Suffering because of Covid-19, exports look forward to EVFTA

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Textile is a typical industry with many opportunities to boost exports when the EVFTA comes into effect. Photo: N. Thanh

Agriculture and fisheries are seriously affected by the Covid-19 epidemic

Reporting on trade activities, especially the import and export of goods during the Covid-19 epidemic at the meeting of the Government Standing Committee earlier this week, Deputy Minister of Industry and Trade Dang Hoang An said thatin the first two months of the year,despite difficulties, import-export activities still grow. Specifically, the total import-export turnover in two months reached USD74 billion, up 2.4 percent over the same period last year. Both exports and imports increased by 2.4 percent, reaching USD36.92 billion and USD37.1 billion, respectively. "This is an effort of the Government, ministries, branches, localities and the business community," Deputy Minister Dang Hoang An said.

According to the Ministry of Industry and Trade, in February 2020, Samsung promoted the export of new version of S20, so import and export in the first two months of this year kept anupward trend compared to the same period last year. Notably, compared to the same period last year, the export turnover of the region with 100 percent of domestic capital was estimated at USD 11.41 billion, up 6 percent. The FDI sector (including crude oil) reached USD 25.51 billion, up 0.9 percent. Thus, the export of domestic enterprises continues to be a bright spot in Vietnam's trade activities with a higher growth rate than the FDI enterprises.

From a commodity perspective, the processing industry group still plays a key role in exporting. Generally, in the first two months of 2020, export turnover of this commodity group reached USD 31.39 billion, up 4.1 percent over the same period last year, accounting for 85.01 percent of the country's total export turnover.

The Covid-19 outbreak in China (the third largest export market of Vietnam and the largest import market of Vietnam) sincethe end of January 2020 has significantly affected commercial activities of Vietnam. In thiscontext, the Ministry of Industry and Trade said that agriculture and fishery are the groups most clearly affected by China as Vietnam's key agricultural and fishery export market. The export turnover of agricultural and fishery products in February 2020 decreased by 15.1 percent compared to January 2020. Eight of nineitems in this group have witnessed decreased export turnover over the same period in 2019.

Opportunities from EVFTA

Imports and exports of Vietnam's goods in the short term is forecast to face many difficulties with unfavorable factors due to the evolution of the disease situation which is showing signs of strong spread outside China, especially in Korea and Japan. These are Vietnam's leading trading partners. According to the Ministry of Industry and Trade, in case of a prolonged epidemic, it may negatively impact the export growth target of the whole of 2020.

Notably, the impacts of Covid-19 not only affectedVietnam's exports to China, but also negatively affected Vietnam's trade activities with other markets. The reason is that most of Vietnam's production materials such as garments and electronic components are imported from China. Meanwhile, the US removal of Vietnam from the list of countries entitled to developing country regulations will have a certain impact on Vietnam's export of goods to this market in the near future.

Besides difficulties and challenges, according to the Ministry of Industry and Trade, in the future, a new motivation for Vietnam's export growth may come from new generation FTAs, specificallythe EVFTA. On February 12, 2020, the European Parliament (EP) voted to approve the EVFTA and the Vietnam-EU Investment Protection Agreement (EVIPA). The EVFTA is considered a lever for growth, opening great opportunities to penetrate a market withGDP of USD 18,000 billion. The EVFTA is expected to come into force in July 2020.

“On March 12, the EU will complete the procedures at the Council of Europe, being ready for the implementation of ratification and preparation for implementation of the agreement. The EU has also taken the initiative in drafting documents for implementation before submitting to the European Parliament, so the agreement can be put into immediate implementation. On the Vietnamese side, the Ministry of Industry and Trade has submitted to the Government documents on the ratification of the EVFTA. The Government Office has requested the Ministry of Justice to coordinate with the ministries and branches to review the list of legal documents that need to be issued, amended and supplemented to implement the EVFTA. Currently, the Government Office is collecting comments from Government members on this report of the Ministry of Industry and Trade,”said Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade) Luong Hoang Thai.

With the EVFTA, nearly 100 percent of Vietnam's export turnover to the EU will have import tax eliminated after a short time. Minister of Industry and Trade Tran Tuan Anh said thatso far, this is the highest level of commitment that a partner withus in the FTA has been signed. This benefit is especially meaningful when the EU is one of the two largest export markets of Vietnam today.