ASEAN- Australia and New Zealand Free Trade Agreement: Big Chances for Enterprises

Addressing at an introductory of ASEAN - Australia and New Zealand Free Trade Agreement (AANZFTA) held by the southern branch of the Vietnam Chamber of Commerce and Industry (VCCI) in Ho Chi Minh City, Mr Tony Burchil, senior Australian Trade Commissioner, said: Vietnam will have more opportunities to export its products to Australia and New Zealand after it signed a free trade agreement along with other ASEAN members.

AANZFTA was signed in February 27, 2009 in Thailand, marking a milestone in cooperation and effort of ASEAN member countries, including Vietnam. According to the agreement, at least 90 per cent of tax lines will be eliminated by ASEAN, Australia and New Zealand.

 

Free flow generated by the agreement will not only apply to products and services but also capital and skilled labour between developed and developing markets. Signatories will cooperate to establish nontariff regimes on licensing, quality standard, hygiene and food safety criteria. Participating countries will not raise commercial barriers against each other. AANZFTA will differently open markets of 10 ASEAN member countries, depending on their specific conditions, especially for new members like Vietnam, Myanmar, Cambodia and Laos. The tax cut will be progressive. Following the enactment of the agreement, Australia commits to scrapping tariffs on Vietnamese farm produce exported to this market. In return, Vietnam will levy 0 per cent taxes on breeding animals and 5 per cent on living animals imported from Australia. By 2016, the tariff will be 0 per cent. Vietnam will also commit to removing most of tariffs on Australian goods, with a 5 per cent cut on many types of fruits and fruit juices in 2010.

 

Australia pledges to eradicate taxes on fish and fish products of Vietnam while Vietnam reduce taxes on 125 fish products from Australia to 0 per cent and 40 fish products to 5 per cent.

 

Regarding dairy products, Vietnam will gradually cut import duties on milk, powdered milk, butter, cheese, skim powdered milk and yoghurt and remove the taxes in 2017- 2018. By 2020, all Australian dairy products will be subjected 0 per cent of import taxes.

 

Australian wheat, malt, barley and oat will be gradually trimmed before being scrapped in 2016. Commodities currently incurred 5-50 per cent of import taxes will be reduced to 0 per cent in 2018 and 2019. By 2022, Australian wine and spirits imported into Vietnam will be decreased to 20 per cent - 40 per cent while vodka is subjected 5 per cent of import duties in 2020. Australia will eliminate tariffs on many industrial and agricultural products imported from Vietnam from 2010 such as footwear, pharmaceuticals, pulp and paper while Vietnam will apply its free-entry on Australian corresponding goods in 2018 - 2020. However, Australia will bind all tariffs on clothing and textiles by 2020.

In recent five years, trade ties between Vietnam with Australia and New Zealand have been continually expanded. In 2008 alone, the two-way trade revenues between Vietnam and Australia amounted to US$5.6 billion while the figure with New Zealand was US$300 million. In general, the growing exportation of Vietnam to these markets is seen to be well beyond its potentiality. In investment relations, Australia and New Zealand are now operating 190 projects with a total investment capital of over US$1 billion. However, Vietnamese exporters have not won the trust of Australian consumers.

 

A representative from Australia and New Zealand Consulate General said Vietnamese enterprises must try their best to grasp opportunities generated from the agreement. Ms Nguyen Hong Ha, Deputy Director of VCCI in Ho Chi Minh City, said, for a country with export revenues accounting for more than 70 per cent of GDP, Vietnamese exporters should take this agreement to boost sales to these markets. At the same time, domestic enterprises also have more opportunities to access cheaper Australian and New Zealand sources of materials and machinery.

 

When this agreement takes effect on January 1, 2010, it will be the biggest-ever free trade agreement of Australia and New Zealand. This covers an area of 600 million people and a combined GDP of US$2,700 billion.