An Overview of Vietnam’s Free Trade Agreements
Vietnam’s involvement in numerous Free Trade Agreements (FTAs) is well under way, as the country has been a part of the ASEAN Free Trade Areasince 1996. Since then, the country has joinedsevenotherregional FTAs,as well as a number of bilateral FTAs.
FTAs not only create opportunities to access foreign markets, but also significantly increase the attractiveness of the domestic investment environment. The growth of overseas markets is especially salient given that the majority of the country’s exports with the strongest foothold and highest turnover (i.e. agricultural, garment and textile, footwear, furniture, and seafood products) can only develop if their overseas markets are expanded.
Vietnam will complete tax reductions for ASEAN countries by 2015, following the ASEANTrade in Goods Agreement (ATIGA). The countrywill then complete its tax reduction commitments with China in 2015, Korea in 2016, with Japan in 2017, and with India, Australia and New Zealand in 2018. With these FTA-mandated tax reductions, average tax rates will gradually fall from 12 percent to 3-4 percent. As such,we can expect to see more intense competition in a variety of consumer goods, raw materials, machinery and equipment.
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