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Opportunity to boost economic co-operation between Vietnam and the US
The US is one of the most important export markets in Vietnam’s economic and trade development strategy. At the same time, Vietnam has become an attractive destination for US investors.
2010 is a pivotal year in Vietnam-US bilateral relations. Fifteen years after normalisation, the two governments have made great efforts to develop bilateral ties deeply and widely in all fields, especially in economics.
The Vietnam – US Bilateral Trade Agreement (BTA) signed in 2001 lifted economic and trade relations into a new height. Two-way trade turnover increased from US$1.4 billion in 2001 to US$15 billion in 2009 and the US became Vietnam’s largest export market. It also became the biggest foreign investor with a total investment capital in 2009 hitting US$9.8 billion.
Co-operative programmes under the Trade and Investment Framework Agreement (TIFA) in recent times have been of significant meaning, especially during the current global economic downturn. The US has a high demand for garments, footwear, wood products, seafood, electric and electronic products and mechanical manufacturing which are Vietnamese strengths. Therefore, Vietnamese businesses should utilise this opportunity to boost exports to the market.
According to the Deputy Minister of Industry and Trade, Nguyen Cam Tu, the BTA, which came into effect in late 2001, helped the boom in Vietnamese exports to the US through the application of the Most Favoured Nation (MFN) system of tariffs.
Mr. Tu said that in the next few years, to boost exports to the US, Vietnamese businesses should improve their competitiveness, especially in industrial processing products. Government and management agencies should upgrade management methods, simplify administrative procedures, issue suitable policies, iron out snags, create a favourable investment environment, improve infrastructure, develop human resources, and produce new products of high quality.
Experts said one issue for exporters is the limited scale of production and the manufacturing base, creating problems in terms of the reliability of products. To surmount this obstacle, businesses need to re-organise production to ensure the quality of goods, widen its scale and lower prices. In particular, they must take charge of the supply of input materials to meet orders from other countries and become direct and long-term partners for the US’s key importers.
Deputy General Director of DOJI Gold and Gems Group, Do Vu Phuong Anh, said the business wishes to export products made of gold and silver to the US market as well as learning new technologies from US businesses.
The US has agreed to widen its market for Vietnamese goods since 2008 and is now entering the first round of negotiations with Vietnam and other partners about the Trans-Pacific Partnership Agreement, which is considered a potential foundation for the region to integrate into the global economy.
The US ambassador to Vietnam, Michael W. Michalak, noted that the development of bilateral trade relations between the two countries runs parallel with the strong growth of Vietnam’s economy. Vietnam’s income level has increased 7.2 percent per year in the past decade and the GDP per capita rose to US$1,052 in 2009. The poverty rate in Vietnam was reduced to 12 percent last year. These statistics provide a sound footing for the US to continue considering investment into Vietnam. In the coming time, US businesses will assist their Vietnamese counterparts to improve infrastructure and search to produce hi-tech goods, overcome the level of low income and push up exports to the US market, he said.
The trade relationship between Vietnam and the US is progressively deepening. The two countries’ governments have launched many programmes to support businesses on both sides in the exchange experience to step up two-way trade. The issue raised is how businesses may take full advantage of these opportunities to export more goods made in Vietnam to the US market.
VOV
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