Building highways - integrating into world economy

Integrate deeper into the world economy

After nearly 15 years of joining WTO, Vietnam has signed and joined 17 Free Trade Agreements (FTAs), notably new generation FTAs in recent times: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); the European Union - Vietnam Free Trade Agreement (EVFTA), and the Regional Comprehensive Partnership Agreement (RCEP).

"The new generation FTAs are like highways that Vietnamese businesses can only set foot on until now. The problem is that we need to prepare the means as well as the stance to move on it at maximum speed," said Mr. Ngo Xuan Nam, Deputy Director of Vietnam SPS Office.

One of the main points that Vietnamese businesses need to exploit from new-generation FTAs is commitments on tax reduction, reduction and exemption. However, the commitment of partners to reduce taxes on Vietnam's agro - forestry - fishery products and food exports means that the technical requirements for sanitary and phytosanitary (SPS) are increasingly higher. The management system is now required to be deeply synchronized.

Mr. Nam considers the scheme "Improving the effectiveness of WTO’s SPS Agreement and SPS commitments within the FTA framework" as a starting point for Vietnam to continue to perfect, synchronize and coordinate the enforcement of legal regulations in the field of SPS while taking advantage of opportunities for technical assistance and capacity building on SPS from trading partners.

Participate in sync

The world currently has five main export market groups:

• The first is a group of countries under RCEP including South Korea, Japan, India, Australia and New Zealand;
• The second is China and its affiliated territories;
• The third is the group of countries in the European Union consisting of twenty-seven countries and the European Free Trade Association (EFTA), five Nordic countries and UKVFTA;
• The fourth is a group of countries under the CPTPP including the United States of America, Canada, Brazil, Argentina, Chile and Mexico;
• The fifth is a group of countries participating in Vietnam - Eurasian Economic Union Free Trade Agreement (VN-EAEU FTA), including the Russian Federation, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Armenia and the Kyrgyz Republic.

Each market group has its own characteristics and requirements for SPS enforcement ability. SPS management in Vietnam is assigned to three ministries, namely the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, and the Ministry of Health.

However, the legal documents on management are not synchronized, overlapping and inconsistent among commodity groups. Standards and technical regulations have not been comprehensively reviewed. Updates are slow compared to the present international situation. Many standards are not in harmony with international regulations (CODEX, JECFA).

The current documents focus heavily on state management of food safety. The involvement of market institutions and civil society in joint management with the state while aiming to achieve greater efficiency remains limited.

Mr. Nam said that the requirements in new generation FTAs are related to the management of many organizations. So in order to enhance the efficiency of SPS Agreement implementation, the involvement of the whole society, all levels and industries is required. The overall quality of agriculture, forestry and fishery needs improvement. This is an important factor excluding the provision of complete, accurate and timely information to businesses and people who are directly producing.

"Once we have decided to participate in the international playground, we must be well informed, promote links in both width and depth. This cannot be the responsibility of any industry alone," said Mr. Nam.

The Import-Export Department (Ministry of Industry and Trade) informed that, despite being affected by the Covid-19 pandemic, in the first five months of implementing the EVFTA (from August to December 2020), Vietnam achieved a growth rate of +3.8%. In the next seven months, the growth rate reached 17.8%. With UKVFTA, Vietnam's exports to the UK increased by 15.4% in 2021. With the CPTPP, Mexico and Canada, two markets that Vietnam has had an FTA relationship with, have also experienced double-digit growth.

As for RCEP, Vietnam, being a member of ASEAN, will receive a single set of rules of origin from five partner countries, namely China, South Korea, Japan, Australia, and New Zealand, making it easier for businesses since they will not be overwhelmed by too many different regulations of origin in RCEP.