Trần Thanh Hải (Mr.)Deputy Director GeneralAgency of Foreign Trade

Ministry of Industry and Trade of Viet Nam

Trần Thanh Hải (Mr.)Deputy Director GeneralAgency of Foreign Trade

Ministry of Industry and Trade of Viet Nam

�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

Viet Nam’s preparation for FTAs

FTAs implemented

FTAs concluded/ signed

FTAs undergoing negotiation

�

196

360

10181163

1878

0200400600800

100012001400160018002000

1988 1996 2001 2008 2010 June 2017

FDI in Viet Nam’s T& G Industry(number of FDI projects increased by years)

�

105 132 150288

788

0100200300400500600700800900

China Japan Hong Kong Taiwan Korea

FDI in Viet Nam’s T& G Industry(number of FDI countries/territories)

�Year Export volume (US$)1989 0.14 billion1995 0.85 billion2002 2.7 billion2007 7.8 billion2009 9.2 billion2012 15.1 billion2013 18 billion2014 21 billion2015 27.2 billion2016 28.5 billionJan-May 2017 9.4 billion

Export’s growth by years

�Year Number of companies1898 1st factory (Nam Dinh Textile

Factory)1998 5882004 1,0502014 5,2142017 6,000

Numbers of companies increased by years

�

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)

Viet Nam’s consecutive growth of T&G: why?

�

16

11: signed

10: implemented

01: not yet implemented

04: undergoing negotiation

Viet Nam’s preparations for international/ regional trade commitments/ FTAs

01: basically concluded

9

Viet Nam

ATIGA

Viet Nam - Japan

ASEAN   -­ China

ASEAN   -­ Korea

ASEAN   -­ India

ASEAN   -­ Australia,  New  Zealand

ASEAN   -­ Japan

RCEP

Viet Nam - Chile

Viet Nam - Korea

VN - Eurasian Economic Union

TPP

Việt Nam - EU

On-going negotiation

Basically concluded but not yet signed

Already implemented

ASEAN - Hong Kong

Viet Nam - EAEU

TPP

VN - Israel

VN – EU FTA

VN - EFTA

�

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

�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%

FTAs: KEY POINT TO DRAW INVESTMENT

�No other ways, except for one way

goes together in parallel

How to get the ideal tariff rate from FTAs?

Goods meeting the requirement of specific Rules of origin (ROO)

designed for a specific FTA

Tariff negotiation

ROO Negotiation

�Liberal/ Flexible Rule

applied for T&ACTC (change in tariff

classification)

CMT (cut-make-trim) within the territory of

Viet Nam

Input can be sourced anywhere (inside/outside

FTA region)

ASEAN/ ACFTA/ AKFTA/ VKFTA/ VN-EAEU FTA

ROO for T&G under implemented FTAs (1)

�ROO for T&G under implemented FTAs (2)

ASEAN – INDIA FTA

One single rule applied for all Chapters of Textile and

ApparelRVC 35% + CTSH (change in

tariff sub-heading)

�ROO for T&G under implemented FTAs (3)

ASEAN –AUSTRALIA-NEW ZEALAND FTA

RVC 40% + CMT in one or more FTA Members

�AJCEP: ASEAN and Japan

VJEPA: Viet Nam and Japan

Who takes the lead of the game?ASEAN accepted the key rule

designed by Japan

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)

AJCEP; VJEPA

ROO for T&G under implemented FTAs (4)

�12 members including

04 ASEAN Member States

Who takes the lead of the game?The US (who has just withdrawn

since Jan 2017)

Yarn-forward rule (among 14 FTAs joined by the US: only US-Jordan; US-Israel:

No yarn-forward rule)

SSL: short supply listSome flexible rules for some

specific items

TPP

ROO for T&G under TPP

�

What does this mean?

TPP Short Supply List (SSL)

8 kinds of Products will be removed from SSL 5 years after

EIF of TPP

Within 5 years (2018 – 2023) 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

186 kinds of products will be permanently in the SSL

These kinds of input can be permanently sourced anywhere in the world (origin can be either in or out

of TPP region)

�

ROO applied for Textile and Apparel (T&A)

VN-EU FTA

Fabric-forward Rule allowing for Third-Party Accumulation

�

Yarn/fabric-forward: how does it work?

Cotton Yarn Raw Fabric

Finished garment

Finished fabric

�� 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;

Meeting ROO requirements means

�Top 2 in terms of the export volume

� Prior to 2013

2013 - 2016

Textile and Garment Industry of Viet Nam

1 2

2 1

1 2

�� Under ASEAN, Viet Nam is the second partner

(1st is Singapore) in terms of number of FTAsimplemented, signed, undergoing negotiation.

Viet Nam’s preparation in terms of FTAs

Viet Nam Singapore

10: implemented

01: signed (not yet

implemtned)

01: basically

concluded

04: under negotiation

20: implemented

03: concluded

/signed06: under

negotiation

16 29

�Newer FTAs should be better than older FTAs

Viet Nam’s preparation in terms of FTAs

AKFTA: implemented

in 2007

VKFTA: implemented

in 2015De Minimis

rule for T&G

10% in terms of weight for T&G Chapters

10% in terms of either weight or value for

T&G Chapters

�

in terms of

Full cumulation and self-certification are also introduced under RCEP, which can bring benefit to Viet Nam’s T&G

Viet Nam’s preparation in terms of FTAs:(besides TPP, Viet Nam also joined 15 FTAs with 21 major trading partners)

RCEP: biggest FTA

Number of members

(16)Regional

GDPRegional

populationRegional flow

of trade

�Viet Nam’s preparation in terms of FTAs:

(besides TPP, Viet Nam also joined 15 FTAs with 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)

�

� 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

Viet Nam’s preparation in terms of FTAs:(on going process of legal – scrubbing of EVFTA)

�

� Britain: Viet Nam’s biggest exporting partner amongEU members (accounting for 20% of overall exportfrom Viet Nam to EU – 2015, 2016);

� Brexit affects most of world/regional economies,including Viet Nam (fluctuating currency exchangerate; FDI flow; utilization rate of FTA may bedecreased,..)

Viet Nam’s preparation in terms of FTAs:(on going process of legal – scrubbing of EVFTA)

��

�

Viet Nam’s preparation in terms of FTAsSelf-certification/ Self-declaration

Saving both cost and time for exporters under FTAs

Conventional 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

Self Certification

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

�

Viet Nam’s preparation in terms of FTAsSelf-certification/ Self-declaration

Saving both cost and time for exporters under FTAs

5

In-depth traing courses

on Self-certification

300

Trainees get

certificates

0

T&G companies get approval of being certified

exporter

��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;

Viet Nam’s preparation in terms of FTAs(Investment Law)

�Restructuring the industry

toward high-intensive technology

Positive pressure to build up capacity for enterprises

Positive pressure to leverage labor productivity

Industrial Revolution 4.0

�

Output:Competition capacity of

goods

Competition among

economies(input 01)

Competition among

enterprises(input 02) Competition

among individuals(input 03)

RecommendationCompetition is the motivation for development

�� Tran Thanh Hai� Deputy Director General� Agency of Foreign Trade � Ministry of Industry and Trade of Viet Nam� haitt@moit.gov.vn

Q & A

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