Vietnam - EU FTA: Challenges and Opportunities for Mekong Delta Businesses

At the seminar "Improving Vietnam - EU trade and investment relations: Mekong Delta enterprises on the prospect of Vietnam - EU FTA signing" organised by VCCI - Can Tho on November 28, 2012, Mr Franz Jessen, Ambassador -Head of EU Delegation in Vietnam, said that since the official establishment of diplomatic relations in 1990, especially the signing of the Cooperation Framework Agreement in 1995, the Vietnam - EU relationship has thrived in many aspects. The EU is currently one of the most important economic partners and is the second largest export market of Vietnam after the United States. Two-way trade turnover increases 15 to 20 per cent every year. In 2011, Vietnam’s total exports to the EU were valued at US$16.5 billion, accounting for 17.68 per cent of its aggregate exports. Of the sum, Mekong Delta provinces contributed more than US$9 billion. Key exports included tra fish fillet, canned agricultural products, handicrafts and rice.

 

Vietnam is the third ASEAN partner of the EU to start FTA negotiations. The two sides officially entered into FTA negotiations in early October in Hanoi. Vietnam and EU expect to conduct four rounds of negotiations and conclude in 2014. Mr Franz Jessen said Vietnam’s exports to the EU market made up nearly 20 per cent of its earnings. Without good utilisation of support policies and tariff reductions, Vietnam’s exports to the EU still face with obstacles. Therefore, Vietnam and the EU should actively promote the FTA negotiations to facilitate Vietnamese goods to enter into the EU.

 

VCCI - Can Tho Director Vo Hung Dung said the signing of Vietnam - EU FTA will bring the bilateral relations to a new high and facilitate Vietnamese exporters to penetrate deeper into this dynamic economic zone. In addition, with Vietnam - EU FTA, Vietnam will have the opportunity to catch a massive wave of investment from the EU.

 

He said the EU is an important market of the Mekong Delta. For that reason, the official signing of Vietnam - EU FTA will more or less affect export performances of Mekong Delta businesses. Poor-performing companies will be left behind. Hence, he recommended regional businesses expand factories, renovate machinery and equipment, modernise technologies, and enhance competitiveness from now till the official signing of Vietnam - EU FTA to fairly compete with EU goods even in Vietnam. The agreement will certainly consist of technical barriers like origin, food safety and hygiene standards. Therefore, enterprises should pay attention to technical requirements when they export products to the EU.

 

Economist Pham Chi Lan said the time for Vietnam to make official entry to new games is not much. Thus, such issues as performing internal reforms, improving competitiveness, actively grasping opportunities, and overcoming challenges at national and business level are very difficult. Enterprises themselves should take the initiative in monitoring, capturing information and defining their advantages to have effective solutions towards FTA.

 

Sharing experiences in trade cooperation with the EU, Huynh Quang Vinh, sales and marketing manager at An Giang Fruits and Vegetable Joint Stock Company (Antesco), said EU consumers and distribution systems like cheap but high-quality products. No poor-quality goods are accepted in this fertile but very demanding market. So, enterprises must have a number of international standard certifications covering quality management to corporate social responsibility. He emphasised that EU importers are very careful and fastidious. Although Vietnamese businesses have quality checking results certified by Vietnamese authorities, they still directly arrive in Vietnam or hire foreign experts to test management capacity, technologies, workshops, production processes and product quality. If everything is fine, they will sign contracts or receive goods.