The free trade agreement Vietnam signed last week with the Eurasian Economic Union (EEU) has significant meaning for local exporters as the trade pact is the first of its kind for both parties involved, industry insiders and experts have said.
The FTA with Vietnam, closed by the prime ministers of the five EEU member countries and their Vietnamese counterpart, Nguyen Tan Dung, in Kazakhstan on Friday, was the first such deal struck by the Moscow-led body with a third party, according to Reuters.
The EEU includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
Vietnamese goods will thus for the first time have the chance to enjoy duties as low as zero percent when entering these markets, according to local experts.
The trade pact with the EEU was the second FTA Vietnam had signed this year, following the deal with South Korea on May 5.
“While the FTA with South Korea only means more import value will be liberated and more tariff lines eliminated, the trade pact with the EEU has significant meaning thanks to its ‘firstness’,” said Nguyen Thi Thu Trang, director of the WTO Center under the Vietnam Chamber of Commerce and Industry.
Vietnamese exports to Russia currently only enjoy preferential tax treatments as per WTO regulations, and the EEU trade pact will leave the door open even wider, Trang said.
More tariff lines will be eliminated and the non-tariff barriers will also be reduced, she added.
Duong Ngoc Minh, general director of Hung Vuong Co., a major Vietnamese seafood exporter, said he is more than happy to see the signing of the Vietnam – EEU FTA.
Minh, who closely followed the negotiations for the trade pact, said he is longing for the effective date of the FTA, which could be later this year or early next year, as his company will then have a greater chance to enter the five markets.
In anticipating the investment opportunity, Hung Vuong Co. has joined hands with a Vietnamese bank and several local firms to form a joint venture with a Russian partner to set up a seafood processing facility in Russia, Minh revealed.
“Russia is one of the main markets for Hung Vuong but we still face many issues in terms of taxes and customs procedures,” he said.
The FTA will help reduce export duties to zero from 10 percent and simplify many procedures.
“Vietnamese firms will thus have the greatest advantage among all seafood exporters [to Russia],” he added.
Russia is one of the most important markets for Vietnamese seafood exporters, according to the Vietnam Seafood Exporters and Producers Association.
Exports to the market in the first quarter of this year reached US$21.6 million, up 11 percent year on year, whereas declines were recorded from other main markets such as the EU, the U.S., Japan, and South Korea.
The FTA with Vietnam is meant to help the EEU to boost its presence in Asian markets.
By signing the FTA, the EEU aims to increase its turnover from trade with Vietnam to at least $10 billion in five years from $4 billion in 2014, Viktor Khristenko, chairman of the Eurasian Economic Commission's board, told reporters after the signing ceremony.
The EEU was launched in January to promote trade and economic integration.
It has a combined population of 175 million and gross domestic product of around $2.5 trillion, according to the Vietnamese Ministry of Industry and Trade.