4 October, 2019
Vietnam is currently a member country of new-generation free-trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EU-Vietnam Free Trade Agreement (EVFTA).
Such agreements have generated incentives for attracting foreign investments into Vietnam. Both local and foreign-invested companies are able to benefit greatly from the provisions in these agreements. Goods exported from Vietnam will have unfettered access to markets not only in the 11 members of CPTPP but also in the 27 member states of the EU, countries with whom Vietnam has been long building its relations on trade and investment.
According to the recently published statistics of the General Department of Vietnam Customs, from the beginning of 2019 to 15 August 2019, Vietnam has recorded USD157.35 billion in national export value, a year-on-year increase of 8.4% which is equivalent to USD12.19 billion. Specifically, Vietnam enjoyed more than USD1 billion surplus from trade with CPTPP nations in the first 8 months of this year.
According to the National Center for Socio-Economic Information and Forecast, Vietnam’s gross domestic product (GDP) and export revenue will expand by 1.32% and 4.04% respectively by 2035 thanks to the ratification of CPTPP.
Regarding CPTPP, the initial six countries which have already ratified CPTPP: Canada, Australia, Japan, Mexico, New Zealand, and Singapore, have slashed import tariffs for Vietnam since late 2018 and early 2019. The remaining CPTPP member states—Brunei, Malaysia, Chile, and Peru—will conduct tariff cuts for Vietnam after they ratify this agreement. Once the agreement is comprehensively implemented, duty-free access in CPTPP countries shall be granted to Vietnam for a large part of its agriculture, industrial, forest product, fish and seafood.
Vietnam, in return, has issued Decree No. 57/2019/ND-CP dated 26 June 2019, on schedules of preferential export and special preferential import tariffs to implement its commitments under CPTPP from 2019 to 2022, applying to the six nations which already adopted the agreement. Accordingly, preferential export/import tax rate on numerous tariff lines will be pared down gradually from 2019 to 2022.
Regarding EVFTA, after this agreement comes into effect, tax rates on approximately 50% of the products currently taxed from 6% to 22% will be slashed to 0%. The remaining products with tax rates of 5.5% to 26% will enjoy tariff cuts to 0% within 3 to 7 years after adoption of this EVFTA.
The full article can be found from Zicolaw's site here.
For more information, please contact:
Kevin Hawkins, Co-Executive Partner at ZICO Law Vietnam,
kevin.hawkins@zicolaw.com
