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VN businesses slow in preparing for EU FTA

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Vietnam expects to surpass Bangladesh and become the second largest textile and garment exporter to the world market after the EVFTA comes into effect. VIETNAM NEWS AGENCY/VIET NAM NEWS

VN businesses slow in preparing for EU FTA

Experts have raised concerns that Vietnamese businesses are slow in preparing conditions to enjoy preferential tariffs in the Vietnam-EU Free Trade Agreement (EVFTA).

European Chamber of Commerce in Vietnam vice-chairman Nguyen Hai Minh said the EVFTA has taken effect from August 1, but only two per cent of 8,600 local enterprises know the details of the deal and about 20 per cent of them know about the agreement at all.

The important thing, he said, is that they must really understand the content of this agreement and its conditions.

Minh said some textile enterprises are choosing whether or not to meet the rules of origin to enjoy preferential tariffs in this FTA.

At present, he said, the main import material of Vietnamese textile enterprises is still from China, so if they do not change suppliers their products can not satisfy the origin requirements in the EVFTA.

Minh told the Dau Tu (Investment) newspaper: “Some businesses say that if they buy the materials from eligible suppliers with higher prices to enjoy tariff preferences, it still won’t be as profitable as buying materials from China to enjoy the tariffs according to the EU’s Generalised scheme of preferences [GSP] at present.

“However, Vietnamese businesses need to know that right after the EVFTA comes into effect, the GSP tariffs would end.”

In addition, the EVFTA’s rules on origin are quite complicated. The complexity is the reason that many Vietnamese face mask manufacturers are ineligible to export to the EU, even if they already have customers, because they do not have the required medical certificates.

Minh said Vietnamese businesses also do not understand clearly about food hygiene and safety conditions when working with European partners.

Another problem is the material region. He said when EU enterprises announced at the beginning of this year that they would stop using plastic packaging – instead of recyclable materials – many Vietnamese businesses have immediately changed to use paper and bamboo packaging.

However, when the EU businesses required information about material region for producing the packaging, Vietnamese enterprises could not identify eligible material regions.

The planning of raw material regions for Vietnam’s many export products is challenging for businesses and also the government, Minh said.

Vietnam Textile and Apparel Association (Vitas) deputy chairman Truong Van Cam said the association continues to request the Ministry of Industry and Trade to complete the Textile and Apparel Development Plan until 2035, which must clarify requirements for the construction of concentrated industrial parks for textiles and clothing, including waste water treatment.

Therefore, Cam said, the textile and garment industry could have large dyeing and textile projects with products meeting the EVFTA’s origin requirements and also requirements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Deputy Minister of Industry and Trade Tran Quoc Khanh said the country expects to surpass Bangladesh and become the second largest textile and garment exporter to the world market after the EVFTA comes into effect.

But without a supporting industry for the domestic textile and garment sector, reaching the goal could prove difficult, Khanh said.

Vietnam Chamber of Commerce and Industry (VCCI) chairman Vu Tien Loc also agreed with the proposal and said that it is an important issue that needs attention from ministries and sectors.

He said Vietnam could not promote textile and garment exports if it does not create favourable conditions to develop the auxiliary industry for the textile and garment sector as well as call on investment to this industry.

VCCI has proposed the National Assembly to formulate the Law on Auxiliary Industry for receiving a new wave of foreign direct investment, he added.

The State also needs institutional reforms, complete the legal framework, and improve investment and business environment to meet the EVFTA requirements, he said.

VIET NAM NEWS/ASIA NEWS NETWORK

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