Poland – important gateway to bring Vietnamese goods into EU

The Ho Chi Minh City Investment and Trade Promotion Center (ITPC) on January 28 held a seminar on the prospects of exporting goods to the European Union through the gateway of Poland to assist enterprises to have more information and experience to increase exports to this market.
Coffee is one of key export products of Vietnam to Poland. (Photo: SGGP)
Coffee is one of key export products of Vietnam to Poland. (Photo: SGGP)

Export turnover of Vietnamese goods to Poland increased by 18.4 percent

According to Mr. Tran Phu Lu, Deputy Director of ITPC, Poland is an important and dynamic market located in the heart of Central Europe. Poland has a large population, a young and highly-skilled workforce, developed infrastructure, a friendly business environment, strong economic growth prospects, and a convenient location that allows access to the market of 500 million people of the EU. With a population of more than 38 million people, Poland is the largest market among the new members of the EU and the sixth-largest in the EU. The participation in the EU in 2004 helped Poland to make economic reforms early, improve the business environment, and promote economic growth.

According to the data of the World Bank (WB), the gross domestic product (GDP) of Poland in 2019 was about US$595.86 billion, making it the tenth-largest economy in the EU. Poland maintained a real GDP growth rate of more than 4 percent per year from 2014 to 2019. In 2019, its GDP grew by 4.1 percent. The motivation mainly came from strong domestic demand, supported by high consumer confidence, a vibrant labor market, and strong growth in personal consumption expenditures. However, last year, due to the influence of Covid-19, its GDP was forecasted to decrease by 4.25 percent and would return to 4 percent in 2021.

The EU-Vietnam Free Trade Agreement, which officially became effective as of August 1 last year, has brought many advantages and opportunities to promote trade between Vietnam and Poland. It is proved by the import and export data between the two countries recently released by the General Department of Customs of Vietnam. Accordingly, the two-way trade turnover between Vietnam and Poland exceeded $2.11 billion, up 17.6 percent compared to 2019. Vietnam's exports to Poland surpassed $1.77 billion, up 18.4 percent, while Vietnam's imports from Poland hit $341 million, up 13.9 percent over the same period.

Vietnam is the 19th largest exporter to Poland. The key products that Vietnam exported to Poland last year include computers, electronic products, and components with an export turnover of nearly $993.21 million; other machinery, equipment, tools, and spare parts with nearly $224 million; textiles and garments with nearly $69.4 million; coffee with nearly $39.16 million; footwear with more than $38.02 million.

Speaking at the seminar, Mr. Piotr Harasimowicz, Head of the Polish Investment and Trade Agency in HCMC, said that 71 percent of tariffs were immediately removed by the EU for Vietnamese export goods. The rest will be removed in seven years. Therefore, Vietnamese goods will have advantages in conquering the Polish market, in particular, and the EU market in general.

Understanding the rules of origin to avoid risks

According to Mr. Dang Thai Thien, Deputy Head of Supervision and Management Department of the HCMC Customs Department, the EU (including the UK) is the second-largest import market in the world, with extra-EU imports of about 1.93 trillion euros. It is the largest seafood consumption market in the world, with an annual import value of about 50 billion euros.

Currently, Vietnam is the tenth-largest supplier to the EU, accounting for about 1.8 percent of the market share. The EU is currently the fifth-largest trading partner, the third-largest export market of Vietnam after the US and China. In the opposite direction, Vietnam is the 17th largest trading partner of the EU in the world, the eighth largest in Asia, and the second-largest in the ASEAN.

Last year, Vietnam's exports to the EU accounted for 14.2 percent of the total exports; imports from the EU accounted for 5.8 percent of the total imports. The Netherlands was the largest export market of Vietnam in the EU, with a turnover of nearly $7 billion, followed by Germany with $6.64 billion, the UK (before Brexit) with more than $4.95 billion, France with more than $3.29 billion, Italy with more than $3.10 billion, Austria with $2.82 billion, Belgium with more than $2.31 billion, and Spain with $2.13 billion. Poland was the ninth largest export market for Vietnamese goods in the EU.

According to the Ministry of Planning and Investment, the impact of the EVFTA on Vietnam's import-export activities and its contribution to GDP is extremely positive. Specifically, Vietnam's exports to the EU are forecasted to increase by 42.7 percent in 2021 and 44.37 percent in 2022. The EVFTA helps to boost growth in some industries of Vietnam, such as water transportation, air transportation, pork, sugar, rice, footwear, apparel, textiles, ceramics, and glass.

To increase the amount of goods exported to the EU, Mr. Dang Thai Thien noted that firstly, the export products must meet the standards of sanitary and phytosanitary (SPS). Accordingly, the EVFTA stipulates that each side needs to make a list of enterprises exporting agricultural and food products that meet the requirements of food safety by the export commodity codes to send to the other side. The recognition time is also shortened to three months from the date of receipt of the request compared to the WTO regulations.

The EVFTA also stipulates flexibly for SPS measures issued by the EU that Vietnam hardly meets. Vietnam can choose one of three options if it faces difficulty in meeting an SPS measure: (1) the EU will give Vietnam transition time to comply with this measure; (2) Vietnam will propose an equivalent SPS measure and ask the EU to consider and recognize it; (3) the EU will provide technical support to help Vietnam to meet SPS measures.

Enterprises also need to learn about technical barriers to trade (TBT), such as the ban on the use of chemicals in food and textile products and the guarantee of legal origin under the Voluntary Partnership Agreement on Forest Law Enforcement, Governance, and Trade (VPA / FLEGT). The Government of Vietnam issued Decree 102/ND-CP on the regulation of the timber legality assurance system of Vietnam.

During the export process, enterprises need to pay special attention to the rules of origin in the EVFTA. According to regulations, only goods with origin in the free trade agreement are eligible to enjoy tariff preferences. When exporting goods to the EU, understanding and strictly practicing the rules of origin will avoid unnecessary risks for enterprises.

According to Mr. Dang Thai Thien, the current certification of origin comprises of the certificate of origin and self-issued certificate of origin. Goods from Vietnam exported to the EU must have the certificate of origin issued according to the regulations; a declaration of origin (self-issued certificate of origin) by any exporter with a consignment with a value evaluated in accordance with the current law of Vietnam and not higher than 6,000 euros; a self-issued certificate of origin by an eligible exporter or an exporter that has been registered in accordance with the current law of Vietnam after Vietnam notified the EU that such regulations would apply to Vietnamese exporters.