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Vietnam Today

APEC motivates Vietnam to sign FTAs

Released at: 14:10, 01/09/2017 APEC Viet Nam 2017

APEC motivates Vietnam to sign FTAs

Deputy Foreign Minister Bui Thanh Son, APEC SOM2017 Chair was speaking at the SOM Dialogue on RTAs/FTAs on August 27, 2017 in Ho Chi Minh City. Photo: apec2017.vn

FTAs a benefit of Vietnam's greater cooperation within APEC and also outside the bloc.

by Minh Tuyet - Nguyen Quynh

“We have to utilize all of the opportunities presented by APEC to develop our economy and maintain its modernity,” Mr. Pham Tat Thang, a senior expert at the Ministry of Industry and Trade, told VET.

APEC creates connections in economics and politics and, especially, in culture among Asia-Pacific countries, including leaders such as the US, Russia, Japan, and China, he went on. “APEC is consensual, while free trade agreements (FTAs) are binding, but FTAs are always based on APEC’s directions,” he said.

Crucial motivation

In the last 30 years, half of all FTAs and regional trade agreements (RTAs) have been in APEC and the number is increasing quickly, Minister of Foreign Affairs and Chair of the APEC Senior Officials Meeting (SOM-3) Bui Thanh Son told the recent senior APEC officials meeting in Ho Chi Minh City.

APEC members have signed 165 FTAs and RTAs, Mr. Son revealed, with 62 signed among members. In the 2000-2016 period, internal trade within Asia-Pacific rose 274 per cent, from $2.3 trillion to $6.3 trillion.

Along with implementing commitments in FTAs, Vietnam is trying to fulfill the Bogor Goals on free trade and investment in APEC by 2020, Mr. Son said. “We are taking concrete steps to implement the FTA in Asia-Pacific (FTAAP), which is one of the key tools in APEC’s regional economic integration agenda,” he added.

He stressed that FTAAP should be a comprehensive free trade agreement by developing regional FTAs such as ASEAN+3 and ASEAN+6. Fortunately, Vietnam has negotiated with ASEAN members on FTAs between ASEAN and important economies and also has important bilateral FTAs, he said.

During senior officials meetings, FTAs were a topic of much discussion, according to Ms. Marie Sherylyn Aquia, Chair of the APEC Committee on Trade and Investment. APEC members are important players in FTAs and RTAs and Vietnam has long-term plans and made great efforts in integrating and cooperating with other economies.

As at the end of 2016, Vietnam had 16 FTAs, including six new-generation FTAs, such as the EU - Vietnam FTA and the TPP. Ten have come into effect, including six signed between ASEAN and China, South Korea, Japan, India, Australia and New Zealand, and four bilateral FTAs with Chile, South Korea, Japan, and Eurasian Economic Union.

By 2020, when all 16 FTAs come into effect, Vietnam will have 59 partners, including five members of UN Security Council and 15 of the 20 countries in the G20.

Challenges ahead

APEC 2017 takes place in the context of many challenges arising from the complex evolution of the global economic situation. Vietnam is not separate from such challenges, but the greatest advantage the country holds is the significant increase in internal resources thanks to the government’s efforts to create innovative growth models, Mr. Son said.

The trend of promoting trade liberalization and facilitation in APEC has opened up tremendous opportunities for Vietnam’s business community, especially small and medium-sized enterprises, to seek cooperation and boost exports to markets inside and outside of the region.

Among Vietnam’s leading economic partners, APEC is currently the largest direct investor, accounting for 78 per cent of total foreign direct investment (FDI), 60 per cent of export value, 80 per cent of import value, and 79 per cent international visitors.

Vietnam’s business community has been making good use of opportunities to access and tap into the Asia-Pacific market, reflected in export turnover to member economies increasing each year.

According to the General Department of Vietnam Customs, export turnover in 2014 was estimated at $98.37 billion. In 2015 it grew about 8 per cent to $106.12 billion and in 2016 was over $119.69 billion. 

Apart from the benefits and opportunities provided by the APEC cooperation process, Vietnamese enterprises also face a number of difficulties. Members of the region, in addition to active cooperation, also have fierce competition in trade and investment relations.

Vietnam is, relatively speaking, some distance behind in terms of development compared to most other members, so is vulnerable to competition. Implementing commitments in trade and investment liberalization and facilitation within the forum means that Vietnam will face many obstacles from greater competitive pressure when opening up its market.

As Vietnam is at a level of medium-low development, it bases negotiations on the following principles: special and differential treatment for open economies, exchanges, and market access, Mr. Son said.

“Vietnam’s principles in negotiating FTAs are shared by more developed economies,” he added. “Therefore, in trade agreements, Vietnam has a roadmap and timeframe for businesses to adjust and participate more effectively.”

Most Vietnamese enterprises are SMEs, marked by low technology, outdated management methods, and an absence of business strategies. Conversely, the strong competitiveness of APEC member economies, which have a high level of science and technology development and high growth, is undeniable, especially in the fields of banking and finance, insurance, telecommunications, power, manufacturing, and shipping, etc.

In the context of international economic integration in general and cooperation within APEC in particular, Vietnam will host the APEC Leaders Meeting for the second time in eleven years this November in central Da Nang city. In addition to efforts from the government regarding APEC conferences, businesses should also actively take advantage of opportunities for investment and business, to maximize the benefits and strengthen connectivity with APEC partners to expand markets and increase production, sales and services in the region.

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