The ASEAN Economic Community (AEC), which will be officially established by the end of this year, will bring both challenges and opportunities to the local economy, Minister of Industry and Trade Vu Huy Hoang said in a TV program aired on the national TV broadcaster Vietnam Television on Sunday.

The AEC is a highly developed process of economic cooperation and integration of the 10 ASEAN member countries, said Minister Hoang on "People Ask - Minister Replies."

The principle of reciprocity

In talking about the concept of free trade, Minister Hoang said that when the economies are involved with or committed to each other within the framework of the World Trade Organization or an economic union, “the trade of goods and services and labor mobility are the basic content.”

In particular, an open commodity market is based on the principle of reciprocity. If Vietnam increases exports to a given market, it must also have an open door policy for commodities of other countries.

The principles are created based on the fact that two or more sides involved are trying to get the core benefits of trade in goods, he said.

As a result, according to Minister Hoang, the signed free trade agreements will bring huge benefits for exports as they offer tax incentives for key commodities of Vietnam such as textiles, footwear, agricultural and aquatic products and those of other processing industries.

Therefore, when negotiating these agreements, Vietnam asked other countries to open up their markets for its products. Besides, Vietnam also pledged to consider opening the market for some export items of these countries, he said.

Opening market with a clear roadmap

However, Minister Hoang also said Vietnam has always had a clear roadmap, especially in terms of sensitive goods of which domestic production capability is limited, so that the country will have a certain period for the local production sector to improve their capacities and increase market share later.

Currently the Southeast Asian country is continuing negotiations to finally conclude seven free trade agreements with other partners, including the Trans-Pacific Partnership (TPP), the Customs Union of Russia, Belarus, Kazakhstan, the FTA with the European Union, and the FTA with the other countries of ASEAN + 6 partners.

"Vietnam has always focused on protecting items related to agriculture. When joining WTO negotiations on agriculture for four items including salt, sugar, eggs and raw tobacco, Vietnam has made possible the application of tariff quotas without causing a negative impact on domestic production, while keeping up with WTO commitments," Minister Hoang said.

"As a result, if we take prudent steps, Vietnam should not be afraid of the AEC," he added.

Commenting on the risk facing Vietnamese goods when the AEC is established, as thousands of imported items enjoying tax reductions may enter the country following the establishments of foreign-owned retail facilities in Vietnam, the minister said the wholesale and retail markets are particularly worrisome for local people and businesses.

However, this market is not only sensitive to Vietnam, but also in a number of other countries. "This is one step to take while following the roadmap, as we open the market gradually and cautiously. Besides, for each commodity, we have a different degree of openness," he said.

According to Minister Hoang, currently there are foreign wholesalers and retailers operating in Vietnam but to a very limited extent, while the amount of goods and categories of goods subject to inspection and control is very large.

“In addition, the opening of such facilities is considered very carefully by everyone from central to local authorities.”

"We can see that Vietnam has opened to goods from other ASEAN member countries since the 1990s, but for more than 20 years now, locally-made commodities has dominated the market,” Minister Hoang added.

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