AsemconnectVietnam - Free trade agreements (FTAs) are considered the key to export growth in 2023.

Increased exports
Decreased global demand is a major challenge for Vietnam’s exports in 2023, and China’s eased COVID-19 restrictions will also increase the competitive pressure on Vietnamese goods in export markets, according to Phan Van Chinh, Director of the Agency of Foreign Trade under the Ministry of Industry and Trade (MoIT).
The Russia-Ukraine conflict continues to adversely affect the global economy. The risk of an economic recession, growing inflation and interest rate hikes have resulted in lower consumer demand across the world. However, tariff preferences in FTAs, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA), the UK-Vietnam Free Trade Agreement (UKVFTA), the FTA between Vietnam and Chile, and Vietnam’s FTA with the Eurasian Economic Union, continued to yield positive effects on trade and investment, especially Vietnam’s exports.
Vietnam’s exports to CPTPP member countries grew over 30 percent in 2022 compared with 2021. Notably, textile and garment exports to Canada increased more than 50 percent. Vo Hong Anh, Deputy Director of the MoIT’s European-American Market Department, said that exports to four American markets that are members of the CPTPP (Canada, Mexico, Peru and Chile) have grown strongly. Of these, only Chile has an FTA with Vietnam, in effect since January 2014.
Since taking effect in May 2021, the UK-Vietnam Free Trade Agreement (UKVFTA) has contributed to the growth of Vietnam’s exports to the UK despite the impact of COVID-19. In 2022, Vietnam’s exports to the UK increased 15.4 percent compared with 2021, with major products including coffee, pepper, rubber, fruit and vegetables, garments and footwear, some recording export growth of nearly 100 percent.
Phan Thi Thanh Xuan, Vice President cum Secretary General of the Vietnam Leather, Footwear and Handbag Association, said that exports to markets having FTAs with Vietnam, the UK for example, were not heavily affected by the delay or cancellation of orders, even in the context of high inflation. FTAs also enable Vietnam to import quality materials for export products, she added.
Promoting new FTA negotiations
Along with taking advantage of existing FTAs, the MoIT is negotiating new FTAs to pave the way for Vietnam’s exports to additional potential markets. Among these is the FTA between Vietnam and Israel, with negotiations started in December 2015.
According to Luong Hoang Thai, Director of the MoIT’s Multilateral Trade Policy Department, the ministry is accelerating negotiations on the FTA with Israel while at the same time promoting Vietnamese goods access to the Middle East market through the United Arab Emirates (UAE).
However, the MoIT warned businesses of the need to ensure the clear origin of input materials used to make exports to Asian and African markets. The ministry also urged them to boost exports to potential niche markets such as Bangladesh and Pakistan, and consider them as a stepping-stone for exports to India - a large market with more than 1.4 billion consumers. Africa is also a potential market with annual import demand amounting to US$600 billion, while Vietnamese exports currently account for a mere 0.6 percent share in this market.
Source: Vietnamplus.vn