Exploiting 3 FTAs, what should Vietnamese businesses pay attention to when exporting to Australia?

Market with great potential

Sharing on the sidelines of the seminar "Maximizing import and export opportunities between Vietnam and Australia through Free Trade Agreements", organized by the Ministry of Industry and Trade in coordination with the Australian Embassy on September 6, Mr. Huynh Quang Thanh - Director of Hiep Long Furniture Company said: In addition to the main markets of the EU, the US, the Middle East, and Japan, businesses are looking for export opportunities through markets such as Australia.

Assessing the potential of this market, Mr. Thanh said that this is a market with a good economy and high payment capacity. “In fact, there are customers of businesses in the EU who buy goods and sell them back to Australia. This shows that there is still demand for this market,” Mr. Thanh shared.

Similar to wooden furniture, many seafood businesses are also stepping up when exploiting the Australian market. Ms. Le Hang - Director of Communications of the Vietnam Association of Seafood Exporters and Producers (VASEP) said that since the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) came into effect, seafood businesses have taken advantage of tariff advantages to export to Australia. However, it is inevitable that in the general trend of the market, in the first 7 months of 2023, seafood exports to Australia decreased by 23% compared to the same period. However, compared to major export markets such as the US, EU, and China, this market still has many bright spots. It is expected that the market will be more prosperous by the end of the year.

Many timber businesses are looking to expand exports to the Australian market. Illustrative photo

Mr. To Ngoc Son, Deputy Director of the Asia-Africa Market Department, Ministry of Industry and Trade, said that Australia will become Vietnam's 7th largest trading partner in 2022. In the opposite direction, Vietnam will be Australia's 10th partner.

In the first 7 months of 2023, Vietnam's exports to Australia were also slightly affected by the slowing trade trend due to the economic downturn, with turnover reaching 2.8 billion USD, down 14.7%. Vietnam's main export groups to Australia include phones of all kinds and components, machinery, equipment, tools, spare parts; computers, electronic products and components, seafood; agricultural products, textiles and garments.

Regarding the negotiation and implementation of FTAs, Mr. Ngo Chung Khanh, Deputy Director General of the Multilateral Trade Policy Department, Ministry of Industry and Trade, said: Vietnam and Australia are currently joint members of at least 3 FTAs ​​including the CPTPP Agreement, the Regional Comprehensive Economic Partnership Agreement (RCEP) and the ASEAN Australia - New Zealand Free Trade Agreement (AANZFTA). While the CPTPP and AANZFTA Agreements help reduce tariffs, the RCEP Agreement helps businesses take advantage of requirements on rules of origin. This helps export growth between Vietnam and Australia always remain high.

Vietnamese and Australian businesses share experience in market exploitation

However, Mr. Khanh pointed out a paradox that investment from Vietnam to Australia has not increased despite the availability of bridging tools such as FTAs. According to him, this is because the technical elements in the commitment are very difficult to implement and Vietnamese businesses still do not have detailed information about the FTA to access new opportunities.

According to Mr. Khanh, Vietnam has a lot of room for both sides to increase import and export activities of strategic goods into each other's markets. Therefore, Vietnamese enterprises need to exploit the benefits from FTAs ​​to rebalance the trade balance.

What should Vietnamese businesses pay attention to in order to take advantage of opportunities for success?

Mr. Pham Dinh Thuong - Director of KTPC Investment and Free Trade Agreement Consulting Company - said that Vietnam's exports to the world have been growing continuously since before the FTAs. After the FTAs ​​were signed and implemented, the growth rate was even stronger. However, the growth rate for the Australian market was somewhat slower.

Explaining the reason for this situation, Mr. Thuong said that to export to this market, businesses must meet very strict standards. However, currently, the interest of Vietnamese businesses in the export standards of other countries is still limited. In particular, with new-generation trade agreements such as CPTPP, labor and environment are important standards, but Vietnamese businesses have not paid much attention. In addition, with new-generation FTAs, to take advantage of preferential opportunities, Vietnamese goods must meet the rules of origin. However, the source of raw materials for many industrial products has not yet met the requirements. Typically, textiles, footwear, etc.

According to Mr. Thuong, to take advantage of the opportunity, businesses need to pay attention to standards, product packaging, improve production processes, meet labor and environmental standards, standards on antibiotic residues, pesticides, etc. At the same time, build and implement a sustainable development strategy. Currently, greening, digitalization, cleanliness, etc. are trends. However, in reality, in many fields, businesses have not paid attention to the environment and labor and have suffered the consequences. Typically, garments and seafood. In addition, businesses need to diversify supply sources, cooperate to reduce costs, and meet rules of origin. Regularly update market information through import partners.

Meanwhile, Mr. Huynh Quang Thanh - Director of Hiep Long Wood Company said that compared to other markets, Vietnam does not have many business delegations promoting trade through the Australian market. Therefore, the State needs to organize more trade promotion delegations through this market, to create opportunities for businesses.

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