The conclusion of bilateral free trade agreement (FTA) talks between Vietnam and South Korea is an opportunity for the Southeast Asian country to ship goods to the Korean market and increase its export revenue, an official from the Vietnamese Ministry of Industry and Trade has said.
Under the trade pact, South Korea will for the first time open its doors for many Vietnamese export commodities such as garlic, ginger, honeybees and shrimp, Le An Hai, deputy head of the ministry’s Asian Market Agency, told Tuoi Tre (Youth) newspaper in an interview published Thursday.
The finalization of the FTA negotiations is the most significant success of Vietnamese Prime Minister Nguyen Tan Dung’s three-day visit to the East Asian country, which wrapped up on Friday, Deputy Foreign Minister Dang Minh Khoi told reporters last week.
The deal will make it easier for Vietnamese goods to enter South Korea, helping to take two-way trade to US$70 billion by 2020 and providing impetus for Korean investment in Vietnam, the deputy minister was quoted by the Vietnam News Agency as saying.
Vietnam and South Korea are slated to conclude talks on other technical issues and are likely to sign the trade pact in early 2015, Hai, from the trade ministry, said.
South Korea will cover 96.48 percent of imports from Vietnam under trade liberalization, whereas the Southeast Asian country will apply the framework to 92.75 percent of the total shipments from the East Asian country, the official said.
Trade liberalization is the removal of or reduction in the trade practices that thwart the free flow of goods and services from one nation to another. It includes dismantling tariffs such as duties, surcharges and export subsidies, as well as nontariff barriers like licensing regulations, quotas and arbitrary standards.
Vietnamese exports to South Korea will be subject to lower taxes than other countries that have not signed a free trade agreement with Seoul, Hai said.
Commodities such as agriculture and seafood products, textiles and garments, footwear and furniture will have a better chance to enter the South Korean market, Hai said.
“This is a huge opportunity for Vietnamese businesses to grab a greater market share,” he said. “Of course, the preparations and efforts of the Vietnamese exporters also matter.”
Many Vietnamese businesses have in fact failed to send their goods to South Korea thanks to technical barriers, instead of tax issues.
The FTA will create a dialogue mechanism between the two countries to minimize the number of such technical barriers.
“The two countries will have talks to work out solutions to problems regarding food safety standards or technical barriers,” he elaborated.
Asked if the FTA will widen Vietnam’s trade deficit with South Korea, Hai said this will happen, but is not an issue.
“Most of the imports are used to serve investment and manufacturing purposes, while consumer goods only account for a mere six percent of the total shipments,” he said.
“We only import necessary products and those that cannot be manufactured in Vietnam.”