Vietnam exporters worry EU free trade deal could bring technical barriers

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One of Vietnam's top five exports to the EU, garment products attract 11.7 percent duty. Photo courtesy of Saigon Tiep Thi

Vietnam and Europe will hold the third round of discussions on a proposed free trade agreement next month, but businesses are worried about technical barriers the bloc is likely to put up.

The EU Union became Vietnam's biggest market last year after export revenues increased by more than a fifth to US$20.3 billion, or 17.7 percent of Vietnam's entire exports, according to the General Statistics Office.

However, Vietnamese exporters had to pay high duties even on items in demand, including 11.7 percent on garments, 10.8 percent on seafood, and 12.4 percent on footwear.

The upcoming agreement is expected to cut tariffs on all goods by at least 90 percent.

But Vietnam will be required to do the same for European goods, make its business environment more favorable for European investors, guarantee transparency of business regulations, officials said at a meeting held March 15 by the EU and Vietnam Chamber of Commerce and Industry as part of the EU's Multilateral Trade-related Assistance Program (Mutrap), Saigon Tiep Thi newspaper reported.

The third round of talks for the Vietnam-EU Free Trade Agreement will be held April 22, when some legal issues carried over from previous rounds and technical matters will be discussed. The two sides are expected to conclude the negotiations in 2014.

Jean-Jacques Bouflet, EU Minister Counsellor in Vietnam, said Vietnam has been enjoying a trade surplus with the EU and the US of $11.5 billion and $14.9 billion last year -- which helped make up the deficit with China, South Korean, and ASEAN member countries.

Bouflet said trade between Vietnam and EU is of mutual interest instead of competitive since the former mainly exports labor-intensive products while Europe exports pharmaceuticals, electronics, aircraft, and vehicles.

Claudio Dordi from Mutrap said European investors would also have interest in wine production, financial services, telecom, healthcare and education.

The agreement would confer on Vietnam and the EU privileges that go beyond World Trade Organization provisions on business competition and copyright, he said.

Vietnamese business executives at the meeting said they are nervous thinking about the various demands the EU is going to make about issues like product quality, labor safety and rights, environmental protection, and local production rate.

The new regulations could limit the number of exporters as well as export volumes, they feared.

The Vietnamese Ministry of Industry and Trade has said it is open to ideas and opinions from businesses.

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