Role of Vietnam Customs in implementing the EVFTA

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Mr. Nguyen Anh Tai, Deputy Director of International Cooperation Department (General Department of Customs)

Could you please tell us the key points for Customs in the EVFTA?

The EVFTA Agreement includes 17 Chapters, eight Annexes, two Protocols, two Memoranda of Understanding and four Joint Statements. In which two areas are considered key point in thetrade in goods and services.

The enforcement role of Customs will focus on the issue of trade in goods, specifically, the implementation of the preferential export tariff schedule, the EVFTA special preferential import tariff schedule according to the routes and lists of goods committed in the agreement; verify the origin of import and export goods under agreements to ensure the enjoyment of preferential tariffs as committed; ensure the principles of customs procedures, commitments on trade facilitation, enforcement of intellectual property rights (IP) at the border and cooperation with rights holders, control of licenses and documents related to goods clearance requirements for goods that need import-export licenses and specialized inspection results in customs dossiers to decide customs clearance.

In trade in goods, the EVFTA stipulates commitments on tax reduction and the schedule. Basically, the import tax reduction rate according to the EVFTA is divided into the following sections: the group eliminating import tax immediately; eliminating import tax according to the schedule; tariff quota group and non-committed commodity group.

For EU exports to Vietnam, Vietnam pledges to eliminate tariffs as soon as the agreement comes into effect with 48.5% of tariff lines (accounting for 64.5% of EU export turnover to Vietnam.) In seven years, 91.8% of tariff lines were equivalent to 97.1% of EU export turnover to Vietnam.After 10 years, the elimination of tariffs was about 98.3% of the tariff lines (accounting for 99.8% of the value). For the remaining 1.7% of tariff lines, Vietnam will apply a roadmap to eliminate import duty longer than 10 years or apply quotas according to WTO commitments or non-commitments.

Vietnam and the EU committed not to implement export tax on exported goods. The reason for the reduction of export tax is that many countries in the world see the export tax as an indirect subsidy that causes unfair competition between countries' goods. However, Vietnam has applied the right to impose export taxes on 57 tariff lines, including important products such as crude oil and coal. For the current high export tax rates, Vietnam agrees to bring the export tax ceiling to 20% for a maximum of five years (particularly for manganese ores with a ceiling of 10%). For other products, the maximum route is 16 years.

The rules of origin agreed by Vietnam and the EU in the EVFTA have the same basic content as the FTAs that Vietnam signed earlier. In addition to the traditional mechanism of issuing certificates of origin, the two sides agreed to allow exporters to self-certify origin. This is the mechanism by which the exporter declares the origin of the product in the set of documents submitted to the customs office instead of requesting a certificate of origin from the competent authorities.

The EVFTA on IP commitments includes commitments on copyright and related rights, commitments on patent rights, industrial designs, geographical indications, confidential information, and protection of intellectual property rights. Basically, Vietnam's IP commitments are in accordance with current law. Some points that Customs should pay attention to include trademarks, industrial designs, enforcement (border control measures for exports suspected of infringing upon IP rights), geographical indications, pledges of most favored nation treatment.

The agreement sets out the most common requirements to ensure an effective and predictable legal environment for economic entities, especially small and medium enterprises.

In your opinion, what are the customs and trade facilitation procedures provided for in the EVFTA?

In the EVFTA, customs regulations and trade facilitation are concentrated in Chapter 4 of the Agreement and Annex 2 - Protocol on administrative mutual assistance in the field of customs.

In terms of content, commitments in EVFTA on customs can be classified into five groups:

Group 1, regarding commitments on specific customs procedures such as: Release of goods; goods in transit or transited goods; predefined; risk management; customs agent; fees and charges; customs value; check customs documents before goods areon board.

Group 2, commitments on trade facilitation:eliminate unnecessary procedures, discrimination, delay procedures; simplify customs conditions and procedures; using modern methods (risk management, EE); use electronic data exchange system.

Group 3, commitments on transparency in customs procedures: publication of documents, regulations, procedures and administrative information, grievance redress mechanism, appeal administrative decisions in customs procedures.

Group 4, supporting enterprises in customs matters: the answer-information point for enterprises; periodic consultation with representatives of businesses.

Group 5, administrative cooperation between EU Customs and Vietnam Customs; cooperation to implement EVFTA and administrative support among Customs agenciesmust be committed.

From a content perspective, it can be said that the commitments on customs and trade facilitation in the EVFTA are designed based on and similar to the provisions of the WTO Trade Facilitation Agreement (TFA).

All commitments related to specific obligations to enterprises are in the content of Chapter 4 on Customs and Trade Facilitation.

In addition, Protocol No. 2 of the agreement covers the rights and obligations of EU and Vietnamese customs authorities, and does not directly affect or change the rights and obligations of import and export entities between the EU and Vietnam nor directly affect the customs procedures, order, conditions or the responsibilities and obligations of the customs authorities with import and export subjects.

All commitments in Protocol 2 are within the functions, tasks and powers of the Customs authorities of each party in accordance with the provisions of national law.

To effectively implement the agreement, at the same time, actively support businesses to take advantage of incentives from the EVFTA, what has the customs sector been doing?

Firstly, regarding the internalization of commitments in the agreement, the detailed review shows that Vietnamese law is compatible with all commitments in the EVFTA on customs and trade facilitation. This is the result of the process of developing the 2014 Customs Law, which took place in parallel with the process of negotiating new generation FTAs ​​such as the EVFTA and CPTPP.

Chapter 4 on Customs and Trade Facilitation of the EVFTA is one of the earliest chapters to complete the negotiation, in early 2014. This stage was also the negotiation stage of WTO Trade Facilitation Agreement (TFA).

Therefore, the Ministry of Finance and the General Department of Customs have directed the review to internalize the commitments in FTAs ​​into the 2014 Customs Law. Therefore, it is not surprising that Vietnamese law in this area has been implemented toabsorb trends and standards on customs and trade facilitation in the world including TFA and the major principles in the CPTPP and EVFTA.

The other reason is that, in regard to transparency requirements, in recent years, Vietnam has made great efforts in administrative reform as well as increasing the transparency of the legal system and emphasizing citizen participation in this process. As a result, many requirements on transparency, information disclosure and consultation in TFA have been met in Vietnamese law. The Customs Law 2014 has fully met customs obligations and facilitated trade in the EVFTA.

Secondly, the General Department of Customs has actively participated in coordination with the units of the Ministry of Finance and the Ministry of Industry and Trade in the process of developing legal documents to implement the EVFTA on tariff and origin of goods. This is also the process of catching up with the requirements related to the enforcement role of the Customs.

Thirdly, the General Department of Customs conducted propaganda and dissemination of the EVFTA on customs-related contents to the business community and related partners.

Fourthly, in order to prepare for the implementation of the agreement after it officially comes into effect on the contents under the authority of the General Department of Customs, the Director of the General Department asked the International Cooperation Department to preside over the elaboration of the implementation plan of the EVFTA of the General Department of Customs and consulting units of the General Department to finalize before submitting to the Director of the General Department for approval, submitting to the Ministry of Finance and signing for promulgation.

Accordingly, the draft Implementation Plan includes the contents of Chapter 4, Protocol 2, the content of origin related to the Customs authorities on the implementation of the rules of origin of Chapter 1 and Protocol 1 "Provisions on origin goods and mode of administrative co-operation management" and a number of contents related to customs in the agreement include trade remedies, enforcement of intellectual property rights, general provisions on implementing the agreement.

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The plan for identifying and assigning specific responsibilities for each unit of the General Department of Customs. At the same time, this plan also ensures the organization of the implementation of the Government's General Implementation Plan and the Ministry of Finance's Implementation Plan, including participation in the Agreement's Implementation Mechanism (sending representatives to participate), Trade Committee (chaired by Ministry of Industry and Trade) and Article Customs Committee (17.2 specialized committees) and other Committees and Working Groups upon request from ministries or sectors.