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FTA to boost Vietnamese garment exports to EAEU
15
Oct '16
The free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) that took effect on October 5 this year is expected to boost Vietnamese garment exports. Under the FTA, 90 per cent of tariff lines have been cut or reduced. The EAEU consists of five member countries, viz Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

The EAEU region has GSP of $2.2 trillion and population of 183 million. Increasing consumption in this region offers a potential market for Vietnamese goods, including textiles and apparel.

Duties were removed on 59 per cent of tariff lines the day the FTA took effect. This offers great advantage for Vietnamese companies while competing with other countries that export to EAEU region.

However, to enjoy zero duties, Vietnamese goods must meet two criteria. First, they must meet rules of origin, labelling requirements and hygiene standards. Second, the volume of exports must be no more than 1.5 times of the average volume that Vietnam exported to the region in the last three years. This is called trigger safeguard measure.

As per the FTA, the EAEU would cut import tariffs from 10 per cent to zero per cent for garment and textile products and apply a trigger safeguard measure. So, in a way, there is an upper limit to expansion of Vietnamese exports to this region.

If Vietnamese exports exceed the trigger volume of 1.5 the average of last 3 years, then EAEU will conduct an investigation to decided whether to apply most favoured nation (MFN) tariffs.

Logistics remains another obstacle in increasing export volume to the EAEU. Currently, it takes one to two months time for Vietnamese goods to reach EAEU member countries, participants at a recent seminar in HCM City were told.

Last year, Vietnam-EAEU trade increased by 6 per cent year-on-year to $3.6 billion. (RKS)

Fibre2Fashion News Desk – India


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