Free trade agreements (FTA) signed between Vietnam and South Korea and the Eurasian Economic Union have brought challenges besides opportunities, requiring Vietnamese businesses to make good preparations in order to benefit from these agreements.
The Vietnam-South Korea FTA is the first signed one out of seven under negotiation agreements.
South Korea has become a more and more important trade partner of Vietnam, being the fifth largest export market of Vietnam last year. The country has been the leading foreign investor in Vietnam for the last several years.
Vietnam is the third largest seafood supplier of Korea with an annual growth rate of 19 percent.
The Vietnam-RoK FTA is expected to create more export chances for Vietnamese companies, especially those from seafood industry, to improve their competitiveness.
Previously, many Vietnamese seafood products were imposed a tariff rate of 10-15 percent when being exported to South Korea. The FTA will reduce these rates faster than the reduction route of RoK-ASEAN FTA.
The Vietnam Seafood exporters and producers hoped that processed seafood items especially shrimp would receive a quota from South Korea to export 10,000 tons at 0 percent tax rate a year.
South Korea is also the fifth largest import market of Vietnamese wooden items with a total turnover of US$300 million last year.
The FTA will open door for more coffee products of Vietnam to enter Korean market.
Besides advantages, the FTA will bring stricter technical barriers. South Korea has applied higher quality requirements. For instance, they have made moves to test Ethoxyquin to shrimp products and permitted only 11 out of 28 beef jerky production establishments to export to their market.
Therefore, Vietnamese businesses will have to make good preparations to overcome these barriers and seize opportunities from the FTA.
The Vietnam - Eurasian Economic Union FTA has recently been signed and taken effect, abolishing tariff rates of 10-20 percent on seafood and furniture items. The union members are Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
