Trần Thanh Hải (Mr.) Deputy Director General Agency of Foreign Trade Ministry of Industry and Trade of Viet Nam
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1 Trần Thanh Hải (Mr.) Deputy Director General Agency of Foreign Trade Ministry of Industry and Trade of Viet Nam
2 Major content Consecutive growth of Viet Nam s textile and garment industry FDI s growth by years Export s growth by years Number of Companies increased by years FTAs implemented Viet Nam s preparation for FTAs FTAs concluded/ signed FTAs undergoing negotiation
3 FDI in Viet Nam s T& G Industry (number of FDI projects increased by years) June 2017
4 FDI in Viet Nam s T& G Industry (number of FDI countries/territories) China Japan Hong Kong Taiwan Korea
5 Export s growth by years Year Export volume (US$) billion billion billion billion billion billion billion billion billion billion Jan-May billion
6 Numbers of companies increased by years Year Number of companies st factory (Nam Dinh Textile Factory) , , ,000
7 Viet Nam s consecutive growth of T&G: why? 1986: economic reform 1995: joining ASEAN 2000: signing bilateral trade agreement with the US 2007: full member of WTO 2017: members of 17 Preferential Trade Agreements (PTA, including VN- Cuba)
8 Viet Nam s preparations for international/ regional trade commitments/ FTAs 16 11: signed 01: basically concluded 10: implemented 01: not yet implemented 04: undergoing negotiation
9 ATIGA ASEAN - China ASEAN - Korea ASEAN - India ASEAN - Australia, New Zealand ASEAN - Japan Already implemented Viet Nam Viet Nam - Japan Viet Nam - Chile Viet Nam - Korea Viet VN Nam - Eurasian - EAEU Economic Union Việt Nam TPP - EU VN TPP EU FTA RCEP On-going negotiation Basically concluded but not yet signed ASEAN - Hong Kong VN - Israel VN - EFTA 9
10 Which is the most important component of an FTA? Trade in Goods Agreement, demonstrated by the reduction to elimination of tariff to 0% per schedule
11 FTAs: KEY POINT TO DRAW INVESTMENT Non-WTO Members Tariff rate applied on Textile: 150% compared to WTO members Tariff rate applied on Garment: 150% compared to WTO members WTO Members Tariff rate applied on textile on average 12% Tariff rate applied on garment on average 25% FTA members Tariff rate applied on textile on average 0 5% Tariff rate applied on garment on average 0 5%
12 How to get the ideal tariff rate from FTAs? No other ways, except for one way Goods meeting the requirement of specific Rules of origin (ROO) designed for a specific FTA goes together in parallel Tariff negotiation ROO Negotiation
13 ROO for T&G under implemented FTAs (1) Liberal/ Flexible Rule applied for T&A CTC (change in tariff classification) CMT (cut-make-trim) within the territory of Viet Nam ASEAN/ ACFTA/ AKFTA/ VKFTA/ VN-EAEU FTA Input can be sourced anywhere (inside/outside FTA region)
14 ROO for T&G under implemented FTAs (2) ASEAN INDIA FTA One single rule applied for all Chapters of Textile and Apparel RVC 35% + CTSH (change in tariff sub-heading)
15 ROO for T&G under implemented FTAs (3) ASEAN AUSTRALIA-NEW ZEALAND FTA RVC 40% + CMT in one or more FTA Members
16 ROO for T&G under implemented FTAs (4) AJCEP: ASEAN and Japan VJEPA: Viet Nam and Japan Who takes the lead of the game? ASEAN accepted the key rule designed by Japan AJCEP; VJEPA Fabric-forward rule (fabric must be sourced within FTA region) Some exceptional cases applied for some HS codes in Textile Chapters: allowing for out-sourcing (from raw fabric into finished fabric)
17 ROO for T&G under TPP 12 members including 04 ASEAN Member States Who takes the lead of the game? The US (who has just withdrawn since Jan 2017) TPP Yarn-forward rule (among 14 FTAs joined by the US: only US-Jordan; US-Israel: No yarn-forward rule) SSL: short supply list Some flexible rules for some specific items
18 TPP Short Supply List (SSL) 8 kinds of Products will be removed from SSL 5 years after EIF of TPP 186 kinds of products will be permanently in the SSL What does this mean? Within 5 years ( ) these kinds of input can be sourced anywhere in the world (no need to be originating within TPP region). After 5 years, these inputs must be originating in VN and other TPP Members These kinds of input can be permanently sourced anywhere in the world (origin can be either in or out of TPP region)
19 ROO applied for Textile and Apparel (T&A) VN-EU FTA Fabric-forward Rule allowing for Third-Party Accumulation
20 Yarn/fabric-forward: how does it work? Cotton Yarn Raw Fabric Finished garment Finished fabric
21 Meeting ROO requirements means Input (from yarn/from fabric) must be sourced within FTA region > stimulating investors to set up factories in Viet Nam to produce input (from yarn/ fabric) in Viet Nam in order to get preferential tariff when exporting finished output;» stimulating the fulfillment from investors into several steps of the value supply chain that Viet Nam is still in lack and weak (for ex: the step of changing from raw fabric to finished one);» creating more jobs for Vietnamese labor;» upgrading the insufficient technical system» completing the value supply chain of the Vietnamese T&G industry;
22 Textile and Garment Industry of Viet Nam Prior to 2013 Top 2 in terms of the export volume
23 Viet Nam s preparation in terms of FTAs Under ASEAN, Viet Nam is the second partner (1 st is Singapore) in terms of number of FTAs implemented, signed, undergoing negotiation Viet Nam Singapore 10: implemented 01: signed (not yet implemtned) 01: basically concluded 04: under negotiation 20: implemented 03: concluded /signed 06: under negotiation
24 Viet Nam s preparation in terms of FTAs Newer FTAs should be better than older FTAs AKFTA: implemented in 2007 De Minimis rule for T&G VKFTA: implemented in % in terms of weight for T&G Chapters 10% in terms of either weight or value for T&G Chapters
25 Viet Nam s preparation in terms of FTAs: (besides TPP, Viet Nam also joined 15 FTAswith 21 major trading partners) RCEP: biggest FTA in terms of Number of members (16) Regional GDP Regional population Regional flow of trade Full cumulation and self-certification are also introduced under RCEP, which can bring benefit to Viet Nam s T&G
26 Viet Nam s preparation in terms of FTAs: (besides TPP, Viet Nam also joined 15 FTAswith 21 major trading partners) ASEAN- Hong Kong a contribution to minimize difficulties related to the Operational Certification Procedures (OCP) under ASEAN China (biggest trading Partner of ASEAN)
27 Viet Nam s preparation in terms of FTAs: (on going process of legal scrubbing of EVFTA) In principle: the legal text of an FTA can only be made public after signing it; EVFTA: a very special one when the text is made public while it has not yet been signed the importance of this new-generation FTA Hundreds of meetings/ training courses/ workshops to provide information and guidelines on how to apply appropriate ROO to enjoy preferential tariff treatment under EVFTA, in comparison with other FTAs
28 Viet Nam s preparation in terms of FTAs: (on going process of legal scrubbing of EVFTA) Britain: Viet Nam s biggest exporting partner among EU members (accounting for 20% of overall export from Viet Nam to EU 2015, 2016); Brexit affects most of world/regional economies, including Viet Nam (fluctuating currency exchange rate; FDI flow; utilization rate of FTA may be decreased,..)
29 Viet Nam s preparation in terms of FTAs Self-certification/ Self-declaration Saving both cost and time for exporters under FTAs Conventional Certification Self Certification Exporters apply and get a preferential C/O from authorized agency assigned by the Government: - From 4 working hours to 03 working days to get a C/O; - Fees and charges; - Human resources to fulfill all C/O related procedures Certified Exporters are enabled to issue an Origin Declaration/ Self Certification by themselves for their exporting & originating goods; - Producers, exporters and even importers can have this right; No need to wait for getting approval from the Govt authorised issuing authorities; - No fee, no charge - Time and cost saving Facilitate utilization of the FTA
30 Viet Nam s preparation in terms of FTAs Self-certification/ Self-declaration Saving both cost and time for exporters under FTAs In-depth traing courses on Selfcertification Trainees get certificates T&G companies get approval of being certified exporter
31 Viet Nam s preparation in terms of FTAs (Investment Law) Preferences may be given to investment projects as below: * with capital of approx. US$ 300 million; * in rural/ remote area of min. 500 labors; * T&G products in supporting industries;
32 Industrial Revolution 4.0 Restructuring the industry toward high-intensive technology Positive pressure to build up capacity for enterprises Positive pressure to leverage labor productivity
33 Competition among economies (input 01) Recommendation Competition is the motivation for development Competition among enterprises (input 02) Output: Competition capacity of goods Competition among individuals (input 03)
34 Tran Thanh Hai Deputy Director General Agency of Foreign Trade Q & A Ministry of Industry and Trade of Viet Nam haitt@moit.gov.vn
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