Economy

How to benefit from EVFTA?

WEDNESDAY, 16/09/2020 14:16:55

The European Union (EU) - Vietnam Free Trade Agreement (EVFTA) became effective as from August 1, 2020.


Hai Duong's leather and footwear production is one of the industries greatly benefiting from the EVFTA

This is a great opportunity for businesses in Vietnam in general and Hai Duong in particular to extend export to the EU.

Businesses take initiative

According to the assessment of economic experts and managers, the opportunity brought to Vietnam by the EVFTA is relatively comprehensive. The EU has abolished 85.6% of import taxes, equivalent to 70.3% of Vietnam's export turnover to the EU.

Hai Duong has a number of staple products greatly benefiting from the agreement, such as garments, textiles, leather, footwear, vegetables, and fruits.

As committed, 42.5% of taxes on garments and textiles exported to the EU immediately dropped to 0%, and the rest will gradually decrease to 0% in the next 5 – 7 years; 37% of taxes on leather and footwear exported to the EU fell to 0%, and the rest will step by step drop to 0% in 3 – 7 years depending on each specific item; 94% of taxes on vegetables, fruits, and products made from vegetables or fruits, including many strong products of Hai Duong like lychee, longan, melon, etc., were immediately removed.

Despite the incentives and good opportunity, to access the EU market, there remain many barriers to Hai Duong-based enterprises.

As assessed by the Department of Industry and Trade, most enterprises exporting products to the EU in the province are small- and medium-sized ones. They have limited resources and production processes yet to meet EU standards, have not appropriately invested in market research and development, and lack manpower knowing foreign languages and having professional trade promotion and negotiation skills for export.

To effectively take full advantage of the incentives of the EVFTA, the province-based enterprises should proactively adjust their production processes and materials.

Director of the Department of Industry and Trade Pham Thanh Hai said small- and medium-sized businesses should consider the EVFTA as the start of a business journey in the new context and the pressure of competition as a driving force for innovation and development.

Enterprises also should proactively seek cooperation directions with partners also enjoying the incentives of the agreement to effectively utilize capital resources and transfer technology from big corporations.

Authorities join hands

Chairman of the Hai Duong provincial Business Association Nguyen Huu Doan affirmed that the EVFTA brought a great opportunity to enterprises in the province.

Potential businesses wanting to export products to the EU must improve themselves and the value and quality of their goods. 
 
Enterprises should attach special importance to food hygiene and safety and social responsibility, satisfy the EU's standards and management processes, make information about labor and production environment transparent, and specifically ensure the rules of origin upon export to the EU.

Functional sectors should have mechanisms and policies to give support and remove difficulties for businesses to access and integrate with the EU market.

Established in June 2008 in Phu Thai town, Kim Thanh district, Nam Lee International Co., Ltd. specializes in sewing and exporting female clothes mainly to the US. It earns an export turnover of USD30 – 40 million each year.

According to a representative of the company leaders, it is difficult for the unit to find orders for export to the EU. 

The company hopes that appropriate authorities of the province will provide and set up points of information about the EVFTA and the EU market for the firm and other businesses in the same industry with export demand to be able to associate and communicate with each other.

As the provincial connection point in supporting the EVFTA enforcement in Hai Duong, the Department of Industry and Trade has proactively counseled the provincial People's Committee to issue a plan to realize the agreement with specific objectives, tasks, and roadmap.

Together with efforts of businesses, in the time to come, appropriate authorities of the province should train concerned officials in regulations and commitments of the EVFTA in each specific speciality and field; devise programs to assist and improve the competitiveness of enterprises, especially medium-, small-, and super small-sized ones, in line with international commitments; and work out support mechanisms for businesses to participate in regional and global production networks and value and supply chains.

LAN NGUYEN

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