Vietnamese businesses should prepare to deal with potential trade barriers that could arise early next year when the European Union-Vietnam Free Trade Agreement (EVFTA) takes effect, experts have said.

Representatives of various firms exchange products to be exported to the EU market
on the sidelines of the forum on December 19 (Photo: saigontimes.vn)

Pham Binh An, Director of the HCM City International Integration Support Centre, said the EVFTA was expected to increase Vietnam’s GDP by 4.3 percent by 2030, and exports to the EU could surge by about 44 percent by 2030.

Speaking at a forum on international economic integration in Ho Chi Minh City on December 19, An noted, however, that trade remedies such as anti-dumping, anti-subsidy and safeguard measures could arise on Vietnamese exports.

Exporters should restructure their production and export output to avoid anti-dumping and anti-subsidy investigations, and “should follow product origin rules and trade fraud to avoid lawsuits”, he said. 

According to recent data from the Provincial Competitiveness Index Report, only 1.55 percent of Vietnamese enterprises surveyed had in-depth knowledge of the EVFTA. More than 65 percent of the surveyed enterprises had only heard of it briefly.

Vu Xuan Phong, former vice president of Vietnam International Arbitration Centre (VIAC), said the signing of EVFTA had opened a new era for both Vietnam and the EU as the country would have access to Europe’s 500 million-strong consumer market.

Vietnam is among the top 10 exporting countries to the EU. Within ASEAN, Vietnam is EU’s second biggest trade partner and largest exporter of goods. 

“However, most Vietnamese enterprises still do not have a deep understanding of the major free trade agreement,” he said. “This is a worrying sign.”

Nguyen Thao Hien, Deputy Director of the European-American Market Department under the Ministry of Industry and Trade, said the EU was Vietnam’s second largest export partner in 2018, after the US. However, in the first 11 months of 2019 exports reached only 38.38 billion USD, a slight drop of 1.26 percent over the same period last year. 

The signing of EVFTA would provide great opportunities for Vietnamese agricultural products, footwear, textiles, computers, plastic products, and seafood.

Other key sectors include automobiles and motorcycles, green growth, intellectual property rights, transportation and logistics.

The elimination of bilateral tariffs and export taxes as well as the reduction of non-tariff barriers affecting cross-border exchanges of goods and services is expected to boost bilateral trade, she said. 

However, the EU has set strict criteria for product quality to protect consumers’ health, including high technical standards and regulations on packaging and labeling, she added.

“Vietnamese enterprises must be fully aware of the commitments made by Vietnam in the trade agreement.” 

Hien said that enterprises must adhere to Rules of Origin (RO), especially as traceability regulations for importing countries have become increasingly strict.

Enterprises should also meet food safety and hygiene standards and management procedures set by the EU, as well as corporate social responsibility and transparency of information on labour and the working environment, she said. 

The use of modern methods will ensure strict control of goods’ authenticity, quality and origin, she added.

To enhance competitiveness, Vietnamese manufacturers should also shift to advanced production and processing systems, according to Hien. 

From a legal perspective, Chau Viet Bac, deputy secretary general of VI-AC, said that commercial arbitration could resolve conflicts between the Government and investors or between enterprises and enterprises in trade deals.

Thanks to a simple and fast process, commercial arbitration has become effective for businesses that encounter problems in signing contracts, while helping facilitate access to the EU market.

Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that enterprises of seafood exports had prepared all the required conditions of the EU to obtain certificate of origin, certificate of food hygiene and safety, and certified environmentally friendly products.

VASEP in 2019 failed to achieve its target of 2 billion USD worth of exports of seafood to the EU. The association has set the same target for 2020, accounting for 20 percent of the country’s total seafood export, according to Hoe.

The EVFTA, signed on June 30 in Hanoi, is one of the most ambitious agreements concluded between the EU and Vietnam. Over a 10-year period, more than 99 percent of tariffs on goods from both sides will eventually be removed.