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Export opportunities when implementing tariff commitments under FTAs

Summary

On August 27, the Ministry of Finance (MOF), in cooperation with USAID, organized a seminar on Vietnam's tariff commitments under Free Trade Agreements (FTAs) with the participation of Southern Customs Agencies and Representatives of enterprises ...

Updated on : 04-09-2018

10 decrees on preferential import tariff

Mr. Vu Nhu Thang, Director General of the International Cooperation Department of the Ministry of Finance, said that Viet Nam has been negotiating a series of free trade agreements, of which 12 have been signed, 10 have come into effect.

Each agreement contains a customs tariff schedule for special tax incentives. In order to comply with the List of Vietnamese Exports and Imports and the implementation of the Customs Law, and continue implementing Vietnam's commitments on import duty in Free Trade Agreements in the following years, the Ministry of Finance has submitted 10 Decrees on Vietnam's Special Preferential Tariff to the Government to implement the schedule of tariff commitments in the period 2018-2022/2023.

The promulgation of these decrees aims to ensure the stability and traceability of enterprises, and to supplement the regulations on import duty rates inside and outside tariff quotas.

According to the International Cooperation Department, for imported goods subject to duty quotas, the special preferential import tax rates applicable to the volume of import goods included in the tariff quotas are detailed in the tariff list attached to the Decrees. The import tax rate outside the tariff quotas will comply with the Government's regulations at the time of import. Annual import volume is regulated by Ministry of Industry and Trade.

At the same time, four specific conditions for application of special preferential duty rates are as follows: Goods under the special preferential import tariff promulgated together with the Decree; being imported from countries that are members of the Agreement into Vietnam; being transported directly from the export countries to Vietnam; meeting the provisions on the origin of goods under the Agreement and having a Certificate of Origin (CO) in accordance with current law.

These Decrees also supplement the provisions on explanatory and general regulations explaining the classification of goods in accordance with the List of Vietnamese Exports and Imports and its implementing guidelines.

Many opportunities for export

According to delegates at the workshop, the implementation of Vietnam's tariff commitments under Free Trade Agreements will help businesses diversify export-import markets, especially opportunities for export goods.

According to Mr. Vu Nhat Thang, Vietnam has a remarkable growth in trade over the past years. In 2017, the total import and export turnover reached $US 425 billion, of which trade surplus is over $US 3 billion. In the first seven months of 2018, Vietnam's total import and export turnover reached $US 266 billion, surpassing the total import turnover of goods in 2013 ($US 264 billion). The figures show that the economy has grown rapidly, in which commitments to implement the agreements is effective. In addition to the traditional export items, many new export items have been developed.

Commenting on the export opportunities for Vietnam in the implementation of tariff commitments of FTA partners, Ms. Tran Son Tra, Department of Multilateral Trade Policy - Ministry of Industry and Trade, said that Vietnam had 12 free trade agreements that were signed from 1996 to 2018.

During the implementation of the agreements, Vietnam's exports have flourished. Vietnam's exports to ASEAN countries alone increased 6.8 times compared with the rate of 10% per year during 1996-2016. The export structure is more diversified. In the past, rice and crude oil were the main commodities, but now, computers, electronic products, crude oil, textiles, etc., are the key commodities.

According to Ms. Tra, the implementation of the CPTPP will help Vietnam diversify its economy, trade and diversify export-import markets, avoiding over-dependence on one area. This is a key factor for Vietnam to improve the autonomy of the economy.

According to a study by the World Bank, Vietnam's exports to the world will increase by 4.2% if basic economic conditions are maintained and increase by 6.9% in 2030. Total export turnover in 2030 will reach over $US 311 billion; Vietnam's exports to CPTPP countries will increase from $US 54 billion to $US 80 billion, accounting for 25% of total exports.

At the enterprise level, Mr. Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers, said that seafood exports in 2017 reached $US 8.31 billion, and 2018 expected to reach 9 billion USD.

According to Nam, the implementation of free trade agreements has many opportunities and challenges for seafood enterprises. In particular, the CPTPP Agreement on Preliminary Products (HS code 03) shall be abolished immediately and after 2-3 years; Processed products are reduced by 5-10-15 years.

To take advantage of these opportunities, fisheries businesses need to grasp Vietnam's commitments in FTAs; changing business thinking in the new context, actively developing business plans for the medium and long term; Improve the competitiveness of enterprises and export products to meet the standards, quality and techniques of FTAs.

Source:  Customs News