Vietnamese yarn and agro-aqua products will enjoy deeper and faster tax cuts when entering the South Korean market under the free trade agreement (FTA) being negotiated between Vietnam and South Korea.
However, this FTA is expected to quickly remove the tariffs on sensitive and highly sensitive products, including yarn, agricultural and fishery products exported to South Korea.
Vietnamese enterprises are already enjoying preferential tax rates when exporting goods to South Korea under the FTA between South Korea and ASEAN. Under this multilateral FTA, at least 90% of the total tariff lines on goods exported from ASEAN nations to South Korea had been slashed to zero by 2010.
However, import tariffs on sensitive items, such as cod, herring, onion, vodka and artificial fiber, so far have only been lowered to 20% and will have been reduced to 0-5% by 2016. Such tariffs make up about 6-7% of the total tariff lines.
Meanwhile, import tariffs on highly sensitive products will be cut to 20-50% in January 1st, 2016. Such products include cuttlefish, kidney bean, barley and corn, which are subject to 200 tariff lines when they are shipped to South Korea.
Vietnamese seafood products are still enjoying preferential tariffs under the South Korea-ASEAN FTA as they are listed as normal goods, said Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP). Vietnam mainly exports raw fish, fresh/live fish. Exporting processed seafood is not easy, said Mr. Hoe.
In addition to the expansion of trade cooperation, this FTA is expected to help promote investment ties between Vietnam and South Korea.
In August 2012, Vietnam and South Korea announced that negotiations over a bilateral FTA would begin soon. In September, the first round of talks was conducted, while the second round is scheduled for next year.
According to the General Department of Customs, Vietnam’s exports to South Korea in the first ten months of 2012 reached over US$4.5 billion, a year-on-year rise of 15.3 percent. Vietnam imported US$12.6 billion worth of products from this country in this period, up 18.8 percent over the same period last year.