Bilateral Free Trade Agreements

Vietnam has signed several bilateral FTAs to strengthen its trade relationships with key partners. The Vietnam-Japan Economic Partnership Agreement, which became effective in 2009, aimed to reduce tariffs and other trade barriers, thereby enhancing trade between the two nations. Similarly, the Vietnam-Chile Free Trade Agreement, effective since 2012, focuses on promoting trade and investment flows between Vietnam and Chile.

Another significant bilateral FTA is the Vietnam-South Korea Free Trade Agreement, effective since 2015, which seeks to increase bilateral trade and investment by reducing tariffs and facilitating market access. Furthermore, the Vietnam-Eurasian Economic Union Free Trade Agreement, in effect since 2016, has boosted trade between Vietnam and the member states of the Eurasian Economic Union (Belarus, Kazakhstan, Russia, Armenia, and Kyrgyzstan).

Regional Free Trade Agreements

Vietnam is also a member of various regional FTAs that promote economic cooperation and reduce trade barriers among member countries. Since 1995, Vietnam has been part of the ASEAN Free Trade Area (AFTA), which aims to enhance trade among ASEAN countries by reducing tariffs and fostering economic integration.

The ASEAN-China Comprehensive Economic Cooperation Agreement, effective since 2005, focuses on reducing trade barriers between ASEAN member states and China. Similarly, the ASEAN-Japan Comprehensive Economic Partnership, effective since 2008, aims to boost trade and investment flows between ASEAN nations and Japan. The ASEAN-Australia and New Zealand Free Trade Agreement, effective since 2010, enhances trade relations between ASEAN countries, Australia, and New Zealand.

Multilateral Free Trade Agreements

Vietnam's participation in multilateral FTAs has further expanded its economic horizons. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), effective since 2019, involves several countries including Australia, Canada, Japan, Mexico, New Zealand, Peru, and Singapore. This agreement focuses on deepening and broadening economic ties among member countries.

The Regional Comprehensive Economic Partnership (RCEP), effective since 2022, includes ASEAN member countries along with Australia, China, Japan, New Zealand, and South Korea, aiming to create the largest free-trade bloc. Moreover, the EU-Vietnam Free Trade Agreement (EVFTA), effective since 2020, seeks to boost trade between Vietnam and European Union countries by eliminating up to 99% of tariffs and reducing non-tariff barriers.

Vietnam has signed and implemented many new generation free trade agreements (FTAs), such as CPTPP, EVFTA and UKVFTA. Recently, free trade agreement with Israel - The first country in West Asia, also signed, offers the opportunity to reduce up to 92% of tariff lines for Vietnamese goods to this country.

In a report just sent to the Government, the Ministry of Industry and Trade said that free trade agreements bring positive impacts on Vietnam's export, import and investment attraction. In 2022, trade turnover with countries in the CPTPP increased by more than 14% compared to 2021, reaching 104.5 billion USD. In particular, Vietnam's exports to CPTPP member countries recorded a positive increase, such as Canada more than 20%, Brunei 163%.

With EVFTA, last year, trade between Vietnam and European Union (EU) countries reached more than 62.2 billion USD, up over 9% compared to 2021. EU countries imported nearly $47 billion worth of Vietnamese goods last year, up nearly 17 percent from a year earlier.

Particularly for the UK, in 2022, Vietnam has a trade surplus of more than 5.3 billion USD to this country after more than a year of the UKVFTA agreement coming into effect.

New-generation FTAs bring Vietnam tens of billions of dollars a year from exports, but the implementation of these agreements still exists, according to the Ministry of Industry and Trade. Currently, the rate of taking advantage of incentives of Vietnamese enterprises from FTAs is still low, such as CPTPP nearly 5%. EVFTA is nearly 26% and UKVFTA is about 24%.

The FDI sector still accounts for the majority when exporting items with large turnover, while domestic enterprises mainly process or export raw materials and semi-finished products.

Many new enterprises can participate in some stages of the supply chain, the ability to meet quality, food safety, export techniques is limited, especially in the context of many countries increasing technical barriers and non-tariff barriers. Therefore, the number of Vietnamese enterprises building export brands to FTA markets is limited. In addition, the connection between businesses is still loose, the phenomenon of unfair competition such as product devaluation occurs widely.

In order to solve the existence and take advantage of FTAs, the Ministry of Industry and Trade proposed to consider setting aside its own capital to support enterprises to take advantage of FTAs. Accordingly, the State Bank and ministries and sectors shall work with commercial banks to have appropriate credit sources and preferential interest rates to support enterprises wishing to improve production capacity. At the same time, enterprises themselves also need to increase access to green credit capital, in order to promptly meet increasingly high standards from export markets.

The Ministry of Industry and Trade and localities piloted the construction of an ecosystem, first 1-2 sectors and industries in each province, to take advantage of opportunities from FTAs. The agency also requested the Government to adopt an overall policy, creating conditions for enterprises to access and use "intra-bloc" raw materials, meeting the criteria of origin as prescribed in each trade agreement.

Conclusion

Vietnam's strategic engagement in various bilateral, regional, and multilateral FTAs has been pivotal in driving its economic growth, enhancing trade opportunities, and integrating its economy into the global market. These agreements have not only opened up new markets for Vietnamese goods and services but also attracted foreign investment, leading to overall economic development and prosperity.