Ecosystem helps businesses leverage FTAs

Nguyen Thi Lan Phuong, Deputy Head of the WTO and FTA Division of the MoIT’s Multilateral Trade Policy Department

How do localities facilitate businesses’ leverage of FTAs?

The utilization of FTAs by Vietnamese businesses is influenced by various factors and entities. There are three groups of entities involved in FTAs’ leverage, including governments of countries as FTA signatories and central-level agencies; local management authorities; and associations, sectors and businesses. Local authorities play an extremely important role in FTA leverage, as all entities, including central and local management agencies and businesses, are aware of the significant opportunities and potential for leveraging FTAs.

However, for businesses to effectively position themselves in FTA markets, enhance value-added activities, and develop their brands, it is crucial to enhance support for their needs at the local level, such as land, credit, technology, and human resources. This support largely relies on the policies, regulations and support programs of specific localities. Localities with clear orientations for key industries and target markets usually have more profound and deeper promotion programs, and more specific support policies, as well as more decisive and timely efforts to overcome difficulties.

The poor connectivity to increase value chains is partially attributed to the modest utilization of FTAs. What is your view on this?

There are many reasons of this, including factors related to relevant state management agencies and businesses. Regarding state management agencies, support activities to enhance business capabilities are still implemented at the local level, but most of them are carried out within the framework of general development policies of the concerned province, not specifically designed for the implementation of a particular FTA.

Moreover, activities haven’t been implemented continually and consistently for a long time to create sustainable effects and efficiency. For example, most provinces and cities organize conferences and seminars to introduce FTA opportunities, but have no follow-up activities to implement the results of these events. Trade promotion activities, information updates, and trade connections in FTA markets, including the EVFTA, haven’t fully met the demand of businesses. Vietnamese businesses, which are mainly small and medium in size, need to improve their capabilities of market research and technology application to take advantage of FTA opportunities and cope with market changes.

The Ministry of Industry and Trade has introduced solutions to promote the EVFTA’s leverage, including the building of an FTA leverage ecosystem. Could you tell us about it?

The concept of an ecosystem to support businesses in leveraging FTAs is not something new. From a certain perspective, we have already had supply chains in specific industries, circular economic models, or ecosystem development in specific areas and sectors. Through a report on the implementation of new-generation FTAs in 2022, the Ministry of Industry and Trade proposed that it be allowed to work with other ministries, sectors, localities and associations in building an ecosystem to help businesses leverage FTAs, in the short term with a focus on key products in each locality.

The Ministry of Industry and Trade has organized many dialogues to exchange views with local management agencies and business leaders in each key industry of each locality to prepare for building an ecosystem to leverage FTAs in general and the EVFTA in particular. On the one hand, this aims to update businesses on regulations and new directions for leveraging FTAs in FTA markets. On the other hand, it aims to listen to views on building sustainable leading export industries from businesses and industries’ representatives.

In the coming time, the Ministry of Industry and Trade will continue more detailed discussions with businesses and sectors to build and realize FTA leverage ecosystem plans for specific key industries in specific localities.