“New vitality” for Vietnam – Chile relations
Vietnam and Chile established diplomatic relations on March 25, 1971, and by May 2007, Vietnam and Chile had established a comprehensive partnership. In recent years, Vietnam-Chile trade relations have made impressive progress and achieved positive results. In particular, the Vietnam-Chile Free Trade Agreement (VCFTA) was ratified and officially took effect in 2014, promoting the growth of two-way trade and diversifying import and export goods.
From November 9-16, at the invitation of President of the Republic of Chile Gabriel Boric Font and President of the Republic of Peru Dina Ercilia Boluarte Zegarra, President Luong Cuong will lead a high-ranking Vietnamese delegation to pay an official visit to the Republic of Chile and the Republic of Peru and attend the 2024 Asia-Pacific Economic Cooperation (APEC) Summit Week.
According to Deputy Foreign Minister Nguyen Minh Hang, for Chile, this is the first visit by the President of Vietnam in 15 years, right on the occasion of the 55th anniversary of the historic meeting between President Ho Chi Minh and the late President Salvador Allende - the event that laid the foundation for Chile to become the first country in South America to establish diplomatic relations with Vietnam.
On that basis, the Vietnam-Chile relationship has been developing positively, especially in the field of trade. Currently, Chile is one of Vietnam's leading important partners in the region; it is the first Latin American country to sign a free trade agreement with Vietnam, so the official visit of President Luong Cuong to Chile will bring "new vitality" to the Vietnam-Chile relationship, especially in areas where the two sides still have much potential for cooperation.
Huge untapped potential
According to the Ministry of Industry and Trade, before the Vietnam - Chile Free Trade Agreement (VCFTA) was signed, Vietnamese goods were subject to import tax in Chile (an average of 6%) and Vietnam always had a trade deficit with Chile. However, since 2014, Vietnam has always had a trade surplus with Chile and especially, after 10 years since the FTA took effect, Vietnam's exports to Chile increased 5 times. At the same time, businesses of the two countries have effectively taken advantage of the opportunities from the FTA to exploit each other's markets.
Citing data from the General Department of Vietnam Customs, a representative of the Department of European and American Markets (Ministry of Industry and Trade) said: In 2023, in the context of the global economy facing many challenges, bilateral trade turnover between Vietnam and Chile reached 1.57 billion USD; of which, Vietnam's exports reached 1.2 billion USD, imports reached 375.16 million USD.
In the first 9 months of 2024 alone, bilateral trade reached 1.29 billion USD; of which, Vietnam exported 1.04 billion USD and imported 254.5 million USD from Chile. Notably, Chile is currently one of Vietnam's four largest trading partners in Latin America (after Brazil, Mexico and Argentina).
Vietnam's main export products to Chile are mainly consumer goods such as: phones of all kinds and components; machinery, equipment, tools and spare parts; textiles; shoes of all kinds; clinker and cement; rice; handbags, wallets, suitcases, hats, umbrellas; coffee; interior products made from materials other than wood... Among them, phones of all kinds and components are the items with the highest proportion in the structure of Vietnam's exports to Chile.
On the other hand, Vietnam imports from Chile mainly raw materials for export production such as: copper for making electric wires and cables, planted wood for producing wooden furniture, fish meal for processing animal feed, poultry and shrimp and fish farming, paper pulp, wine, fresh fruit, animal and vegetable oils and fats, animal feed and raw materials, scrap iron and steel, etc.
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| The 5th meeting of the Vietnam - Chile Free Trade Council was held under the chairmanship of Deputy Minister of Industry and Trade Nguyen Hoang Long and Deputy Minister in charge of Foreign Trade, Ministry of Foreign Affairs of Chile Claudia Sanhueza in June 2024. |
“ Over the years, the Ministry of Industry and Trade and the Ministry of Foreign Affairs of Chile have alternately organized the Free Trade Council between the two countries. The meeting is an effective mechanism to review the implementation of the Vietnam - Chile FTA and promote bilateral cooperation in the fields of economy, trade, investment, agriculture, education, health, science and technology” - The European - American Market Department commented and said that the VCFTA Agreement has created a boost for economic - trade relations between the two countries. In Vietnam, businesses are taking full advantage of the incentives of the Vietnam - Chile FTA and Chile is one of the leading markets in terms of preferential utilization rate with the rate of using certificates of origin (C/O) form VC.
In addition, Chile is a member of the Pacific Alliance, which helps Vietnamese enterprises not only access the Chilean market but also expand opportunities to other member countries such as Peru, Colombia and Mexico. With a population of more than 19 million people and high per capita income, Chile is one of the countries with large consumer demand in the South American region. Vietnamese products are highly appreciated by Chilean consumers. This creates favorable opportunities for Vietnamese enterprises to export.
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| Booth introducing Vietnamese products at Lago Ranco Fair, Chile, April 2022 |
Notably, the new Vietnamese Ambassador to Chile, Nguyen Viet Cuong, also said that in addition to VCFTA, trade between Vietnam and Chile also received a "boost" from the CPTPP Agreement. Although the CPTPP only took effect in Chile in July 2023, it has received widespread support from both the Chilean government and businesses, creating a foundation and a favorable environment to attract foreign investors to Chile.
“ Within the framework of VCFTA and CPTPP, trade relations between the two countries still have much potential to develop even more strongly. In addition to increasing two-way trade turnover, there are still many ways to further exploit the potential of the two-sided markets such as: reducing tariffs; attracting investment; diversifying the supply of raw materials for domestic production industries; further opening up the two-sided markets, especially for each country's strong export products...
VCFTA and CPTPP have been, are and will continue to be a solid foundation to strengthen trade and investment relations between Vietnam and Chile in particular and between each country and the neighboring region in general" - the new Vietnamese Ambassador to Chile Nguyen Viet Cuong emphasized.
Make the most of incentives from FTAs to promote exports
With tariff incentives from VCFTA or CPTPP, Chile is a potential market for domestic enterprises. However, to take advantage of opportunities and achieve success requires a lot of effort from the enterprises themselves, especially in the context of complex and unpredictable economic and trade fluctuations in the world today.
To boost exports to Chile, in the coming time, state management agencies will continue to implement a series of synchronous and effective solutions, focusing on improving the competitiveness of Vietnamese goods, optimizing the legal environment and expanding market access opportunities. In particular, focusing on promoting market research, providing detailed and timely information on demand, consumption trends as well as quality requirements of the Chilean market; focusing on supporting businesses in understanding Chile's legal regulations, technical standards, and non-tariff barriers, and organizing training programs to help businesses improve their export capacity, especially the ability to meet international standards on food quality and safety.
For businesses, first of all, they need to invest in market research and understanding. Along with that, improving product quality and applying international standards are key factors. In addition, businesses need to be proactive in finding partners and establishing long-term business relationships with distributors and importers in Chile. Building a network of trusted partners not only helps businesses minimize risks but also creates favorable conditions for market expansion.
Notably, businesses need to make the most of the incentives from the Free Trade Agreement (FTA) between Vietnam and Chile. To do this, businesses need to master the regulations on goods origin, customs procedures, as well as related tariff policies, thereby minimizing costs and enhancing competitive advantages. Close cooperation with trade promotion organizations, embassies and Vietnamese trade offices in Chile is also an important solution, helping businesses update market information, seek new opportunities and support in solving arising problems.
Finally, businesses need to develop a long-term export strategy that focuses not only on sales growth but also on sustainability and stability.
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