[NEWS] – Accelerating exports to FTA markets

Vietnamese enterprises need to concentrate resources to increase market share in FTA markets before competitors enter these "playgrounds".

What is an FTA? The effect that FTAs bring

There are many interpretations of Free Trade Agreements. In the most general sense, a Free Trade Agreement (FTA) is an agreement between two or more Members that removes barriers to most trade between the Members.

Members of FTAs can be countries (eg Vietnam, China, the United States…) or independent tariff areas (eg European Union, China Hong Kong...). Therefore, usually, when talking about FTA Members, people often use the common word "economy".

Participating in FTAs brings many practical benefits, not only helping to diversify export markets, and avoiding too much dependence on one market, but also proving the rapid pace of our country compared to other countries. countries in the world.

More mature thanks to FTAs

New-generation Free Trade Agreements (FTAs) such as CPTPP, EVFTA, and UKVFTA after implementation have brought about positive effects. Not only was the market expanded, but export turnover to these markets also recorded high growth.

According to preliminary statistics from the Vietnam SPS Office, 2 years after the EVFTA came into effect (August 2020 - August 2022), the EU has published about 71 drafts and adjusted about 146 related regulations. to Vietnamese exports. The EU also tends to strengthen standardization, legalize restrictions, and tighten technical standards related to climate/environment, sustainable development, and green transition.

New challenges

Although much progress has been made in the FTA markets, the growth potential in the coming time is still very large. Ms. Nguyen Thao Hien, Deputy Director of the European - American Market Department (Ministry of Industry and Trade), the market share of goods imported from Vietnam only accounts for nearly 2% of the total import scale of about 2.1 trillion EUR in the market. EU. Expanding market share is not easy when the international situation is forecasted to remain complicated, especially with regional and global geopolitical uncertainties, potential risks of economic recession, and chain disruption. supply.

In addition, Vietnamese enterprises are also facing stricter non-tariff regulations, especially in new-generation FTA markets such as CPTPP and EVFTA. Ms. Nguyen Thao Hien pointed out that, recently, the EU has announced a circular textile strategy, putting great pressure on Vietnam’s textile and garment products. Similarly, Vietnam’s wooden furniture products, to grow in export, also need to meet conditions such as VPA/FLEGT (Voluntary Partnership Agreement/Forest and Forestry Governance) license, CITES permit, and more. those are ESG standards, CO2 emissions…

Besides challenges from the export market, enterprises are also facing internal difficulties. Only about 60% of enterprises are disbursed credit. In the fourth quarter, many small and medium enterprises were not disbursed and had no orders. This puts businesses at risk of bankruptcy. At the same time, the lack of cash flow caused the export activities of enterprises to be congested.

Increase market share before competitors enter the "playing field"

There have been cases where businesses have missed orders just because they can’t catch up with the market. Therefore, enterprises must deeply research the market, research market standards, and change models to keep pace with the market to offer the products the market needs.

In addition, to

effectively take advantage of the EVFTA, Vietnamese exporters need to maximize their resources to boost exports and quickly increase their market share in the EU’s agricultural import market before the EU signed FTAs with potential competitors of Vietnam.

In particular, the EU has implemented a set of policies and actions called the European Green Deal, with the goal that by 2050 the European economy will be more sustainable and carbon neutral. The action plan also sets out a target to reduce pesticide use by 50% and increase the share of farmland used for organic agriculture to 25% by 2030. This means more pesticides. Plants will be banned in the EU, and residue levels will gradually decrease in the coming years. Therefore, Vietnamese enterprises need to pay attention to this organic consumption trend in their long-term development strategy.

The market is gradually changing the taste of imported and exported products. Understanding those difficulties, Indochina Holdings provides trade promotion services to maximize support for Vietnamese businesses, Vietnamese products, and Vietnamese brands confidently go to the international market.

(Source: Collector)