Opportunities of new-generation FTAs for HN

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In the long term, domestic enterprises will benefit from reforms in institutional regulations and laws.

The term of new-generation FTA covers comprehensive scope, surpassing free trade framework, including the Viet Nam-EU FTA (EVFTA); the Trans-Pacific Partnership Agreement (TPP); the Transatlantic Trade and Investment Partnership (TTIP); the North American Free Trade 

According to a recent report on export performance in Ha Noi, the local authorities assessed that 90% of tariff exemption would help Vietnamese enterprises in general and local ones enjoy numerous opportunities to expand export market shares.

Key Ha Noi’s exports, including garments, textiles, footwear, and agricultural produce are projected to benefit from lower tariffs. On the other hand, local businesses will profit from imported raw materials at reasonable costs with good quality and a high rate of stability.

FTAs will support local enterprises to expand market and improve their competitiveness; alter trade circulations among FTA signatories and broaden trade goods.  

In addition, investment inflows will be changed towards more preference for Viet Nam in general and Ha Noi in particular thanks to its competitive advantages and commitments on investment and trade preference. Ha Noi was projected to absorb more investments, especially in export-oriented production sectors namely garments, textiles, footwear, food processing, and electronic assembling.

New-generation FTAs will also create favorable ways for economic growth in Ha Noi.

In the context that the TPP came to a standstill and may be hardly passed this year, Viet Nam in general and Ha Noi in particular will loss possible opportunities which the TPP will bring. However, it is necessary to make full use of opportunities from other FTAs.  

Besides the aforesaid advantages, new-generation FTAs will bring fresh challenges on local exports especially tariff incentives are only given to exports with appropriate origins. As auxiliary industries of Ha Noi have yet matured, relying on imported raw materials, local enterprises are unqualified for lower tariff preferences from new-generaton FTAs.

In addition, overseas shipment of agricultural products, food, and light industrial products, a strength of Viet Nam in general and Ha Noi in particular are coping with heavy challenges due to complicated trade protections in foreign countries. On the other hand, local enterprises will be put under more pressure on cheap products at good qualities with other FTA signatories even in the domestic market.

Solutions

Earlier, the Ha Noi People’s Committee on 2013 approved an action plan on the implementation of the export-import strategy in the 2011-2020 period with a vision towards 2030. The local authorities pledged to provide market information on import policies of foreign countries and Vietnamese export and import mechanisms and policies; encourage enterprises to select raw materials.

The local authorities also asked local enterprises to pay attention to and research on commitments on labor, trade unions, intellectual property rights, and environment.

Local enterprises were urged to compose export strategies in accordance with every market, commitments to key markets including the EU, U.S., and Japan; build development strategies for every commodity with a view to renovating production process, exercising thrift-practice, diversifing models, raising quality, cutting cost, and raising competitiveness.

The local authorities also stressed the importance of market research, market forecast, making full use of the  mass media; and joining in training sessions on new-generation FTAs.

Local businesses were asked to keep a close watch on changes of policies, especially those on tax and foreign markets (tariff barriers, non-tariff barriers, quality standards, technical standards, food hygiene, quarantine, economic growth in combination with environmental protection)./.  

By Kim Anh