Prospects for the Vietnam-EAEU free trade agreement

(VOV) - Prime Minister Nguyen Tan Dung has signed a free trade agreement (FTA) with the Eurasia Economic Union (EAEU) in Kazakhstan that is expected to open up vast opportunities and challenges for the nation over the years to come.

In the run up to the signing ceremony, Dang Hoang Hai, head of the Vietnam Technical Negotiation Delegation in Astana, sat down with a Radio Voice of Vietnam (VOV) reporter to provide his thoughts on the important trade pact.

Following are key translated excerpts from the interview.

Reporter: The negotiation process and preparations for the signing of the FTA between Vietnam and the EAEU are nearly complete. What is your assessment of how the process has gone?

Mr Hai: The negotiation process has transpired rather quickly. Initially, Vietnam was negotiating with only Russia and then over the span of two years the other nations of the EAEU joined in.

prospects for the vietnam-eaeu free trade agreement hinh 0
Dang Hoang Hai, head of the Vietnam Technical Negotiation Delegation in Astana

The agreement has the typical characteristics of other free trade pacts. All of the nations involved in the FTA, have a long standing traditional friendship with Vietnam including Russia, Belarus, Kazakhstan and new members like Armenia and Kyrgyzstan.

These countries have stood shoulder to shoulder with Vietnam in the process of national construction and in the war against US imperialism.

The negotiation process for the agreement was undertaken seriously and as a consequence, both sides have a hammered out a solid agreement that is mutually beneficial not only for Vietnam but all nations of the EAEU.

Reporter: What do you think about the significance of the agreement for Vietnam and member countries of the EAEU?

Mr Hai: I think that it has great significance for all concerned parties. For Vietnam, the EAEU is a great potential market with a consumer market of more than 170 million strong and GDP with purchasing power reaching US$17 trillion.

The figures unequivocally demonstrate this is a promising market. Notably, the agreement has fulfilled our fundamental targets in which all priority export items have achieved favourable conditions.

For example, nearly 100% of the nation’s commodities will be allowed entry into the EAEU free of any import duties. Regarding garments and textiles value added items, we have successfully negotiated for abatement of 80% of the import duties.

Vietnam is one of the first nations to sign a FTA with the EAEU and will enjoy substantial reductions in import tariffs. At the same time we have made significant progress in removing ‘technical barriers’ to trade.

In the negotiations, we placed great emphasis on opening up the EAEU markets for Vietnam’s top commodities such as iron, steel, industrial and agricultural goods. In return, Vietnam has opened its markets for import of beef, milk, cereal, meat and processed fish.

I think the overall impact of the agreement will be very positive as it should benefit all concerned parties.

Reporter: During the negotiation process, what are assessments of concerned parties towards Vietnamese market when implementing articles in the agreement?

Mr Hai: The EAEU member nations view Vietnam as a great potential market for exports and investment in addition to being a gateway to the ASEAN markets.

Reporter: What obstacles do you foresee in implementing the FTA?

Mr Hai: Although the FTA opens up a lot of opportunities, it poses a number of challenging obstacles. Geographical distance is the number one problem that must be overcome as nations in the EAEU are far from Vietnam.

Secondly, familiarity with the markets is a distinct problem. It is going to take some hard work on the part of the Vietnam business community to get up to speed on the EAEU markets and thoroughly understand them.

Thirdly, language barriers, differing laws, customs, all will create their own unique problems that will need to be dealt with effectively. Therefore, the Vietnam business community will have its hands full in manoeuvring in the market.

Furthermore, the FTA hasn’t broken down all trade barriers so Vietnam should expect some push back from specific industries in the EAEU member nations as they attempt to create their own technical barriers.

Vietnam has had some experience exporting to Russia. However, this will be the nation’s first experience with the markets of Armenia and Kyrgyzstan— so it is apt to be a very demanding and rewarding experience.

Reporter: Thank you very much.