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Vietnam, Eurasian customs union sign FTA to lift legal, technical barriers on trade

Vietnam, Eurasian customs union sign FTA to lift legal, technical barriers on trade

HANOI: Vietnam and the Eurasian Customs Union of Belarus, Kazakhstan, and Russia have concluded negotiations for a free trade agreement (FTA) in a ceremony witnessed by Vietnamese Prime Minister Nguyen Tan Dung in Kien Giang province.

The FTA covers trade, customs facilitation, intellectual property, investment, legal issues, military industries, rules of origin, animal and plant quarantine, and lifting legal and technical barriers to trade. Trade negotiations began in March 2013 and the FTA is expected to come into law in early 2015 after both sides have finished finalizing certain technical details.

Vietnamese exports will benefit from preferential tariffs that will help facilitate exports of agricultural products, seafood, textiles and garments, and wooden furniture. Goods imported from the Customs Union will also receive preferential tariffs, these include machinery, vehicles, and livestock products.

Vietnam and Russia aim to have bilateral trade between the two countries reach US$10 billion by 2020. Russia has directly invested approximately US$2 billion in 104 projects in Vietnam, including US$1.12 billion in 32 projects in the manufacturing and processing sector. Twenty-seven percent of Russian investment is in the oil and gas sector. Binh Dinh province leads in Russian investment with approximately US$1 billion, followed by Hanoi with US$129.5 million, and Ba Ria-Vung Tau province with US$52 million.

Russia has diversified its agricultural imports since restricting imports from Australia, Canada, the European Union, Norway, and the United States in response to economic sanctions imposed by the West over the Ukraine crisis. According to the World Trade Organization, agricultural products made up 21.6 percent of Vietnam’s exports in 2013. Statistics from the General Department of Customs show Vietnam exported only US$61.3 million of seafood products to Russia in the first three quarters of 2014, a figure set to rise as Russia continues to seek trade alternatives.

In 2015, the Customs Union will be re-branded as the Eurasian Economic Union, and will include the countries of Armenia and Kyrgyzstan.