Exports to EU need long-term vision

Friday, 2020-10-23 11:47:06
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Seafood is one of the items that has taken advantage of the incentives created by the EVFTA.
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NDO - Exporters are taking advantage of incentives from the EU-Vietnam Free Trade Agreement (EVFTA). However, there remain many issues to be addressed to boost sustainable exports to the EU.

Positive outcomes recognised

As one of the products benefiting most from the EVFTA, seafood export turnover saw positive growth in the two months since implementing the agreement. General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said that orders for Vietnamese shrimp increased by 10-15% over the same period last year and the demand for the product is expected to rise compared to the previous year.

Notably, the agreement is expected to bring about more benefits in the long term as importers have shown their interest in goods with a tariff reduction schedule from three to five years to develop strategies for market penetration in the long term after the tax reduction schedule is over.

Enterprises have also paid greater attention to international certification issues in order to meet EU standards and make better use of the opportunities emanating from this agreement in the near future.

Seafood is one of the items that has taken advantage of the incentives created by the EVFTA. Vice President and General Secretary of the Vietnam Association of Small and Medium Enterprises, To Hoai Nam, said that in the two months since coming into force, the EVFTA has brought about many positive results for export enterprises, especially agricultural enterprises, as a series of products such as rice, coffee, and fruit have seen export boosts to this market.

“The utilisation of the EVFTA has greatly contributed to helping Vietnam maintain its position as one of the few countries who enjoyed export growth in the first half of 2020 despite the disruption of the global trade”, Nam said.

According to the Ministry of Industry and Trade (MOIT), as of mid-October, two and a half months since the implementation of the EVFTA, about 23,800 sets of certificates of origin (C/O) of the EUR.1 form were granted to Vietnamese products worth a total US$963 million and allowing them to export to 28 EU countries.

Compared with other FTAs ​​such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the FTA between ASEAN and Hong Kong (China), the FTA between Vietnam and Cuba, and others, the number of C/Os under the EVFTA is much larger, demonstrating that businesses have effectively utilised the agreement. Of which, the value of footwear products applying for C/Os was about US$391 million, the value of aquatic products reached US$183.4 million, the value of plastic and plastic products was posted at US$49.1 million and the value of textiles and garments reached more than US$27 million.

Items that have applied for C/O of EUR.1 form with a high usage rate of 50 - 80% include seafood and footwear. The preferential tariff rates for these items under the EVFTA are lower than those in the Generalised Scheme of Preferences (GSP) and the standards of origin of EVFTA are looser or equivalent to the GSP.

Special attention to rules of origin

According to experts, the results thus far are only the first step. Because the EU is a large market with strict requirements, in the long run, Vietnamese enterprises who wish to participate in and access this market must meet certain standards and criteria prescribed by the market. This is a challenge, but it will boost the sustainable development of enterprises in the international trade playground.

The MOIT noted that in order to enjoy preferential tariffs, Vietnamese enterprises need to meet the rules of origin of the EVFTA as tariff preferences and rules of origin are parallel and inseparable.

To promptly support Vietnamese enterprises to take advantage of opportunities from the first days of the implementation of the agreement, the MOIT issued Circular No. 11/2020/TT-BCT on June 15, 2020 on the rules of origin in the EVFTA to serve as a legal basis to guide attention to them in Vietnam. The Circular took effect from the date the EVFTA came into force.

Truong Dinh Hoe said that one of the important issues in implementing the EVFTA is the certification of origin to enjoy preferential tariffs. Therefore, the first thing that businesses need to pay due attention to is building a transparent and scientific traceability system to meet the requirements related to certification of origin.

Therefore, the issue of traceability, chain linkage, and quality management in the supply chain system should be given maximum attention.

To Hoai Nam added that the EU is the most demanding market in the world, especially regarding rules of origin, so, if enterprises want to make use of the agreement effectively, they must not hurry but instead carefully research the market, thoroughly prepare resources, and produce high quality goods. In addition, with the impacts of the COVID-19 pandemic, the EU now has even stricter regulations on imported goods.

Amid this difficult situation as well as the issue of the limited resources of enterprises, the Government, ministries and sectors need to devise breakthrough policies and mechanisms to create a favourable environment to encourage entrepreneurship and creative business, especially supporting industries.

To develop supporting industries, it is necessary to no longer only rely on the previous advantage of cheap labour and enterprises must instead focus on new standards to meet the requirements of the development trends of the market. One such focus is to promote innovation based on science and technology.

However, the Vietnamese business community remains weak in scientific research for business initiatives and product development. “Therefore, to remove this barrier, it will be necessary to create conditions for enterprises to access scientific research projects to apply in production and business while also promoting the value of research projects - a great resource,” To Hoai Nam suggested.