VIFTA to boost trade with Israel

Le Thai Hoa, Vietnam Trade Counselor in Israel

What did the Vietnam Trade Office in Israel do to speed up the VIFTA conclusion?

In a short period of time, Vietnam and Israel made strenuous efforts so that the VIFTA could be signed on the occasion of the bilateral diplomatic relations’ 30th anniversary and Vietnam’s 78th National Day.

The VIFTA was signed after 12 rounds of negotiation lasting for seven years.

The successful VIFTA conclusion is attributed to the efficient direction by the two countries’ leaders and strenuous efforts by Vietnamese and Israeli negotiation teams. The Ministry of Industry and Trade’s Multilateral Trade Policy Department worked with the Israeli Ministry of Economy and Industry to prepare for the agreement’s signature.

The Vietnam Trade Office in Israel kept regular contact with Vietnamese and Israeli negotiation teams to accomplish things necessary for the signature and prepare for the July 25 signing ceremony.

What solutions does the Trade Office have to bring this agreement to life soon?

The VIFTA will create an important legal framework for economic, trade, investment, service and employment cooperation, and pave the way for Vietnamese goods to penetrate the Israeli market and vice versa. The two sides are working to make the agreement take effect early next year.

Vietnamese and Israeli import and export structures are complementary with each other. Goods that Israel needs are Vietnam’s strong exports and vice versa. The recently signed VIFTA covers many areas of mutual interest, such as trade in goods, services, investment, rules of origin, sanitary and phytosanitary measures, and customs procedures.

In the short run, the Trade Office will strengthen information and promote trade exchanges between Vietnamese and Israeli business communities, encourage Israeli business delegations to Vietnam, stimulate information about the Israeli market, and promote branding and trade promotion through trade fairs and exhibitions in Vietnam and Israel.

What should Vietnamese businesses do to make the most of VIFTA’s incentives?

In general, Israeli businesses are professional and reliable, quick and fair in making a transaction, and willing to deposit or pay in advance. However, the political situation in the country is sensitive and unstable so businesses need to closely eye situations in order to have timely responses.

Vietnamese companies should learn carefully about Israeli partners and can ask for the Vietnam Trade Office in Israel for help, if necessary. They also need to thoroughly understand foreign trade terms, as well as actual international trade customs and practices, and make strict provisions on payment, quality standards, packaging, delivery deadlines and dispute settlement when signing an import-export contract.

Jewish businesses often require exporters to have the Kosher certification, while Arab businesses require the Halal certification for certain categories of goods, mainly food, foodstuffs and consumer goods. Vietnamese enterprises need to learn carefully about customs, regulations and market tastes to avoid encountering unnecessary barriers.

Vietnam exported footwear worth US$92.3 million to Israel in 2022

Which products are potential for export growth after VIFTA takes effect?

Israel has become the third biggest Middle East importer of Vietnamese goods. Vietnam exports about 70 items of all kinds to Israel annually.

Vietnam has become a stable Asian supplier of goods, especially farm produce, seafood, processed food and foodstuffs, household and consumer goods, to Israel.

According to VIFTA, Vietnamese egg, meat, potato, carrot, cauliflower, mushroom, honey and tuna are subject to a zero (0) percent tax rate in Israel, while fashion items, footwear and finished products of Group HS61-64 shall be exempted from tariffs as soon as the agreement comes into force, and taxes applied to fashion and sports footwear products will be reduced within 3-5 years. Processed products with a high added value will continue to have a stable foothold and are likely to yield a growing export value in the coming time.

In recent years, Israel has had a growing demand for and faced shortages of dairy products of all kinds, offering opportunities for Vietnamese businesses to boost dairy exports to Israel.