New pact to yield export benefits

A free-trade agreement (FTA) between Viet Nam and the Customs Union of Russia, Belarus and Kazakhstan is expected to be completed this year.

This will create many tariff advantages for Viet Nam's exports, especially textiles, a report by the Ministry of Industry and Trade's Viet Nam Economic Times said.


Russia is one of Viet Nam's comprehensive strategic partners, with bilateral trade achieving great progress over the last several years.

According to the ministry, the revenues earned from Vietnamese exports to Russia increased more than 62 per cent per year and Russia became the biggest market for Viet Nam in terms of export growth in the 2010-2013 period.

In 2013, Viet Nam's exports to Russia was worth more than US$1.9 billion, up over 20 per cent from the previous year. In the first two months of this year, Viet Nam's exports to Russia reached $316 million, up 10.7 per cent year over year. The main exports included phones and components, computers, electronic products and components, textiles, garments, footwear, coffee, seafood, cashew nuts and rice.

The fourth round of negotiations over an FTA between Viet Nam and the Customs Union ended in February, while the fifth round is expected to take place from March 31 to April 4 and the negotiations are expected to end later this year.

The FTA is expected to pave the way for Vietnamese businesses to access a new, larger market with preferential tariffs.

According to the Viet Nam Trade Office in Russia, once the FTA is completed, many non-tariff barriers such as customs procedures, payment of goods and technical regulations, among others, in the union's markets will be removed, many taxes will be cut and services and investment development conditions will become more favorable.

In 2013, the textile exports to Russia reached $135.6 million, an increase of 11.02 per cent over 2012, according to the General Department of Viet Nam Customs.

The Viet Nam National Textile and Garment Group (Vinatex) said that with a population of 143 million, tariff preferences related to Russia's accession to the World Trade Organisation and the expected FTA between Viet Nam and the Customs Union, Russia will become a key market for Vietnamese textile and garment exports in the coming years.

Trade Counselor in Russia Pham Quang Niem said, the biggest problem for Vietnamese exporters is the absence of a centralised, stable trade transaction organisation in Russia, which makes it difficult for them to learn about consumer demands in this market.

Russia is an open market so the Vietnamese businesses trading with this market have to compete fiercely with rivals from other countries providing similar products, he said. It is a large import market that remains potentially risky because its legal system is inadequate and the payment process with Russian partners remains difficult, especially those made with letters of credit, he said.

For better access of the Russian market, Niem said that the enterprises should participate in annual fairs and exhibitions to introduce their products to Russian partners directly because they prefer that way to seek information through websites. This should be done while entering into joint ventures with Russian partners to establish enterprises which will process Vietnamese products in both countries to help increase sales in Russia.