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Free trade agreement between Eurasian Economic Union, Vietnam comes into force

October 05, 17:12 UTC+3 HANOI
Experts say the annual trade turnover between Vietnam and Russia will top $10 bln by 2020 thanks to the free trade regime
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© EPA/LUONG THAI LINH

HANOI, October 5. /TASS/. The agreement on creation of a free trade zone between the Eurasian Economic Union and the Socialist Republic of Vietnam enters into force on Wednesday following its ratification by national parliaments of all countries participating in the pact.

As a result of the launch of this mechanism, Vietnam will obtain a privileged access to the large and lucrative common market of five countries - Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan - with the total volume of gross domestic product of around $2.2 trillion and with almost 183 mln consumers. In exchange, the Eurasian ‘five’ will be able to promote its products in Vietnam with population exceeding 90 mln people, on easy terms.

Upgrade of trade, economic relations

According to Vietnam’s leadership, the country considers the expansion of trade and economic relations with the EAEU, which unites the leading economic players on the post-Soviet space, to be fairly promising. The implementation of the free trade zone agreement will bring the relationship between Vietnam and a number of republics of the former Soviet Union to a game-changing level. Vietnamese experts expect the trade turnover between the Eurasian Economic Union and the Socialist Republic of Vietnam to surge within the next several years already. They also say that the annual trade turnover between Vietnam and Russia will top $10 bln by 2020 thanks to the free trade regime.

Moscow is also certain there is a substantial potential of expansion of trade and economic relations between the EAEU member-states and Vietnam on the whole, and between Russia and Vietnam in particular, regarding the implementation of the free trade regime. The mechanisms stipulated by the free trade zone agreement are long-term and will help meet the target set by the leadership of the two countries to bring the mutual trade to $10 bln by 2020.

The implementation of the free trade regime between Vietnam and the EAEU will not only enable the sides to successfully trade in traditional product groups but will open up a wide field for investment cooperation. Also, the free trade zone agreement stipulates protection of rights for intellectual properties, outlines the areas for cooperation in the field of e-commerce and public procurements, sets common principles of competition protection and harmonizes customs formalities. The tariff liberalization of trade between the EAEU member-countries and Vietnam implies reduced or slashed to zero import customs duties (around 90%) - either immediately after the free trade agreement comes into force (59%) or within transitional periods (30%) - on the majority of goods items (all in all, around 10,000 items) on a quid pro quo basis.

New horizons

According to Russia's Ambassador in Hanoi Konstantin Vnukov, the free trade agreement between the Eurasian Economic Union (EAEU) and the Socialist Republic of Vietnam opens up new horizons for cooperation, both multilateral and bilateral.

"This is the first agreement of the kind, made by the Eurasian Economic Union with a foreign state, which demonstrates a particularly close cooperation between the EAEU member-states and Vietnam," he said, adding that the Supreme Eurasian Economic Council took the decision at the highest level to launch talks with Vietnamese partners on formation of a new integration mechanism in December 2012.

According to Vnukov, the implementation of the free trade regime between Vietnam and the EAEU will not only enable the sides to successfully trade in traditional product groups but will open up a wide field for investment cooperation. Also, the free trade zone agreement stipulates protection of rights for intellectual properties, outlines the areas for cooperation in the field of e-commerce and public procurements, sets common principles of competition protection and harmonizes customs formalities.

Win-win

The tariff liberalization of trade between the EAEU member-countries and Vietnam implies reduced or slashed to zero import customs duties (around 90%) - either immediately after the free trade agreement comes into force (59%) or within transitional periods (30%) - on the majority of goods items (all in all, around 10,000 items) on a quid pro quo basis. "As a result of the launch of this mechanism Vietnam will obtain a privileged access to a large and lucrative common market of five countries - Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan - with the total volume of gross domestic product of around $2.2 trillion and with almost 183 mln consumers. In exchange, the Eurasian ‘five’ will be able to promote its products in Vietnam with population exceeding 90 mln people, on easy terms," the diplomat said.

Russia-Vietnam trade expansion

According to Vnukov, Moscow expects the mutual trade with Vietnam to surge significantly as the preferential trade zone between the EAEU and the Socialist Republic of Vietnam is launched. The mechanisms implied by the free trade zone agreement are long-term and will help meet the target set by the leadership of the two countries to bring the mutual trade to $10 bln by 2020.

"Despite a number of certain hurdles, our trade and investment ties are getting stronger," he said, adding that "Vietnam already tops the list of Russia’s biggest trade partners within the ASEAN."

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