“The rate of using preferential tariffs from free trade agreements (FTAs) is on a downward trend (from a record 39.7% in 2017 to 32.7% in 2021) and has not progressed. stable with each agreement. This shows that businesses do not seem to have a stable strategy for taking advantage of incentives,” said Dr. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration under VCCI, said.
The VCCI’s 2022 survey shows that, among businesses that have enjoyed at least 1 tariff preference with one shipment, over 34% of businesses said that thanks to their goods and production processes, they are lucky. have met the FTA rules of origin without being actively converted to meet these conditions of origin.
STRATEGIES IN IMPLEMENTATION OF FTA
According to the survey results of VCCI, “Not knowing about the benefits of FTAs” is always among the top reasons why businesses have not benefited from FTAs (second only to the fact that “no transaction with FTA partners”).
Regarding the obstacles that make it difficult for businesses to realize potential opportunities from FTAs, businesses are most concerned about market fluctuations and instability (46.8% of enterprises), limited capacity competition (46.4%), lack of information on commitments and how to apply (40.1%). Although there has been a significant improvement compared to previous years, the inadequacy in the implementation of FTAs by State agencies is still a hindrance for about 28.2% of enterprises.
The average growth rate of export turnover to FTA markets is always lower than the overall export growth rate. Specifically, according to the data of the General Department of Customs, in the two years 2020-2021 (the period in which FTAs with all 53 partners have come into effect), the average export growth to FTA markets is 10. 3%/year, lower than the average growth rate of 13%/year of exports to the world. In other words, with the impetus from FTAs, the growth rate of exports to FTA markets is quite high but still not equal to the average growth rate in markets without FTAs (especially the United States).
The latest forecasts (October 2022) of many international organizations show that the prospect of 2023 is not bright for Vietnam’s exports.
The International Monetary Fund (IMF) forecasts that the GDP growth rate of most of Vietnam’s key export markets in 2023 will decrease compared to 2022 and fall deeply compared to 2021 (especially the euro area is expected to decrease). from 3.1% in 2022 to 0.5% in 2023, even negative growth in major trading markets of Vietnam in the EU such as Germany, Italy…).
The WTO’s forecast for import growth of major markets is also in the same direction (North America in 2023 is expected to increase only 0.8% compared to 8.5% in 2022 and 12.3% in 2021). ; EU is even -0.7%, while 2022 is up 5.4% and 2021 is 8.3%).
“Although in 2022, import and export activities in general and with Vietnam’s FTA markets in particular still achieved impressive results such as: total import and export turnover in the first 11 months of 2022 reached 673.8 billion VND. USD, up 11.8% over the same period, of which exports reached 342.2 billion USD, up 13.4%) but the market situation showed many unfavorable signs in the fourth quarter of 2022 and this fact is expected to be more difficult in 2023; it could even continue to be complicated for a longer period of time.”
Falling incomes, weak consumer demand in key export markets are forecasted in 2023, which will certainly cause the market size to shrink, increasing competition between goods from Vietnam and competitors. competition, even with domestic industries in these markets, especially price competition.
In recent days, the market situation has a few more optimistic signals; For example, China has significantly eased its Covid-19 response policy, making supply chain risks less stressful or the EU seems to have passed the most stressful period in energy and inflation. However, those are just a few indicators of the overall bleak landscape.
Leveraging FTA to keep export momentum
In such a context, “, Dr. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration under VCCI, emphasized that the advantages from the FTA, especially the tariff preferences that continue to be expanded according to the roadmap in the coming time, can be a great success. especially important support tools for Vietnamese businesses, creating competitive advantages to be able to continue to hold and expand market share in these markets.
To do this, VCCI proposes 3 groups of immediate policy solutions.
The Ministry of Industry and Trade, in collaboration with the Ministry of Agriculture and Rural Development and the Ministry of Culture, Sports and Tourism, deploy campaigns to promote Vietnamese product brands specifically designed for each market (priority is given to the Vietnamese market). EU and America).
Accordingly, the Vietnam Trade Office in FTA markets will (i) build a channel to connect partners with Vietnamese enterprises in each market and widely disseminate information about these connection channels for businesses; (ii) establish focal points for market information (market bulletins, periodic market updates such as supply and demand, policy adjustments…) for key export products of the country. Vietnam.
Meanwhile, the Import-Export Department, the Ministry of Industry and Trade set up a switchboard to support businesses on FTA rules of origin, widely publicizing the switchboard on the mass media, through which businesses know and can seek guidance and advice to understand, implement and meet the FTA rules of origin.
Regarding policy solutions in the long term, VCCI recommends that the Party and State consider two main directions.
Firstly, to study the feasibility and promote the negotiation of new FTAs, in an appropriate format (bilateral, multilateral/regional) with some potential markets for Vietnam’s exports.
Example: The United States is the world’s largest economy, Vietnam’s largest export market; South America (especially the MERCOSUR bloc) is a potential economic region that does not compete directly with Vietnam; Africa (through the African Union or select major economies, leading in the region) because the region has a relatively low level of development, there is a high demand for mid-range products and low, requirements are not too high in terms of quality, design and brand.
Second, establish an annual program to evaluate the effectiveness of the implementation of FTAs comprehensively, thereby identifying and promptly handling issues that hinder the effective utilization of FTAs.
In particular, focusing on assessing the institutional, legal, and administrative procedures related to FTA enforcement activities (especially import-export procedures, specialized inspection; issuance of certificates of origin). FTAs; and licensing and investment management).
Assess the situation of enterprises’ implementation of FTAs (especially in terms of their understanding, ability to take advantage and influence of FTAs, and obstacles in the implementation of FTAs of enterprises).
