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FTA Index: Improving local interest in FTAs

03:32 - 06/11/2023

The FTA Index being developed by the Ministry of Industry and Trade is expected to help localities take advantage of FTAs and boost export capacity for businesses.

FTA index was developed by the Ministry of Industry and Trade to reflect the effectiveness of FTAs brought to localities. Photo: VNA

Limited involvement

Over the past time, the participation in supporting businesses to take advantage of free trade agreements (FTAs) of localities has been recorded as encouraging.

Mr. Ngo Chung Khanh – Deputy Director of Multilateral Trade Policy Department, Ministry of Industry and Trade assessed that up to now, the issuance of implementation plans by localities has become more and more active, many provinces and cities have given very detailed details for each item and each field. As a result, the export value of many provinces and cities to markets with new-generation FTAs increased significantly.

However, according to the Ministry of Industry and Trade, the number of localities recording import and export activities with countries with FTAs is still modest. Thus, the room to boost exports is still very large. For example, among 63 provinces and cities, only 38 localities have import and export activities with CPTPP countries. If only countries with FTA relations such as Canada, Mexico and Peru are counted, the number is much lower.

In addition, import and export activities of many provinces and centrally-run cities currently focus on traditional markets, not promoting to new markets with FTAs in the CPTPP Agreement or even EVFTA. There are even localities with very large export turnover, but the proportion of important markets in the CPTPP such as Canada or EU countries is relatively modest.

On the other hand, according to the Ministry of Industry and Trade, in recent years, although the awareness of international economic integration in general and FTA implementation in particular of some agencies and localities has improved, the forecasting, attention and proper assessment of the scope of impacts of FTA integration and implementation are still limited, not systematic and timely.

Notably, many localities have not really actively participated in building orientations and strategies to take advantage of FTAs for businesses in their localities. This is also partly because the staff at agencies and localities advising on international economic integration is still thin, not well-trained and regularly updated with necessary information or knowledge for their work.

In 2021, VCCI's survey results on provincial competitiveness index and integration support for enterprises in 63 provinces and cities also showed that the need for international economic integration of enterprises is huge, especially in the context of Vietnam's deep accession to FTAs. However, local supports have only stopped at the level of "general application" for all industries and businesses, that is, they have not gone into detail about the industries that need to be taken advantage of from FTAs, which are really strategic commodities and strategic areas that localities can rely on to promote export growth.

According to agricultural expert Hoang Trong Thuy, so far with the participation in 19 FTAs, the market openness as well as opportunities for Vietnam to promote exports, strengthen economic cooperation and investment are huge. If local authorities step in early and drastically together with ministries and sectors to support businesses and industries to take advantage of FTAs, the opportunities for businesses and industries to develop and participate in the global supply chain will be more favorable and effective.

Mr. To Hoai Nam – General Secretary of the Vietnam Business and Medium Association also said that the participation of localities in supporting businesses to take advantage of FTAs over the past time is still limited, causing businesses to miss many opportunities for market development. "The capacity and resources of enterprises, especially small and medium enterprises, are still weak, leading to domestic goods that are still difficult to access as well as unable to build brands and gain market share in many potential export markets" - Mr. Nam pointed out.

FTA Index changes the way it supports

Mr. Ngo Chung Khanh – Deputy Director of the Multilateral Trade Policy Department said that if all 63 provinces and cities are interested in the implementation of FTAs, they are interested and wondering how to help businesses take advantage of FTAs more, surely the results will be better, more efficient, like the results we've achieved since PCI. "This is also the reason, the Ministry of Industry and Trade has proposed and the Government has also approved the project to develop a set of indicators to evaluate the results of the implementation of FTAs of localities every year (FTA Index)" - Mr. Khanh said.

The objective of building an index FTA is said by the Ministry of Industry and Trade to reflect the effectiveness of FTAs brought to localities, which is reliable additional information for investors to orient and make investment decisions; for the National Assembly, it is an important information base to strengthen the direction and supervision of the implementation of FTAs in localities. For central agencies, according to the Ministry of Industry and Trade, FTA Index helps enhance the effectiveness and effectiveness of state management and the role of central agencies.

As for localities, the FTA Index helps evaluate the results of the implementation of FTAs in their localities, creating a motivation to increase the interest of local authorities, businesses, including people to signed FTAs. In particular, the Ministry of Industry and Trade expects that the FTA Index will help provinces and cities change their thinking and change their ways of doing things in creating more favorable conditions for businesses to take advantage of FTAs.

If the PCI helps to identify problems of the local business environment, thereby promoting the improvement of the quality of Vietnam's business environment. Over the past ten years, the implementation of PCI has created very strong changes in improving the investment environment of localities. Mr. To Hoai Nam – General Secretary of the Vietnam Association of Enterprises and Mediums assessed that the implementation of the FTA Index by the Ministry of Industry and Trade is expected to contribute to strongly improving the support to take advantage of FTAs of local authorities for businesses more effectively.

Mr. To Hoai Nam emphasized that FTA Index will be a tool to help localities have a better shift in thinking in terms of promoting the story of integration in the coming time. "In particular, we appreciate that direct participation in the survey related to FTAs, the voices of small and medium-sized enterprises have just reached the government; they can make policy recommendations to make adjustments to help them take advantage of opportunities from FTAs more effectively in the coming time," Nam said.