Investors Missing Out on Benefits of Vietnam’s Free Trade Agreements
By Vietnam Briefing
Posted: 20th August 2015 10:39
HCMC – Vietnam has a range of free trade agreements (FTA) in place, and even more currently in the negotiation phase. However, many investors are still unaware of the potential benefits of these trade deals for their businesses. In fact, many investors are unaware that Vietnam even has an applicable FTA that could be of use to them.
Over the past few years, Vietnam has been quite active in signing bilateral trade agreements with countries throughout the world. Additionally, due to its membership in the Association of Southeast Asian Nations (ASEAN), Vietnam has become a party to a number of FTAs that the regional trade bloc has signed.
Wading one’s way through the legalese that many of these FTAs use to spell out their rules and regulations can often be headache inducing. This frequently is one of the most cited reasons why businesses fail to take advantage of the benefits available to them. Therefore, it is strongly suggested that businesses and investors consult with a legal and tax professionalwith strong experience in the region. This will allow a business to have a reliable, and clear, source of information on this complex topic.
Key free trade agreements that Vietnam has already signed and which are in effect include the following:
Chile-Vietnam Free Trade Agreement:
- Reduces tariffs and a number of tax categories.
- Around 92 percent of commodities are exempt from tariffs in each member state’s market.
- Reduces export duties on many goods to zero from 10 percent and simplifies many procedures.
- Reduces or eliminates tariffs on over 90 percent of all goods.
- Imposed the Common Effective Preferential Tariff (CEPT) Scheme. Over 99 percent of the products in the CEPT
Inclusion List (IL) for Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, have been reduced to the 0-5 percent tariff range.
- Cambodia, Laos, Myanmar and Vietnam, are moving slower but are expected to reach the 99 percent level for their respective CEPT ILSwithin the next few years.
- Tariffs eliminated on 99 percent of all goods.
- Reduces tariffs on a range of goods.
- Eliminated tariff rates on tariff lines and trade value for many goods.
- Includes a zero percent tariff on 90 percent of traded goods.
- Reduces tariffs on a range of goods traded between members.
Vietnam has also recently reached an agreement in principle on an FTAwith the European Union (EU). The deal, which is expected to be finalized before the end of this year, will eliminate tariffs on over 99 percent of all items, among other benefits.
Additionally, Vietnam is currently in negotiations on a number of other trade agreements, these include:
- ASEAN-Hong Kong, China Free Trade Agreement
- Includes the 10 ASEAN nations and Australia, China, India, Japan, New Zealand, and South Korea. Expected to significantly reduce tariffs.
- Twelve nations, including the U.S. and comprising a region with US$28 trillion in economic output. Will remove tariffs on almost US$2 trillion in goods and services exchanged between the signatory countries.
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