Vietnam Free Trade Questions

Vietnam, which announced a free trade agreement with the European Union earlier this month and signed a deal with South Korea in May, is also eager to be part of the 12-nation Trans-Pacific Partnership currently being negotiated. However, as reported by Bloomberg, some sectors in Vietnam will become vulnerable to competition from foreign corporate giants.

“It drives home the impact of trade with the rest of the world for Vietnam,” Vu Tu Thanh, chief Vietnam representative of the US-Asean Business Council, told Bloomberg. “Many people are still unaware of what the free trade agreements will mean for the country and the economy.”

Vietnam expects exports to soar with the reduction of tariffs on products such as seafood, shoes and clothes once the TPP is signed. But agriculture, automobiles and machinery probably won’t, according to Fred Burke, managing partner of Baker & McKenzie (Vietnam) Ltd. in Ho Chi Minh City.

“It’s a good example of the difficulties Vietnamese, especially small household farms, will face, whether it’s chickens, beef or pigs,” he told Bloomberg. “There will be a lot of competition.”

According to Nguyen Duc Thanh, head of the Vietnam Institution for Economic and Policy Research, Vietnam’s livestock sector will struggle to compete with foreign companies. He told Bloomberg the sector’s weaknesses include heavy dependence on imported feed and seed, inadequate food safety and low productivity with about 50% of livestock coming from small family farms.

“Because the US is richer and its incomes are a lot higher than those of Vietnamese, it is believed it can’t have things cheaper than Vietnam,” Thanh said. “But that’s not the case.”

Source: Neurope.eu