Pressure of protection: Enterprises must improve competitiveness

Tariff barriers are removed, technical barriers are erected, leading to difficulties for enterprises. Picture: Trần Việt.

Difficulties increase

Currently, Vietnam has signed 10 Free Trade Agreements (FTA), helping Vietnamese goods to benefit from deep tax cuts, many items also enjoy 0% of tax. However, in many economies, when the tariff barriers are removed, technical barriers are erected, most signed FTAs have regulations on technicl barriers. Not only are the technical barrier, but the trade protectionism has recently emerged with many decisions from leaders of major economies.

According to the data from the Vietnam Competition Administration Department (under the Ministry of Industry and Trade), so far, Vietnam’s export products have faced over 80 trade remedies from other export markets, which are largely dumping cases, and combat against subsidy. The high export turnover items are highly at risk to face lawsuits such as: Leather, steel, shrimp, seafood. This situation above has raised concerns for enterprises, notably small and medium enterprises.

Mr. Nguyen Ton Quyen, Vice Chairman of the Vietnam Timber and Forestry Product Association says, although the export turnover of the wood industry is not large, the industry has faced many difficulties over time as its import markets have required products to meet standards, have origins, and lawful certificates. These requirements and barriers have caused many difficulties for our enterprises, many of them could not meet the demands then they are unable to export products, meanwhile there are not many opportunities to sell the items in the domestic market.

Besides the setting of trade barriers, many countries are protected by implementing trade defense cases. A representative of the Vietnam Steel Association says, trade defense cases cause great damage to enterprises in finance, export turnover decreases and these enterprises may lose their markets. Moreover, though Vietnam’s steel industry has sued and has been sued many times, many enterprises still do not pay proper attention on this issue, thus, they have not yet collaborated with the State agencies to investigate, provide information and data.

Enterprises must put more effort

However, with such protection measures, though they is a rising trend, according to experts, they are short-term measures, because they can be reversed which damages the economy and enterprises of that country. So in the near future, Vietnam’s enterprises must find ways to improve their competitiveness, prove their strength in order not to lose their major markets. To reach strategic markets and deal with protective measures and trade protectionism, enterprises must determine to “live” with this trend. Until then, these enterprises must find their own ways to develop.

In this regard, Mr. Pham Xuan Pha, Director of Phuong Thanh Import Export Production Company Limited shares, the number of Vietnamese enterprises in the fields of manufacturing and exporting handicrafts is quite large, and import countries demand strict standards. Thus, the company has found a “niche” that is handicrafts for garden decoration, which mostly export to Japan, the EU or the US. However, they are difficult markets, requiring high quality with different cultural styles, thus, the Company has to change gradually its production equipment to meet the demands of customers. Thanks to that, the value of export is not only higher, but it also has less competitors.

For wood enterprises, Mr. Nguyen Ton Quyen thinks that, in order to deal with trade barriers and trade protectionism, these enterprises are actively seeking information about FTA and markets as well as the regulations of these markets to be more active in export activities, and have a good preparation to face.

Agreeing with him, a representative of the Vietnam Steel Association says, when participating in international trade organizations, the integration ability of Vietnamese enterprises under international regulations is still limited. Thus, Vietnamese enterprises must work and learn at the same time, raise awareness of international law, technology and foreign languages. Moreover, to improve competitiveness, enterprises must have a large size and good level of technology, must upgrade equipment and apply new techniques. Besides, the State should have plans and mechanisms to encourage, support, and facilitate domestic enterprises in investment of building a large-scale steel production centre, approximately 5-10 million tons/year, reducing the dispersion and separation as is currently.

These solutions to deal with trade protection measures mostly come from enterprises themselves, enterprises must capture the information of market, law, and the development of the process of trade liberalization, as well as the trade defense instruments; besides, these enterprises must find ways to seek the relationships between enterprises and enterprises, enterprises and associations, and competent agencies…