Illustrative photo - Source: vtc.vn

The EU is considered to be a major export market for Vietnamese goods once the Vietnam-EU Free Trade Agreement (FTA) is signed.

Tran Ngoc Quan, Deputy Head of the EU Market Department under the Ministry of Industry and Trade (MoIT), says the EU accounts for 74.7 percent of the European market’s total import turnover.

Over the past 11 years, two-way trade turnover between Vietnam and the EU has increased by 5.9 times, from US$4.1 billion in 2000 to US$24.29 billion in 2010.

Last year, Vietnam’s exports to the EU posted a relatively high growth rate of 45.31 percent, the highest on record over the past seven years.

In the first quarter of this year, the country’s export earnings from the lucrative market hit US$ 4.34 billion, up 25 percent over the same quarter last year.

With a total population of 501 million and most people enjoying high incomes, the EU makes up 17 percent of total Vietnamese export revenue and its main imports are seafood, coffee, garments and textiles, footwear, fine art and handicraft products, bicycles and wood furniture.

According to the Vietnam Association of Seafood Exporters and Processors (VASEP), since 2007, the EU has surpassed Japan to become the biggest import market for Vietnamese seafood. Last year, the EU market accounted for 21.8 percent of total Vietnamese seafood export turnover

VASEP has predicted that shrimp exports will pick up considerably in the following years. In 2001, Vietnam ranked fifth among the group of top shrimp exporters to the EU with its export value growing by 20.3 percent against 2010.

The EU is regarded as one of the strategic markets in Vietnam’s export strategy from now until 2020, under which the EU will contribute approximately 20 percent to the country’s total export earnings.

To reach that goal, Vietnamese businesses need to expand overseas markets, improve the quality of export goods and devise an appropriate strategy in line with every EU member country to achieve greater market penetration.

To meet the EU market’s strict requirements, Vietnamese goods must ensure criteria for environmental protection, social responsibility and health safety for consumers.

Despite enjoying reasonable tax rates, Vietnamese businesses will have difficulty penetrating the demanding market as they have to meet strict EU requirements.

In the 2011-2013 period, 25 percent of Vietnam’s total exports to the EU get a tax rate reduction of 3.5 percent on average in the frame for the Generalized System of Preferences (GSP).

The EU has recently improved its policy for Vietnam but not as much as compared to other countries which have signed the FTA with Vietnam.

Apart from exports, Quan argues, Vietnam can exploit the service sector to full advantage by boosting labour exports and providing orderlies and nurses- the two areas of its strength.

Vietnam and the EU have started negotiations on their FTA, focusing on issues related to sanitary and Phyto-sanitary (SPS) measures and technical barriers to trade. To facilitate the negotiation process, Vietnam needs to further streamline customs procedures and protect intellectual property right.

As soon as the FTA is signed, Vietnam will benefit from the agreement as 90 percent of trade businesses will be liberalized.