Taking advantage of FTA opportunities

According to the Import-Export Department under the Ministry of Industry and Trade, Vietnam had 33 export markets of at least US$1 billion each in 2021 (two more than in 2020), 11 markets of at least US$5 billion (three more than in 2020) and five markets of at least US$10 billion. This good performance was attributed to opportunities generated by 15 Free Trade Agreements (FTAs) to which Vietnam is a signatory.

In 2021, Vietnam ratified the Regional Comprehensive Economic Partnership (RCEP) and enforced the Vietnam - UK Free Trade Agreement (UKVFTA). The country also achieved good outcomes in market opening negotiations, FTA entry and FTA enforcement.

Notably, with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam's export value to its member markets that did not have any FTA with Vietnam before increased significantly. Specifically, exports to Canada reached US%5.3 billion, up 20.8% year on year; shipments to Mexico climbed 44.5% to US$4.6 billion. Its exports to Peru leaped 84.4% to US$560 million.

Since its enforcement, the Vietnam - EU Free Trade Agreement (EVFTA) has produced many positive results for Vietnam. Specifically, its exports to the European Union (EU) rose 14.2% to US$40.1 billion in 2021. Relevant authorities authorized 208,653 C/O EUR.1 forms for more than US$8.1 billion of exports to 27 EU countries in the year.

Export shipments to the United Kingdom (UK) soared 16.4% to US$5.8 billion in 2021. Authorities issued 25,519 C/O forms EUR.1 (UKVFTA) for more than US$992 million of exports.

For Africa, according to statistics, in 2021, Vietnam's agricultural and aquatic exports to this market climbed 21% year on year to US$936 million in 2021. Exports to Oceania totaled US$557 million, up 11.7%.

According to the Ministry of Industry and Trade, FTA-utilized exports which were subject to lower tariffs valued at US$69.08 billion in 2021, accounting for 32.66% of total exports to FTA-signed markets. In the year, 1.2 million preferential C/O forms were issued, 23% more than a year earlier.

India offered the highest rate of incentives from AIFTA with 68.7% of exports; followed by Chile and South Korea with the utilization rate of 61.8% and 51%, respectively. Preference-utilized exports to Laos and Cambodia were not high because they were ASEAN members like Vietnam where exporters often directly took advantage of ATIGA incentives. In general, Vietnam's rate of FTA preference-utilized exports was 32.66% in 2021.

Clearly, free trade agreements (FTAs), especially new-generation ones such as EVFTA and CPTPP, will continue to open up tariff preferences, create incentives for investors seeking to expand production capacity, and make exporters more professional in the international arena and participate more deeply in global supply chains.

Exploring many niche markets

Mr. Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, said, when world markets are well-shaped and divided, Vietnamese businesses need to find niche markets to survive and avoid direct competition with major distributors in the world.

In recent years, Vietnamese companies have fostered trade promotion to many new markets in Africa, Latin America and the Middle East. Many business forums, exhibitions, conferences and workshops have been launched for this purpose.

During her recent visit to Vietnam, Esperanca Laurinda Francisco Nhiuane Bias, President of the Assembly of Mozambique, expressed her wish that Vietnamese and Mozambican businesses have more opportunities to strengthen connectivity ahead of the 50th anniversary of bilateral diplomatic relations by 2025.

Vietnamese businesses have a lot of opportunities to invest in many fields such as tourism, mining, energy, and agriculture in Mozambique. In particular, Vietnamese products can penetrate deeper into member markets of the Southern African Development Community (SADC).

Mongolian Ambassador to Vietnam Jigee Sereejav said that he will actively act as a bridge and create an environment for businesses of the two countries to meet and find partners in various industries like animal husbandry, agriculture, tourism, and pharmaceuticals, not only establishing cooperation in trade but also forming comprehensive cooperation in economy, build joint projects, increase investment, and shape an enabling environment for businesses to operate and develop stably.

Uruguayan Ambassador to Vietnam Raul Juan Pollak expressed his wish to facilitate business connectivity between the two countries to enhance information exchange and cooperation in investment and trade. Online seminars and workshops are expected to be launched to connect businesses of the two countries to learn about markets, demands, strengths, and trade and investment promotion in various potential fields and projects.

To approach niche markets, businesses need to capture new consumption trends. One of the new consumption trends in the world today is green consumption and circular economy. Director Vu Ba Phu of Vietrade said that the new current consumption trends in the world, especially with Vietnam’s COP26 commitments and greenhouse gas emission reduction, will form a green economy, green consumption and circular economy trends. Europe, the United States, and Japan tended to return to natural products.

For strong products like agricultural products and seafood, businesses need to adhere to green and organic production besides packaging design to meet market needs, he added.