The role of new-generation trade agreements in promoting Vietnam's sustainable development goals
- QTH-3Q19 Nguyen Thi Nhung
- Feb 20, 2022
- 3 min read
Updated: Mar 27, 2022
What is "New Generation Free Trade Agreement (FTA)"?
The term "New Generation Free Trade Agreement (FTA)" refers to FTAs that include substantial and comprehensive obligations, such as commitments on free trade in goods and services. "Traditional FTA"; highest level of commitment (cutting taxes almost to 0 percent , possible roadmap). Furthermore, the new generation Free Trade Agreement (FTA) has a stringent enforcement system and encompasses "non-traditional" areas such as labor, environment, business, state-owned businesses, government procurement, transparency, and an investment dispute resolution process. Vietnam has now ratified a number of new generation free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Vietnam-EU Free Trade Agreement. EVFTA (European Union).
ietnam has joined and concluded the negotiations of 12 bilateral and multilateral FTAs after ten years as a WTO member. Nine FTAs have been signed and are in the process of being implemented. Vietnam is on the verge of broad integration, thanks to the negotiation and signing of a succession of major FTAs, which is greatly valued by partners. These FTAs are expected to provide chances for financial cooperation as well as innovative, modern, and more effective management models and procedures for Vietnamese businesses.
The growth of import and export markets, as well as the signing and participation in new generation FTAs, will have a significant impact on Vietnam's economy. As a result, import and export turnover to partner nations will expand, as will the consolidation of the traditional market. The most significant benefit of new-generation FTAs is that they expand the market by lowering tariffs and removing trade obstacles, allowing Vietnamese goods to participate more fully in global production and supply chains. Vietnam's FTA partners, in particular, are key trade partners, as evidenced by the high trade value and proportion of Vietnam's total trade with the rest of the globe each year.
Export promotion
To begin with, the new generation of FTAs have the impact of promoting exports. Regulations in Free Trade Agreements (FTAs) compel Vietnam to restructure, develop new markets, and attract goods. Vietnam's exports are likely to rise substantially in the next few years as tariff reductions under FTAs enter the deep reduction phase. In the future, the CPTPP and EVFTA Agreements will be the driving force behind Vietnam's exports.
Reducing prices
Secondly, entering new generation FTAs will cut the prices of numerous products utilized as input materials for domestic manufacture, lowering company production costs. As a result, the cost of goods will be lower than that of imports, encouraging domestic export manufacturing. Because of low pricing, a wide range of designs, and good effects on domestic manufacturing, tariff reductions will increase imports from other nations, particularly EU countries, into Vietnam.
Amending and finalizing policies
Thirdly, joining next generation FTAs on institutional concerns, policies, and laws, such as EVFTA and CPTPP, will generate conditions and motivation to modify and enhance policies and laws in the direction of more consistent with international standards. New-generation FTAs will assist Vietnam in consolidating its state machinery in order to accelerate administrative reform, increase accountability, and improve official discipline. As a result, the process of reforming the development model and restructuring the Vietnamese economy is aided.
Allowing foreign investors to enter the Vietnamese market faster
Last but not least, all new generation FTAs include commitments to equal treatment of domestic and international investors in the establishment, expansion, operation, and business, allowing foreign investors to enter the Vietnamese market more quickly. Regulations on sustainable development are also included in new generation FTAs, which help to minimize outmoded technologies and stimulate the growth of renewable and environmentally friendly energy sources.
When the FTA commitments enter the period of deep reduction, especially the FTAs with the United States and the EU, which will come into effect, they will promote stronger exports, bringing more opportunities to expand markets for goods. of Vietnam, while also assisting in the diversification of import markets and avoiding reliance on traditional raw material markets.
Comments