Vietnam and EAEU members ponder trade deal upgrade

Vietnam and the Eurasian Economic Union (EAEU) members of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan are to work on an upgrade of the free trade agreement, known as the VEAEUFTA, and specific discussions are now being looked at.

At the fourth session of the joint committee on enforcement of the deal on October 13 in Moscow, Vietnamese Minister of Industry and Trade Nguyen Hong Dien underlined that some provisions and commitments of the deal are no longer suitable in the current context.

“Now is the right time for the EAEU and Vietnam to mull over new ideas and upgrade the agreement in order to jointly exploit the new potential and fresh opportunities that remain open,” said Dien, who co-chaired the session with Andrey Slepnev, Minister in charge of trade of the Eurasian Economic Commission.

“While dealing with necessary processes and procedures to modify the VEAEUFTA, the two sides need to seek solutions to erase existing impediments, and promote bilateral trade,” Dien said.

He asked the EAEU to note Vietnam’s concerns in particular of the limitations of the threshold safeguard measure and the low rice quota.

Minister Slepnev also noted that despite the agreement’s entry into force in October 2016, the extent of preferential tariff usage from this deal remains humble, with an average rate of over 40 per cent. This would mean the bilateral economic and trade ties have a bigger room for flourish, with a need to eradicate hurdles as soon as possible.

According to figures from the EAEU, bilateral trade turnover between the EAEU and Vietnam has witnessed with a rise of 32 per cent, from about $5.9 billion in 2017 to $7.8 billion in 2021.

Among the member states of the EAEU, Vietnam has the biggest trade and investment ties with Russia. The General Department of Vietnam Customs reported that total export-import turnover between Vietnam and Russia reached $5.54 billion last year, including $3.2 billion earned by Vietnam’s exports.

The 2-way trade figure hit $2.48 million in the first eight months of 2022, down 27.74 per cent on-year. Currently, Vietnamese investors have invested into 22 projects in Russia, registered at nearly $3 billion.

Vietnam and Russia are expected to establish a new air route to Russia’s Far Eastern region in a bid to develop tourism, trade, and investment ties. Currently, many Russian tourists cannot visit Vietnam directly, and the Vietnamese Ministry of Industry and Trade is now formulating a mechanism for consultancy between representatives from both nations in order to solve obstructions.

Moreover, the Russia-Ukraine conflict has forced investors from Russia to shift investment from Europe to other potential markets, with Vietnam expected to be a good selection.

“This offers an opportunity for Vietnam to attract more Russian investment, especially thanks to advantages from the VEAEUFTA,” said Pham Hong Hai, deputy director of the Department of European Affairs, under the Ministry of Foreign Affairs.

Since last year, Vietnam and Russia have been exploring more measures to recover cooperation. For instance, Vietnam and the Russian Direct Investment Fund are seeking to boost partnerships in areas including the fund’s scheme to promote and support direct funding between the two countries, as well as with third nations.

According to a priority list for jointly-implemented projects, there are 17 ventures already approved by both nations in sectors such as oil and gas, transport, agriculture, electricity, construction, and high technology. Both nations are working to formulate a roadmap for the deployment of these projects.

Russian President Vladimir Putin put his signature to ratify the free trade agreement (FTA) between the Eurasian Economic Union (EAEU) and Vietnam on May 1.

Belarusian President Alexander Lukashenko signed to ratify the free trade agreement (FTA) between the Eurasian Economic Union (EAEU) and Vietnam on May 31.

The free trade agreement (FTA) between the Eurasian Economic Union (EAEU) and Vietnam will take effect on October 5, Minister for Trade at the Eurasian Economic Commission Board Veronika Nikishina has said.

The government has issued a decree on Viet Nam's list of preferential import tax rates for the 2016-18 period to cut more than 5,000 tariff lines to zero.

Vietnam will be removed from the list of generalised scheme preferences (GSP) of the Eurasian Economic Union (EAEU) from October 2021.