EU-Vietnam Free Trade Agreement: the impact on VN (with a special focus on SMEs) Presenter: Claudio Dordi Ha Noi, 12 November 2014 Summary • Two parts – Impact assessment of EU-VN FTA • • • • • EU-VN trade Level of protection Recent FTA Commitments of EU and VN Tariffs (export to EU) Increased trade following the EVFTA – Support to SMEs • Perceived barriers to export to the EU • What kind of support SMEs might need? • Some basic ideas for further support EU-VN Trade: VN surplus Blue: import into EU Red: export to VN EU Balance EU trade with Vietnam (2003-2012) Source: Eurostat (2013) European Union Trade in Goods with Vietnam, November Levels of Protection • Vietnam’s exports to the EU face an average tariff of 4.6 per cent, but this hides a number of tariff peaks • EU exporters to Vietnam also face significant barriers on specific items, most notably on alcohol and tobacco products, 100 per cent, and motor vehicles, especially motorcycles • Behind the border restrictions, which include nontariff measures are significant in both parties • Restrictions on services are also extensive Recent FTA Commitments of EU and VN • EU has liberalised fully or over 99% of its trade over 0-7 years in recent FTAs • EU has gone beyond GATS in services, and added other cooperation or commitments for government procurement, competition policy, investment, TRIPS, trade facilitation and customs, mutual recognition agreements, dispute settlement, labour rights, capacity building and sustainable development • Vietnam has similar trade in goods commitments across agreements • Vietnam has tended to stick to its WTO accession protocol for services and shied away from other trade related areas Tariffs on Vietnam’s agricultural exports to EU Source TASTE 2013 and simulations Rice exempt Industrial tariffs on Vietnam’s exports to EU Source TASTE 2013 and simulations Vietnam total exports relative to base Vietnam total imports relative to base Vietnam gains from services reform relative to baseline in 2020 Improvements in bilateral access Welfare gains =$321m 10 Imports, industrial Change in 2020 relative to 2007 12 Exports, agriculture Change in 2020 relative to 2007 Excludes dairy, forestry 13 Exports, industrial Change in 2020 relative to 2007 14 Output Change in 2020 relative to base in 2007 15 Output in textiles sector Change in 2020 relative to base in 2020 16 Agricultural Issues • The agricultural and fisheries sectors are sensitive sectors for both parties of the negotiations (use of tariff peaks, subsidisation, income support, etc.) • Impact on employment, poverty alleviation and rural development • Vietnam has significant input requirements across the entire supply chain of agro-processing sector with a high propensity to import • Non-tariff measures are significant (SPS, HAACP, EuropGAP, GAP etc.) 17 Industry Issues • VN experienced high growth and competitive in all sectors • Three sectors are particularly outward oriented: textiles and clothing, footwear and handicrafts • Investment is also drawn significantly to four of these sectors: textiles and clothing, footwear, high-technology and automotive • Inputs often rely on imports • Rules of origin concerns, standards and investment concerns, IPRs 18 Services Issues • VN experienced high growth, major investment and restructuring in most sectors • Commitments go quite far for VN • EU highly competitive in most service sectors • Problem in VN of implementation, regulations, licensing and policy uncertainty • Problem in EU for mode and mode => strong VN interests Currently VN exports mainly under mode • Professional services most complicated to liberalise 19 Perceived barriers to export to EU • Bureaucratic legal and business environment (including tax) • Poor access to sufficient HR • Cultural differences, language • Trade barriers • Access to finance • Difficulties in identifying foreign business opportunities (partners networks, contacts overseas) • Differences between markets and regulations in different EU members • Limited information to locate/analyze markets • Poor access to information and difficulties in obtaining reliable information What kind of support SMEs might need? Coordination in the target country: experiences of EU SMEs • • Situation • Enterprises from some Member States are better provided than others • Parallel services provided by different MS and agencies= often duplication or inefficiencies • Competition among different agencies from MS=how to coordinate? Added value • Make it possible that SMEs from MS not providing support services in VN can also get access to services provided by support service organizations from another MS (EU Business center: hub in the target country linking support service organizations) • There are services where there is no competition among different service providers’ organizations (e.g technical standard, IPRs, legal environment, basic market studies, trade information, etc.) • Is there room for cooperating on trade missions? • Liaison with Enterprise Europe Network • Acting as counterpart of coordinating bodies at a NATIONAL level in the EU (e.g bringing together the existing agencies, establishing an effective division of labor, identifying gaps and improving relations with the business support system “at home” • Signposting: reference point for enterprises/support agencies in Europe directing them to the most appropriate form of support • Efficiency gains (division of labor…is it possible?) Some basic ideas to further support - First entry services information (how the country is, a few brochures on how to recruit, how to deal with taxes, etc) - Matchmaking, Trade promotion - Organize activities, like VN pavilions in trade fairs - Support to import is equally important to other support activities! - Make baseline studies THANK YOU! Contact : Trade Capacity Vietnam (TCV) Project Office: Rm 603 – 604, 6th floor, 65 Van Mieu, Dong Da , Hanoi , Vietnam Tel +84 (4) 62757026 ; Fax +84 (4) 38232786; Email: tcv@vafie.org.vn Website: tcv.vafie.org.vn ; And/or: EU-MUTRAP Project Management Unit Tel: (84 - 4) 3937 8472;Fax: (84 - 4) 3937 8476 Email: mutrap@mutrap.org.vn Website: www.mutrap.org.vn (workshop documents are available on above websites) 26 [...]... legal environment, basic market studies, trade information, etc.) • Is there room for cooperating on trade missions? • Liaison with Enterprise Europe Network • Acting as counterpart of coordinating bodies at a NATIONAL level in the EU (e.g bringing together the existing agencies, establishing an effective division of labor, identifying gaps and improving relations with the business support system “at... fisheries sectors are sensitive sectors for both parties of the negotiations (use of tariff peaks, subsidisation, income support, etc.) • Impact on employment, poverty alleviation and rural development • Vietnam has significant input requirements across the entire supply chain of agro-processing sector with a high propensity to import • Non-tariff measures are significant (SPS, HAACP, EuropGAP, GAP etc.) 17... important to other support activities! - Make baseline studies THANK YOU! Contact : Trade Capacity Vietnam (TCV) Project Office: Rm 603 – 604, 6th floor, 65 Van Mieu, Dong Da , Hanoi , Vietnam Tel +84 (4) 62757026 ; Fax +84 (4) 38232786; Email: tcv@vafie.org .vn Website: tcv.vafie.org .vn ; And/or: EU-MUTRAP Project Management Unit Tel: (84 - 4) 3937 8472;Fax: (84 - 4) 3937 8476 Email: mutrap@mutrap.org .vn. .. barriers to export to EU • Bureaucratic legal and business environment (including tax) • Poor access to sufficient HR • Cultural differences, language • Trade barriers • Access to finance • Difficulties in identifying foreign business opportunities (partners networks, contacts overseas) • Differences between markets and regulations in different EU members • Limited information to locate/analyze markets... enterprises/support agencies in Europe directing them to the most appropriate form of support • Efficiency gains (division of labor…is it possible?) Some basic ideas to further support - First entry services information (how the country is, a few brochures on how to recruit, how to deal with taxes, etc) - Matchmaking, Trade promotion - Organize activities, like VN pavilions in trade fairs - Support to import is equally... coordinate? Added value • Make it possible that SMEs from MS not providing support services in VN can also get access to services provided by support service organizations from another MS (EU Business center: hub in the target country linking support service organizations) • There are services where there is no competition among different service providers’ organizations (e.g technical standard, IPRs,... markets • Poor access to information and difficulties in obtaining reliable information What kind of support SMEs might need? Coordination in the target country: experiences of EU SMEs • • Situation • Enterprises from some Member States are better provided than others • Parallel services provided by different MS and agencies= often duplication or inefficiencies • Competition among different agencies from... Industry Issues • VN experienced high growth and competitive in all sectors • Three sectors are particularly outward oriented: textiles and clothing, footwear and handicrafts • Investment is also drawn significantly to four of these sectors: textiles and clothing, footwear, high-technology and automotive • Inputs often rely on imports • Rules of origin concerns, standards and investment concerns, IPRs...Imports, agriculture Change in 2020 relative to 2007 11 Imports, industrial Change in 2020 relative to 2007 12 Exports, agriculture Change in 2020 relative to 2007 Excludes dairy, forestry 13 Exports, industrial Change in 2020 relative to 2007 14 Output Change in 2020 relative to base in 2007 15 Output in textiles sector Change in 2020 relative to base in 2020 16 Agricultural Issues • The agricultural and... Issues • VN experienced high growth, major investment and restructuring in most sectors • Commitments go quite far for VN • EU highly competitive in most service sectors • Problem in VN of implementation, regulations, licensing and policy uncertainty • Problem in EU for mode 3 and mode 4 => strong VN interests Currently VN exports mainly under mode 1 • Professional services most complicated to liberalise