Vietnam has signed about 15 free trade agreements with international partners, while the pact with Vietnam is the first of its kind inked by the Eurasian Economic Union, said Dr. Artem Pylin of the Institute of Economics under the Russian Academy of Sciences, adding that Russia highly evaluated Vietnam’s experience.
Pylin cited the official statistics by the Eurasian Economic Commission, which showed that Vietnam’s exports to the EAEU member countries, including Russia, Belarus, Kazakhstan and Armenia, grew almost 30% in the first seven months of 2017, while the EAEU’s exports to Vietnam rose only 11%.
In the short term, Vietnam has capitalised on the trade deal better than the EAEU nations, he said in an interview granted to Vietnam News Agency reporters on the first year of implementing the FTA.
The expert attributed the trade gap to differences between Vietnamese and EAEU commodities. Vietnam shipped to the bloc a wide range of products, mostly popular consumer goods, such as mobile phones, food and apparel, which has recorded good growth right after the pact took effect.
Meanwhile, the EAEU countries mainly shipped to Vietnam oil products, fertilizers, metals and auto spare parts, which require high value contracts, specialized transport agreements, and big business customers.
He also pointed to Russia’s economic slowdown as another cause of the gap, which resulted in drops of 25% and 4% in Russia’s exports to Vietnam in 2016 and in the first months of 2017.
Pylin said Russia might change its trade policy with Vietnam if it cannot take full advantage of the VN-EAEU FTA, particularly once the EU-Vietnam Free Trade Agreement (EVFTA) is officially signed, heating up competition in the Southeast Asian market.
With an annual growth rate of almost 7%, Vietnam is expanding its export markets and the EAEU nations with 183 million people is seen as a potential market, he said, suggesting that Vietnamese companies should connect together, form value chains, and build strong trademarks to seek a firm foothold in this market.
The Vietnam-EAEU FTA was inked in Burabay, Kazakhstan, on May 29, 2015 and took effect on October 5, 2016.
Under the agreement, Vietnam will remove import tariffs on 59% of the total tax lines on goods from the EAEU, including meat products, wheat flour, alcohol, mechanical equipment and steel products. The tariffs on another 30% of goods will be gradually reduced to 0% in the transitional period.
The average level of Vietnam’s duties on EAEU goods will drop from 10% to 1%, while EAEU’s average import tariffs on Vietnam’s goods will be reduced from 9.7% to 2% in 2025.
The tax removal is expected to spur the EAEU’s export of agricultural and industrial products to Vietnam, and vice versa, Vietnam’s farm produce, garment, bags and electrical devices will have better access to the EAEU market.
At the same time, businesspeople of both sides will have opportunities to take part in joint projects in the EAEU countries and Vietnam.