A string of Free Trade Agreements (FTAs) made ‘bumper’ debut in 2015, creating a solid foundation for 2016 which is so-called the year of economic integration.
Prospects from FTAs
In 2015, Viet Nam seta global record inthe number of FTAssignedwithother partners.This was a deserving outcome for Viet Nam in2015, theyear of ‘tradeliberalization’, saidMedia and Government Relations Manager at the Russian International Affairs Council (RIAC) Anton Tsvetov.
The signing of FTAs was expected to open up vast opportunities for Vietnamese enterprises to enlarge market, raise revenue, and improve production capacity.
In 2015,the Southeast Asian country sealedaFTAwith the Eurasian Economic Union (EAEU), the Republic of Korea, concluded negotiations on the Trans-Pacific Partnership Agreement,andfinalized the Viet Nam-EU Free Trade Agreement Negotiation(EV-FTA).
Viet Nam is the country with the lowest level of development among TPP member countries and is expected to benefit most from the TPP. Economists forecast that TPP wouldboostUS$23.5 billionofViet Nam’s GDPby 2020 and US$35.5 billion by 2025.
Under the EV-FTA, Viet Nam and the EU wouldcutover 99% oftariff lines, the highest commitments evermade by Viet Nam.Thus, the benefits of the EV-FTA for VietNam isequal to TPP’s ones.
Earlier,the FTA between Viet Nam and the member countries oftheEconomic Alliance Asia – Europe (EEU)-Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan-was reachedon May 29.The two sides are expected for each level of market opening in goods thataccountfor about 90% of tariff lines, equivalent to over 90% of bilateral trade.Once the FTA takes effect, two-way trade turnover would hit US$10-12 billion by 2020 and risethree times against 2014.
Especially, theASEAN Economic Community (AEC) came into effect on January 1, 2016, and createdthe world’s seventh-largest single market of 600 million people, larger than the European Union or the North American Free Trade Agreement.
Turning challenges into opportunities
It istheright time for Viet Nam to “play” withbig partners across the globe, said Dr. Vo Tri Thanh,Vice President of Central Institute for Economic Management (CIEM).The economist also regarded this as a unique opportunity for localenterprises to play with the best.
In 2016, Viet Nam will integrate comprehensivelyand intensivelyinto the global economy. The integration process will bring back both opportunities and challenges.
According to Minister of Planning and Investment Bui Quang Vinh,Viet Nam joined the AEC on December 31, 2015 and facedthree challenges including thefree movementof products, investment and high-skilled laborers.
Without higher competitiveness,Vietnamese peoplemay losejobsrightat ‘their playing ground.’Oncetrade liberalization is effective, a“large piece of thecake” would be taken byFDI enterprises,not domestic ones.
Minister Vinh also suggested the necessity to work with associations andenterprises to build mechanisms and policies which give aimpulse tointernal strengthen;seize FTA opportunities; and overcome challenges./.