Making goods to go deep into the EU market

Ben Tre green skin pomelo stall. Photo: VNA

Space is vast

At the recent seminar on increasing connectivity to support businesses to take advantage of the EVFTA Agreement, Mr Ngo Chung Khanh - Deputy Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, assessed that export turnover was very positive; many of the double-digit increase in exports to the EU market is a very encouraging result after the EVFTA is implemented. On the opportunities from EVFTA, Mr Ngo Chung Khanh said that the proportion of exports to the EU has increased disproportionately, and Vietnam's trademark in the EU is limit ed. This shows that the EU market is vast.

According to economist Vo Tri Thanh, the EU market is not a new market for Vietnam; Vietnamese businesses are not too unfamiliar with the EU. The new point is that since August 2020, when the EVFTA took effect, Vietnam's exports have grown positively, while six months ago, it was growing negatively. The transformation is impressive, thanks to taking advantage of incentives from EVFTA. Since the Agreement's utilization rate was in single digits in the early stages, it is now more than 30% on average. Although compared with many other FTAs, this utilization rate is not low, the rate of change of utilization rate of EVFTA is the fastest.

However, Mr Vo Tri Thanh assessed that, in general, the increase in the EU market this year is not a breakthrough. In this market, traditional partners are where Vietnam exports some products with high export potential, but we have not been fully utilized. Moreover, the issue of taking advantage and linking trade with attracting investment in Europe has not been as expected.

Mr To Hoai Nam, Vietnam Association of Small and Medium Enterprises (VINASME), said that Vietnam's export goods are highly dependent on imported raw materials from countries outside the EU, which creates a challenge related to the origin of goods when they want to access the EU market. At the same time, regulations on the origin of goods, safety and hygiene are a considerable challenge for Vietnamese enterprises in exporting to the EU, to which large enterprises can have better access, but it will be very challenging for small and medium enterprises.

Looking at the overall picture, a representative of the Multilateral Trade Policy Department analyzed that the proportion of enterprises and localities effectively taking advantage of the EVFTA is modest; one of the crucial reasons is the connection between stakeholders agencies, including ministries, branches, localities, associations, businesses and people are still relatively limit ed.

At the corporate level, there is a fear of exporting to the EU due to a lack of capacity, capital, and technology.

Strengthen support for business connection

According to Mr Ngo Chung Khanh, in terms of support measures, in the implementation plan of the Agreement by the Government, ministries and sectors, there is an important item to support businesses to take advantage of EVFTA. However, the Ministry of Industry and Trade found that most provinces and cities have reported very general support measures, leading to the fact that businesses have not taken advantage of the benefits of the EVFTA. They are not focused on industries with strengths and want to take advantage of opportunities from EVFTA. In particular, connectivity in the value chain has many shortcomings. The business-to-business connection alone has revealed many problems.

According to a Vietnam Small and Medium Association representative, the EVFTA Agreement opens up huge trade opportunities for domestic enterprises. Therefore, to stand firmly in the EU market, enterprises alone cannot do it but must have a clear strategic direction. The Government needs to have a mechanism to protect small and medium enterprises when participating in international trade.

Along with that, the Ministry of Industry and Trade needs to design policies to create greater motivation for businesses, especially to help them have the motivation to accept a greater risk index when entering the world's economic playing field. With the role of leading the implementation of policies and plans to implement EVFTA, the Industry and Trade sector needs to be able to effectively propagate, investigate and survey scientifically and meticulously to provide information most effective for businesses about EVFTA.

A representative of the Multilateral Trade Policy Department said that following the direction of the Government, the FTA Portal has been built and deployed. However, getting enough information and providing information about each field and industry that businesses need requires more time and resources. In addition, from the fact that businesses take advantage of EVFTA because of limit ed support resources, Mr Ngo Chung Khanh proposed that each locality identifies one or two key products to build supporting ecosystem support and connect to maximize the benefits of the EVFTA Agreement.

In addition, the Government has approved a project to build a set of indicators to evaluate the results of annual FTA implementations of localities (FTA Index) and assigned the Ministry of Industry and Trade to assume the prime responsibility for and coordinate with other relevant agencies in the implementation of FTAs related to the implementation of the Project. FTA Index was built to create competition among localities, help provinces and cities change their thinking, change their ways of doing things, and participate more actively in supporting businesses in creating favourable conditions for the businesses industry in taking advantage of FTAs.

With the proposed plan, it is expected that when the FTA Index is implemented, the Ministry of Industry and Trade will conduct propaganda for localities and businesses to increase opportunities to exploit and make effective use of FTAs.