Vietnam goods spread in Chile and Latin America

After signing the free trade agreement with Chile, Vietnam goods are exported more to the market, raising Vietnam export turnover significantly with lower tariff. In addition, Vietnam goods are increasingly imported in Latin American market.

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According to the General Department of Vietnam Customs, in the first seven months of 2014, Vietnam exports to Chile reached US $250 million, up 102% and imports from Chile made up for US $203 million, up 12% compared to the same period last year 2013. This is the first time Vietnam has trade surplus rose, ending a long period of deficit with Chile.

FTA Breakthrough

On evaluation of the result, American Market Department (under Ministry of Industry and Trade) defined that the FTA between Vietnam and Chile dated 11-11-2011 and had effect from 1-1-2014. This created extraordinariness for Vietnam good to penetrate not just Chilean market, but also spill over to the Latin American region, as well as Chilean goods in Vietnam market and ASEAN market. Under this agreement, Chile commits to eliminate tariffs on 99.62% of tariff lines (representing 100% of the Vietnam export turnover to Chile in 2007) for a period not exceeding 10 years. In which, 83.54% of tariff lines (accounting for 81.8% of the total export turnover of Vietnam) was entitled to the 0% tax since early 2014. This category includes the major export items of Vietnam to Chile as seafood, coffee, black tea, raw oil, fresh and processed fruits and vegetables, processed and frozen meat, poultry, some items of textiles and footwear. In addition, 537 tariff lines accounting for 6.96% tax lines and 4.6% of turnover export of Vietnam in Chile will be lower taxes to 0% within five years after the agreement takes in to the effect. More 704 tax lines, accounting for 9.12% of all tariff lines and 13.6% turnover will be down to 0% over 10 years. On contrary, Vietnam pledged to eliminate tariffs on 87.8% of tax lines (representing 91.22% imports from Chile in 2007) in 15 years.

Good beginning

For years ago, as there was no free trade agreement, Vietnam products had to suffered import tax in Chile with an average of 6%, and Chilean goods to Vietnam were also imposed high taxes. Yet, the two-way trade continued to grow, even during the world economic crisis, up from US $ 157 million in 2007 to 473 million in 2011. The list of Vietnam exports to Chile currently has more than 40 items, including shoes and garment, accounting for about 63% of the total export turnover of Vietnam to Chile. Turnover of other categories is very small, just from a few thousand to hundreds of thousands of dollars / year. In the context of Chile having signed 23 free trade agreements and preferential trades with more than 60 partners and around 93% of exports and imports to the world of Chilean counterparts, there are main competitors with Vietnam in Chile as China, Korea, and Malaysia... So, that more than 40 items of Vietnam has been in this market has shown the ability to competitiveness of Vietnam enterprises.

Vietnam goods spread in Latin America

About import and export structure, Vietnam and Chile have a few competing products. Most products are mainly complementary to each other. Vietnam Chile FTA will certainly creates tremendous opportunities for trade growth in the two countries. Items such as footwear, clothing, furniture, Vietnam coffee as well as salmon, grapes, pine wood and paper pulp of Chile are forecasted to have the opportunity to increase turnover by reduced import tariffs. In addition, Vietnam is expected to be the gateway for goods of Chile to penetrate ASEAN market, while Chile is the gateway for Vietnam products to enter Latin American market.

Big Chilean corporations are stepping up investment in regional countries. It is noteworthy that the major supermarket groups in Chile as Cencosud Group, Sodimac Group, and Felabella Group are implementing projects to invest billions in other South American countries, such as Argentina, Brazil, Colombia, Peru.... In fact, there were many goods of Vietnam such as clothing, shoes, plastic toys, crafts and fine art following these groups to infiltrate South American countries.... So American Market Department confirmed, "While Vietnam goods were canalize by Chilean market, there would be contagious to other countries in Latin America." In addition to Vietnam - Chile FTA, Vietnam is negotiating TPP, including the participation of two South American countries as Chile and Peru. While this agreement is in effect, goods of Vietnam and these countries will be able to better compete in Latin American market than before, creating new business opportunities between enterprises of the two sides.