Vietnam is also now conducting negotiations for a series of FTAs, including one with the European Free Trade Association (EFTA) which comprises Switzerland, Norway, Iceland and Liechtenstein, and the ASEAN+6 FTA (ASEAN plus China, Japan, South Korea, India, Australia and New Zealand). Within RCEP, Vietnam has begun negotiations with Israel and Hong Kong (China).
“Vietnam is among the countries which have joined the most FTAs and the Vietnam economy is very open,” Tuyen said.
He went on to say that there are two trends now in the world – protectionism represented by the US under the Trump administration, and liberalization of trade and investment.
Protectionism is just a temporary, short-term phenomenon. Therefore, he believes that Vietnam needs to actively integrate into the international economy.
According to Hoang Xuan Hoa, director of the General Economic Affairs under the Party Central Committee, Vietnam will have great opportunities and challenges in 5-10 years, especially after the implementation of the next-generation of FTAs.
These include the Vietnam-EU FTA, expected to be signed and to take effect in 2018, or TPP 11, now with 11 members.
There are big differences between traditional and next-generation FTAs.
First, the latter has a broader range of commitments, not only on tariff and non-tariff policies on goods and services, but also in other fields, including investment, labor, environment, competition, public procurement and e-commerce.
Second, next-generation FTAs have a broader liberalization scope which target wider market openness with higher standards than that of the World Trade Organization (WTO). Instead of gradual reduction and tariff cuts to 0-5 percent, the FTAs strive to apply a zero percent tariff to all goods.
The third difference is that the time for implementing FTA commitments is shorter. Instead of a 10-year roadmap, FTA members will have 5-7 years to cut the tariffs. Some commitments will become valid as soon as the agreements take effect.
Hoa affirmed that with the next-generation FTAs, Vietnam would have great opportunities to boost exports.
With AEC (ASEAN Economic Community) , Vietnamese products will be able to approach 10 markets in ASEAN with 620 million consumers. With EVFTA, exports are expected to increase by 21 percent per annum, helping Vietnam earn $16 billion more from exports by 2020.
FTAs will also help Vietnam restructure import/export markets. At present, 70 percent of imports are from East Asia and over 50 percent of exports go to the region. If something happens in the region, Vietnam’s import/exports would be seriously affected.