April 20, 2024
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Vietnam Apparel Exporters Yet To Unlock Full Benefits Of FTA’s

Vietnam’s textile and apparel sector has not been able to fully unlock the full potential and benefits of the free trade agreements (FTAs), which it has signed with several countries and regions.

In order to address the challenge, the Vietnamese Ministry of Industry and Trade (MoIT) is leveraging connections between ministries, association and industry stakeholders.

In the process, MoIT hopes to establish a collaborative ecosystem and help the textile and garment sector to exploit the full potential of these FTAs.

Vietnam has signed various FTAs with many markets around the world, which has helped reduce tariffs or the lowest or zero levels and all these come simpler rules of origin for Vietnamese goods.

In a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI), while most companies had little understanding of the FTAs, just 8 percent had a clear understanding.

While Vietnam reported a trade surplus of US $95 billion in 2022 with the US, $31.4 billion with the EU and $5.2 billion with the UK, it recorded a deficit with neighbouring Asian countries.

This includes deficit in trade of $60.5 billion with China, $37.9 billion with South Korea, and $13.42 billion with ASEAN countries.

The worry for MoIt is that the market share of Vietnamese textiles in FTA markets has not increased in the past four years and remained relatively modest.

In Canada, Vietnamese textiles and clothing accounts for just 2 percent share, 4 percent in the UK and 13 percent in Mexico.

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