Free Trade Agreements and the issue of tariff preferences utilization by Vietnamese enterprises

Abstract

This article studies the current status and gives suggestions to improve the utilization rates of tariff preferences in Free Trade Agreements (FTAs) by Vietnamese enterprises. Over the years, Vietnamese government has made enormous effort to engage itself in a number of multilateral and bilateral FTAs with a view to boosting competitive power of Vietnamese merchandise and increasing the opportunities for its goods to get access to more foreign markets. However, the fact reveals that current level of FTA tariff preferences utilization by Vietnamese companies has not met the expectation. This article systemizes, analyzes, and consolidates the reasons why those enterprises have not made good use of tariff preferences in FTAs; therefrom, offers recommendations to help increase such utilization rates. The suggestions include (i) a much tighter cooperation among Vietnamese enterprises, industry associations and functioning authorities is essential so that the enterprises will be provided with information, assistance and guidance to meet requirements in FTAs as well as other matters on utilizing tariff preferences; (ii) Vietnamese companies themselves should be more active in searching for and updating information and knowledge of FTAs as well as their preferences in order to make better use of them; (iii) business strategies of Vietnamese enterprises should be adapted in order to achieve a higher chance of satisfying the rules of origin of specific FTAs; (iv) a long-term plan to develop areas producing domestic materials and accessories is needed to ensure the grant of future FTAs’tariff preferences to Vietnamese companies (especially those in industries currently dependent heavily on imported materials and accessories).