FTAs give fresh impetus to economic growth, market diversification

In fact, new-generation FTAs such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the EU – Vietnam FTA (EVFTA), and the UK – Vietnam FTA (UKVFTA) have opened up a wealth of opportunities for Vietnam to diversify its export and import markets and at the same time attract greater foreign investment.

To Thi Huong Lan, deputy director of the Thai Binh provincial Department of Industry and Trade, emphasised that the province’s export turnover has increased to 40% thanks to advantages brought about by these FTAs, adding that local firms have utilised tariff incentives from FTAs in an effective manner.

Lan revealed that the majority of the locality’s export products have met the origin criteria set forth by the new-generation FTAs, while businesses have moved to take advantage of tax incentives in a bid to boost exports to several demanding markets, including Japan.

Phan Thi Thanh Xuan, general secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said that while most major markets have shrunk due to decreasing demand, exports to the UK even witnessed impressive growth of up to 11% last year.

The positive export growth recorded in the UK market helped the Vietnamese leather and footwear industry not suffer any steep declines last year.

Xuan analysed that the UK is also a major importer of Vietnamese footwear, particularly as these products are almost no longer produced in the UK, a factor that will open up bright export prospects for Vietnamese businesses moving forward.

At present, local firms are focused on applying British standards and regulations, as well as testing equipment in order to evaluate product quality to further accelerate exports to the demanding market.

Thanks to effective cooperation among relevant Vietnamese agencies and the German Organization for International Cooperation, Xuan said Lefaso has supported small and medium-sized enterprises (SMEs) to improve product quality, especially when exporting quality shoe products to the European market.

Further penetration into the UK market will also help to create opportunities for Vietnamese products to make greater inroads into other demanding markets around the world, she noted.

According to experts, although FTAs have brought about plenty of positive effects, Vietnamese enterprises have yet to fully tap into the FTA incentives.

In fact, the proportion of export turnover to FTA markets has so far failed to meet expectations, while the rate of taking advantage of preferential certificate of origin (C/O) is not high.

This will therefore require greater efforts and stricter coordination from relevant agencies and craft associations in supporting businesses in gaining greater insights into the advantages of each FTA to bring about the highest possible level efficiency, industry insiders stressed.

With regard to the regulations of new-generation FTAs, Do Thi Thuy Huong, member of the Executive Committee of the Vietnam Electronic Industries Association, underlined the need to grasp the latest rules set forth by foreign importers.

Huong revealed that local businesses have received effective support from the German Corporation for International Cooperation (GIZ), which has provided them with the latest standards set by the German Supply Chain Due Diligence Act (LkSG).

The programme, which took effect since January 1, 2023, imposes certain obligations on organisations with respect to the conduct of due diligence implicating adverse environmental and human rights impacts in supply chains. 

This is one of the regulations which local exporters in the supply chain are required to abide by in order to boost exports to the EU in a sustainable manner, concluded Huong.