Photo for illustration (Source: baochinhphu.vn)
The opening fourth months of the year has seen the nation’s exports to the EU market reach a figure of USD10.75 billion, representing a fall of 8.1%. Despite this drop, with the incoming EVFTA set to take effect in July, it is anticipated that the deal will offer fresh impetus to exports during the remaining months of the year and in subsequent years.
The country’s ratification of the EVFTA looks set to be at the right time, serving to create momentum for the recovery of the domestic economy following the novel coronavirus (COVID-19) pandemic being successfully brought under control.
Alongside the implementation of the Comprehensive and Progressive Agreement for Trans- Pacific Partnership, the adoption and implementation of the trade pact with the EU affirms the nation’s staunch commitment to the international free trade system. Furthermore, the deal serves to accelerate the country’s FTA negotiations with other important partners, therefore marking the increasing comprehensive and extensive international integration of the nation.
Once the agreement comes into force, export growth to the EU market is widely expected to enjoy a range of positive effects, especially upon major export items that have been suffering from the impact of the COVID-19 epidemic.
Minister of Industry and Trade Tran Tuan Anh stated that within the context of the virus epidemic causing negative effects in terms of global production and import-export activities, the implementation of the EVFTA can be viewed as a necessary means of boosting economic recovery.
For local firms, the EVFTA can also be seen as the ultimate solution that can bring about a more diverse range of market opportunities, while simultaneously helping them to regain growth momentum following this difficult period.
As a result of the agreement coming into force, Vietnamese businesses will have the opportunity to enjoy access to fresh supply chains that are capable of replacing old ones that have either been disrupted or stalled in traditional markets as a result of the recent COVID-19 epidemic. This is viewed as an important step in the recovery of domestic enterprises following the decline of the national economy, whilst also boosting production after the epidemic period.
The export market of Vietnamese enterprises will also enjoy opportunities for further expansion and diversification, therefore reducing their dependence on certain market groups.
With the EU now representing one of the nation’s largest trading partners, two-way turnover in 2019 reached a figure of USD56.45 billion, including USD41.5 billion from exports and USD14.9 billion from imports.
A prominent feature of the import-export structure between both sides is that goods will prove to be highly supplementary to each respective market, meaning there will be less direct competition. Therefore, once initiated, the trade deal will provide extra leverage for the country’s exports, serving to promote bilateral trade between the two sides in a more comprehensive fashion.
According to the Ministry of Industry and Trade, the impact of the COVID-19 on the nation’s industrial production and import-export activities first began to show in April when the export market of major partners endured a sharp fall in comparison to the previous month.
Most notably, there was a fall of 20% in terms of the ASEAN market in comparison to March last year, while China dropped by 2.9%, Japan by 9.3%, the Republic of Korea by 13.7%, the EU by 28.6%, and the United States 24.1%./.