A milestone after eight years of negotiation

After eight years of persistent and effective negotiation, the Vietnam-Israel Free Trade Agreement (VIFTA) was officially signed on July 25, 2023 in Israel. This historic milestone marks a strategic step forward in unlocking both countries’ potential in economy, trade, industry, and technology.

According to the Multilateral Trade Policy Department (Ministry of Industry and Trade), Israel is one of Vietnam’s most important partners in trade, investment, and labor cooperation in the West Asia region. It is currently Vietnam’s third-largest export market and fifth-largest trading partner in the region playing an increasingly vital role in Vietnam’s economic diversification strategy.

The trade structure between Vietnam and Israel is highly complementary rather than competitive. Vietnam exports agricultural products, processed food, and consumer goods, while Israel provides high-tech products, electronic equipment, fertilizers, and machinery. This complementarity allows both countries to capitalize on their strengths, helping Vietnam access advanced technology and enhance product competitiveness.

Trade growth accelerating, yet still imbalanced

Vietnam-Israel trade has expanded strongly over the past decade,  from USD 1.7 billion in 2015 to USD 2.9 billion in the first 11 months of 2024, according to Vietnam Customs. However, the trade balance remains tilted toward Israel, which exported USD 2.1 billion worth of goods to Vietnam, while Vietnam’s exports reached USD 741.3 million.

Vietnam’s main exports include phones and components, seafood, footwear, cashew nuts, coffee, textiles, wood, and wood products. Coffee exports rose by 15.2%, while the range of export items expanded to nearly 70 categories, mostly in agriculture, forestry, fisheries, and processed foods.

In contrast, Vietnam mainly imports computers, electronics, machinery, fertilizers, and fruits from Israel, products with high technological value that support Vietnam’s industrial production.

VIFTA will remove tariffs on 92.7% of Israel’s tariff lines, providing a strong boost to Vietnam’s exports and helping reduce production costs through technology transfer and cooperation.

Unlocking industrial cooperation and innovation potentialIsrael is a global leader in high-tech agriculture, biotechnology, electronics, telecommunications, and climate adaptation sectors that align with Vietnam’s development priorities.

To fully realize VIFTA’s opportunities, the Ministry of Industry and Trade has proposed six key directions:

First, enhance delegation exchanges and cooperation between ministries, sectors, and chambers of commerce.

Second, promote trade and investment through fairs, exhibitions, and business missions.

Third, facilitate policy and technical standard sharing to ease trade flows.

Fourth, boost collaboration in high technology, agricultural processing, and other emerging sectors.

Fifth, encourage Israeli investment in high-tech, consumer goods, food, and environmental industries in Vietnam.

Sixth, expand expert exchange and human resource development in industrial production.

The Ministry also called on Israel to support capacity-building programs and technology transfer projects for Vietnamese enterprises, particularly in smart agriculture and food processing.

VIFTA not only deepens economic ties but also opens doors for Israeli investment in Vietnam’s technology and sustainable development sectors, creating new jobs and driving innovation.

With mutual economic complementarity and strong political trust, VIFTA is set to elevate the Vietnam-Israel relationship to new heights, fostering long-term cooperation in industry, science, and digital innovation.

In an era of global competition, effectively utilizing free trade agreements such as VIFTA will be key for Vietnam to strengthen its international trade position and ensure sustainable economic growth in the years ahead.