“It’s not clear when the current crisis will end, and when all the knock-on effects throughout the economy will work themselves out. So now there is an urgent imperative for the Vietnamese economy to quickly grasp the opportunities to diversify its markets and, by doing so, reducing the risks it faces.”
The EVFTA might prove to be of vital importance in this regard, along with other international treaties such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
According to RMIT International Business Program Manager Dr John Walsh, the EVFTA is the most stable agreement for Vietnam as it has stricter rules by which all partners must abide by.
“That means there is less scope for beggar-thy-neighbour policies for short-term gain which one country might pursue – either deliberately or not,” Dr Walsh said.
The new-generation FTAs will also give Vietnam the chance to improve its position on the global trade map, moving beyond low labour costs and abundant agricultural resources and on to technological transfers and skill sets of its young workforce.
Bold leadership
Vietnam became the second ASEAN country to sign an FTA with the EU. But “such boldness needs to be accompanied by swift, decisive and credible initiatives to enable the economy to be developed further”, according to Dr Trung.
Within seven years, trade with the EU will see the elimination of more than 99 per cent of tariffs on more than 99 per cent of products exported from Vietnam.
Dr Walsh said that the competitiveness of Vietnamese products, particularly textiles, footwear and agricultural products, will be enhanced by reforms in the energy sector to meet low carbon footprint standards.
Furthermore, as the Vietnamese economy and consumers become accustomed to EU imports in new sectors, Dr Walsh believes that the retail and distribution sectors will be strengthened to accept other products in these categories from around the world.