A Free Trade Agreement (FTA) is understood as economic cooperation agreements signed between two or more members aimed at eliminating barriers to the majority of trade activities, while promoting trade exchanges between member countries. These trade barriers can take the form of tariffs, import quotas, and other non-tariff barriers such as technical standards and sanitary measures.
Currently, there are various terms used, such as Economic Partnership Agreement (EPA), Regional Trade Agreement (RTA), etc. However, if the essence of these agreements aims at trade liberalization (including removing barriers and promoting trade), they are all understood as FTAs.
However, FTAs differ from WTO Agreements, bilateral trade and investment agreements between countries, or Preferential Trade Agreements (PTAs). Specifically:
- WTO Agreements: These usually include commitments in specific trade areas such as goods, services, intellectual property, and investment, aiming to establish common rules for global trade, and mainly focus on reducing trade barriers. Compared to WTO Agreements, FTAs aim at a higher level of trade liberalization, not just reducing, but completely removing trade barriers.
- Bilateral Trade and Investment Agreements: Unlike FTAs, these agreements, such as bilateral investment promotion and protection agreements, customs cooperation agreements, etc., aim at commitments to create a general framework for investment and trade activities between two countries without involving the removal of trade barriers.
- Preferential Trade Agreements (PTAs): These are unilateral trade commitments where a developed country grants tariff preferences to imports from developing countries without reciprocity. These agreements include the Generalized System of Preferences (GSP).
This distinction highlights that FTAs are more comprehensive in their approach, aiming to create a more integrated and barrier-free trade environment.
In the context of globalization and international economic integration, Free Trade Agreements (FTA) have become essential tools to promote economic growth and sustainable development. For Vietnam, signing and implementing FTAs not only expands export opportunities but also brings about many positive changes in the business environment and competition.
1. Expanding Export Markets
FTAs help Vietnam access large and potential markets such as the US, EU, and Japan. This not only increases the export of key products like textiles, footwear, and agricultural products but also attracts investment from foreign partners. Hence, Vietnam can enhance the added value of export products and create more jobs for workers.
2. Improving Business Environment
FTAs require Vietnam to improve its legal system, regulations, and administrative procedures to create a more favorable business environment. This includes simplifying customs procedures, protecting intellectual property rights, and increasing transparency in state management. As a result, Vietnamese businesses can operate more efficiently and attract more foreign investors.
3. Enhancing Competition
Joining FTAs poses a significant challenge in terms of competition for Vietnamese businesses. However, it also serves as a driving force for businesses to improve production capacity, product and service quality, thus affirming their position in the international market. Businesses need to invest in technology, research and development, and workforce training to compete effectively.
4. Strengthening International Cooperation
FTAs not only help Vietnam expand economic relations but also strengthen cooperation with partner countries in other areas such as education, healthcare, and technology. This creates opportunities for learning and technology transfer, enhancing the skills and technical expertise of Vietnamese workers. Moreover, international cooperation projects contribute to infrastructure development and improve the quality of life for people.
Conclusion
Free Trade Agreements (FTAs) have significantly impacted Vietnam’s market by opening up new opportunities for trade and investment. These agreements have enabled Vietnam to access larger markets, such as the US, EU, and Japan, boosting exports of key products like textiles, footwear, and agricultural goods. Additionally, FTAs have driven improvements in Vietnam’s business environment by necessitating legal and regulatory reforms, enhancing transparency, and simplifying administrative procedures. This has made Vietnam a more attractive destination for foreign investors. Moreover, the increased competition resulting from FTAs has pushed Vietnamese businesses to innovate, improve product quality, and enhance their competitiveness on the global stage. Furthermore, FTAs have fostered international cooperation in various sectors, including education, healthcare, and technology, contributing to overall economic growth and development. To fully capitalize on the benefits of FTAs, Vietnam must continue its efforts in reform and innovation, ensuring a transparent and favorable business environment for both domestic and foreign investors.
—————————-
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
_Nguyen Thu Phuong_