including US$2.37 billion worth of products from Vietnam.
Under the FTA, tariffs on garments and textiles will be slashed from 11.7 percent to zero percent, therefore facilitating the sector’s growth.
Domestic garment and textile businesses have asked the Government to pay attention to the principles of origin and the time period for two-way tariff cut during the negotiation process.
Regarding the fisheries sector, Secretary General of the Vietnam Association of Seafood Exporter and Producers (VASEP) Truong Dinh Hoe said that the FTA should help the sector abide by sanitary and phytosanitary (SPS) measures and market access.
The EU is an important market for Vietnam, he said, adding that the removal of tariffs on the majority of export items will create favourable conditions for Vietnam to compete against its rivals.
According to Vo Tan Thanh, Director of the Ho Chi Minh City Chapter of the Vietnam Chamber of Commerce and Industry, the agreement will help improve the business environment and facilitate direct investments in Vietnam from the EU and other nations.
Bui Huy Son, Head of the Ministry of Trade’s Asia-Pacific Market Department, who is also Director of the EU-MUTRAP project, said the EU is Vietnam’s leading partner in economics, trade and investment.
The FTA is entering the third round of negotiation and the process is scheduled for completion in 2014.
He emphasized the urgent need for businesses to contribute their opinions to the FTA negotiations as it is not only in their interest, but also necessary to the negotiations.
Last year, the General Statistics Office said the EU became Vietnam’s largest importer with revenues of US$20.3 billion, representing 17.7 percent of the nation’s total export turnover.
The EU purchases 7.7 percent of Vietnam-made products. Vietnam’s trade surplus is estimated at US$11.5 billion with the EU and US$14.9 billion with the US.
