Illustrative image

NDO – With 17 FTAs, 2020 marked an important step into a new, more extensive and comprehensive stage of international economic integration. This is considered as a launch pad for Vietnam's economic recovery, helping Vietnamese goods and businesses reach out to the "great sea".

Positive move

The Covid-19 pandemic caused the leather and footwear supply chain to break, and the leather and footwear enterprises faced many difficulties in exporting. However, thanks to good disease control in Vietnam and the signing of 'new generation' FTAs, the leather and footwear industry has gradually recovered. According to Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association (LEFASO), when EVFTA came into effect from August 1, it sparked hope for exports of the leather and footwear industry at the end of the year.

Since the second half of the third quarter of 2020, orders of enterprises in the leather and footwear industry have improved, and export orders are gradually recovering. After four months of implementing the EVFTA, footwear is a commodity in the list of export items of Vietnam with positive changes in exports. The total export turnover of the leather and footwear industry in 2020 is estimated at US$19.5 billion, down from 2019 but equivalent to the export turnover of 2018.

“The decrease in 2020 is said to be a relatively positive decrease compared to the general situation, as aggregate demand is down 22%, while the leather and footwear industry is down only 11%. In the coming time, thanks to the EVFTA, the leather and footwear industry will have more motivation to grow again”, expected Phan Thi Thanh Xuan.

Leather and footwear industry is one of the industries that has greatly benefited from the nation's international integration framework. Joining ASEAN since 1995, Vietnam officially opened its integration and started joining FTAs. To date, Vietnam has 13 FTAs in effect; one FTA has not been ratified and is about to take effect; one FTA is about to sign; and two FTAs are under negotiation.

In the 2016-2020 period, the whole country has made outstanding efforts in accessing and opening markets, especially the markets where Vietnam has Free Trade Agreements (FTAs), including the 'new generation' of FTAs, including CPTPP, EVFTA, UKVFTA and RCEP. The EVFTA has a scale accounting for 30% of global GDP; RCEP is similar with 2.2 billion consumers, accounting for more than 30% of global GDP.

Only accumulating these two regions, Vietnam has penetrated the economic sector with GDP accounting for 60% of global GDP with extensive and continuous tariff reductions with commitments to open markets for Vietnamese products, services and goods in the direction of transparency, openness and convenience with open commitments in all areas. Not to mention, the signing of FTAs also contains reforms of the economy.

Tran Tuan Anh, Politburo member, Head of the PCC's Economic Commission and Minister of Industry and Trade assessed, with his consistency in the policy of international economic integration, from a latecomer country in the international economic integration process, Vietnam rose to become the leading country for the first time, and was the first developing country in the Asia-Pacific region to have an FTA with the EU. Along with Singapore, Vietnam is among the first group of countries in ASEAN to ratify the CPTPP.

"In particular, the CPTPP and RCEP have affirmed Vietnam's voice in shaping new cooperation mechanisms, as well as the rules of the region, enhancing the country's position", Politburo member Tran Tuan Anh emphasised.

It can be said that the signing and joining of FTAs has opened up an unprecedented large import and export market for Vietnam. Accordingly, import and export turnover to partner countries increased. The signing and joining FTAs also help consolidate traditional markets, opening many potential markets on the basis of promoting relationships with important economic strategic partners, and at the same time enhancing competitiveness for domestic businesses.

Particularly, EVFTA, which took effect from January 1, 2020, had initial "results". After four months of EVFTA implementation, Vietnam's exports to the EU increased by 4%, and imports increased by over 11%. In particular, a number of Vietnamese commodity groups have taken advantage of the incentives in areas such as seafood, plastic products and shoes.