The Influence Of Vietnam Europe Free Trade Agreement On Chinese Funded Cotton Textile Enterprises In Vietnam

Since August 1, Vietnam EU free trade agreement (hereinafter referred to as "the agreement") came into effect.

After August 1, Vietnam's tariffs on 71% of the EU's exports and the EU's tariffs on 65% of Vietnam's exports will be exempted immediately. According to the agreement, about 99% of the tariff on bilateral trade in goods will be gradually reduced or even eliminated. According to the official statistics of Vietnam, the target of textile export in 2020 will reach 42 billion to 42.5 billion US dollars.

After Vietnam and the EU signed the Vietnam EU free trade agreement (evfta), the tariff of a small number of clothing products will be directly reduced to zero, and most of the clothing products will be gradually reduced to zero within 3-7 years after the agreement takes effect. However, the free trade agreements signed by Vietnam, such as cptpp and evfta, have created some difficulties for Vietnamese textile and garment enterprises, that is, they have strict requirements on the "rules of origin". In the rules of origin of textiles and clothing, it is required to identify from yarn and fabric respectively.

The entry into force of the agreement will greatly promote Vietnam's economic development. At the same time, there are also challenges for Chinese enterprises in Vietnam. Chinese enterprises can increase their exports to the EU based on Vietnam. On the contrary, they also need to compete with EU goods that enter the EU duty-free in the local market of Vietnam.

Increasing competitive pressure on Chinese Enterprises

After the agreement comes into effect, both Chinese products and Chinese enterprises in Vietnam will face major challenges. For example, in the EU market, Chinese products, especially labor-intensive products such as textiles and garments, will face competition from Vietnamese products.

There are a number of Chinese funded cotton textile enterprises in Vietnam. These enterprises need to carefully study the terms of the agreement, and benchmark the quality and technical requirements of EU products, so as to make good use of this opportunity to continue to expand export business to the EU.

At the same time, improving product quality also helps to compete with EU products that enter Vietnam duty-free. "If the Chinese enterprises are defeated by the European Union, they must be aware of the possibility of losing in the market."

Guidelines for certificate of origin

The EU Vietnam free trade agreement (evfta), consisting of 17 chapters, 8 appendices, 2 agreements, 2 memoranda of understanding and 4 joint statements, covers many issues, including:

Trade in goods (including general rules and market opening commitments), rules of origin, customs and trade facilitation, quarantine and food safety (SPS) measures, technical barriers to trade (TBT), trade in services (including general regulations and market opening commitments), investment, trade remedies, competition, state-owned enterprises, government procurement, intellectual property rights, trade and sustainable development, cooperation and capacity-building, Law system.

In order to implement the Circular No. 11 / 2020 / tt-bct issued by the Ministry of finance of Vietnam, the guidance of the Ministry of industry and trade on the certificate of origin of evfta is as follows:

1. According to Article 19, point 2, a of the Circular No. 11 / 2020 / tt-bct of the Ministry of finance of Vietnam, the institutions and organizations authorized by the Ministry of industry and trade of Vietnam to issue certificate of origin (C / O) can declare at www.ecosys.gov.vn. For goods worth more than 6 000 euro, the EU Vietnam FTA special certificate of origin form - EUR. 1 will be issued by these authorized institutions and organizations.

2. According to Article 19, point 2, B of the Circular No. 11 / 2020 / tt-bct of the Ministry of finance of Vietnam, for enterprises to declare the certificate of origin of goods by themselves, they can declare on www.ecosys.gov.vn, and any exporter is allowed to issue a declaration of origin for goods with a value not exceeding 6000 euro. The certification documents and documents related to the export goods uploaded by the export enterprises shall comply with the provisions of Article 25, paragraph 6 of the Circular No. 11 / 2020 / tt-bct of the Ministry of finance of Vietnam.

3. If the exporter exports goods to the UK, the institution or organization issuing the certificate of origin form (EUR. 1) shall instruct the exporter to submit declaration materials or issue self certification documents of origin in accordance with the form of certificate of origin (EUR. 1). Relevant information shall be provided in accordance with the contents mentioned in Article 1 and Article 2 of this official document. The effective date of this document shall be December 31, 2020.