2016: two new FTAs may not have a big impact right away At the end of 2015 and 2016, there were two free trade agreements (FTAs) that Vietnam […]
At the end of 2015 and 2016, there were two free trade agreements (FTA) that Vietnam recently signed. take effect, but these two agreements may not have a major impact immediatelyVietnam, according to a leader of the Ministry of Industry and Trade.
Specifically, the FTA between Vietnam and Korea took effect from December 20, 2015 and the FTA between Vietnam and the Eurasian Economic Union (including the Russian Federation, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Armenia and the Kyrgyz Republic) is expected to take effect next year.
Talking with the press on the sidelines of the conference "Disseminating information about free trade agreements" organized by the Ministry of Industry and Trade and Ho Chi Minh City People's Committee on December 28, Deputy Minister of Industry and Trade Tran Quoc Khanh said that these two agreements cannot have a clear and quick impact on Vietnam right away.
Because, the FTA with Korea is a supplement to the FTA between ASEAN and Korea that has been implemented for a long time. The FTA between Vietnam and Korea does bring added value, but does not help increase exports dramatically. The biggest value of this new agreement is to attract investment from Korea to Vietnam, but this impact may not be evident until after 2016.
The FTA between Vietnam and the Eurasian Economic Union was initially assessed to have a large and positive impact on Vietnam's exports to this market. The reason is because this area maintains a relatively high import tax rate, so when this tax rate is reduced or completely eliminated, it will create a great motivation for Vietnam's exports to this market. However, the Russian market is facing difficulties, the Russian ruble is losing value, so the purchasing power of the Russian market is seriously declining.
Therefore, although this agreement is expected to take effect in 2016 with Vietnamese goods exported to this market being reduced or brought to 0% (depending on each item - PV), it may not have an immediate impact in 2016, but possibly in the following years.
Regarding the Trans-Pacific Partnership Agreement (TPP), at the conference, Mr. Ngo Chung Khanh, Deputy Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade), said that the TPP is expected to be signed in the first quarter of 2016. After that, TPP member countries will ratify this agreement, with the agreement expected to take effect in early 2018.
What support will the government give businesses regarding TPP?
At the conference on December 28, Deputy Minister of Industry and Trade Tran Quoc Khanh said that the process of reducing taxes, opening the service market... (as committed in TPP) will increase competitive pressure, and some industries in TPP participating countries will face difficulties. The governments of some countries have programs to support each of these difficult sectors.
They can provide support in a number of forms. The first form is to provide information and explain (to businesses and people) where the pressure comes from and in what form. The second form is through special subsidies, such as the governments of some countries committing a sum of money to support farmers in balancing production. Third, TPP countries commit to providing technical support to each other, such as technical support to help small and medium-sized enterprises (SMEs) more fully grasp the opportunities that TPP brings, or technical support to improve the capacity of state agencies to develop programs to support businesses.
That's why Mr. Khanh said he thinks the Vietnamese Government will focus on forms of support such as providing information and creating a favorable environment for businesses to transform their structure.
According to Mr. Khanh, in order for businesses to be able to convert from one industry to another, they first need to create opportunities for businesses. For example, participating in TPP will create competitive pressure on businesses, but at the same time create a market for export products, so this is a direction for farmers to shift production.
In addition, according to Mr. Khanh, when the TPP and the Free Trade Agreement between Vietnam and the European Union come into effect, the agreement implementation committee will be responsible for making a list of specific support programs. Currently, Vietnam has not released a list of this support program because the VN-EU FTA and TPP are not yet in effect.
"When this committee operates, we will work with other countries to make a list of programs to support Vietnamese businesses in the process of participating in TPP and VN-EU FTA. These are solutions that Vietnam can use to support," Mr. Khanh said.
"In the next 5-7 years, if Vietnam has budget conditions, I believe that the Government will also have a support program (subsidy - PV) for farmers to restructure," Mr. Khanh said, adding that support in the form of this subsidy does not violate the regulations of the World Trade Organization (WTO) as well as TPP because of general support, not for the purpose of increasing exports or localization.
Source: Saigon Economic Times Online
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