Vietnam: commodity exports to accelerate, after trade barriers are removed

After WTO accession, Viet Nam will gain a competitive edge, according to director of the Europe Department (Ministry of Trade) Pham Van Minh’s interview with Nong Thon Ngay Nay (Countryside Today).

Could you give a brief ex-planation of the agreement on market access between Viet Nam and the European Union?

The agreement is a bilateral commitment between Viet Nam and the European Union. The purpose is to help Viet Nam’s market gradually access and prosper in an EU market. The agreement was signed on December 3, 2004. However, only when Viet Nam becomes a full member of WTO, will it actually come in to effect.

The objective of the agreement is to have EU lift the garment and textile quota which is an urgent requirement for Viet Nam in it’s bid to accede to WTO. In exchange, Viet Nam also makes commitments on reducing tariffs of cotton, wine, motorbike quota and oil refining chemicals as well as opening some services in the sectors of banking, shipping, insurance, telecommunication, construction and distribution.

What benefits will the agreement on removing garment and textile quota bring to other types of commodities after Viet Nam has successful acceded to WTO?

The textiles quota is the final remaining obstacle to be removed. We have to sign many commitments in exchange for the removal of the textiles quota. However, thanks to this agreement, all Viet Nam’s commodities will be exported to EU’s market without any quota obstacles. More importantly, Viet Nam’s commodities will get the Generalised System of Preferences (GSP).

When Viet Nam successfully accedes to WTO and the agreement comes into effect, agriculture products, seafood products, textiles, footwear, handicrafts and fine arts items will get the GSP with a very low tariff. Some products will have to pay as little as zero to five per cent.

This is a valuable advantage for exporting goods to the EU market while many of our neighbouring countries like China, have yet to receive any GSP.

The exporting of textiles, footwear, and agriculture products has increased sharply even without the preferences. Thus, is there any type of commodity really taking full advantage of the GSP?

That is correct. Presently, many main types of commodities for export to the EU have increased considerably. Some examples of these are, in the first nine months of this year, the export of seafood products has increased by 60 to 70 per cent, textile 50 per cent, electrical appliances 50 to 60 per cent and wooden furniture and handicrafts 30 to 40 per cent.

However, due to the low general competitiveness of Viet Nam’s enterprises, it is essential for Viet Nam’s enterprises to get these preferential policies. If the quota is not removed, it will be impossible for the textile industry to abruptly boost exports. EU is an open market with high competitiveness. It also creates an even playing field for every country to boost their export, with most taking full advantage of those benefits. Therefore, without preferentials, it will be very difficult for Viet Nam’s enterprises to make progress in the integration process.

In regards to other types of commodities with low growth rate or agricultural products such as pepper, coffee and cashew nuts, these commodities will benefit from the agreement the most.

In what way can Viet Nam’s enterprises fully tap these advantages?

Viet Nam’s enterprises must equip themselves with better information about international trade rules, and agreements that the Vietnamese government has signed with other nations about related issues. At the very least, they must get to know the rights and duties of counter partners. They must also understand the situation of importers’ markets to fix the price and quantity.

For example, if the export of footwear to the EU market reaches the threshold of 19-20 per cent, adjustment should be taken immediately. Also, Viet Nam’s enterprises should not sell their commodities at low prices for competitive purposes, because this will reduce profits and increase the risk of being sued for dumping. Therefore, it is imperative for domestic enterprises to improve their capacity for competitiveness and access, but also to thoroughly understand laws, and international trade rules.

Source: vnagency.com.vn