HCM City (VNA) - Domestic garment and textile firms have, for the most part,missed out on the much-touted benefits of free trade agreements (FTAs) that Vietnamhas signed, experts said at a seminar on August 2.

The firmsin the country that have taken advantage of FTA breaks are in the FDI sector,they noted.

Vietnam has signed 12 free trade agreements, ofwhich 10 FTAs have come into force: VN-ASEAN, ASEAN-India, ASEAN-Australia-NewZealand, ASEAN-Republic of Korea, ASEAN-China, ASEAN-Japan, Vietnam-Chile, Vietnam-Japan,Vietnam-Republic of Korea and Vietnam - Eurasian Economic Union, said Nguyen NgocHoa, deputy director of the HCM City Department of Industry and Trade.

In the2016-20 period, most tariff lines under the FTAs have entered the period ofbeing deeply cut or completely removed, he said.

Garments and textiles are key export items for thecountry in general and HCM City in particular. If enterprises can take goodadvantage of FTA opportunities, the country will be able to increase exportrevenues as well as expand export markets, he said.

But to be able to enjoy preferential tariffs underFTAs, the products must meet requirements under the rules of origin, he added.

With weakmaterials supply and supporting industries, businesses in the garment andtextiles face a big challenge in complying with the rules of origin, Hoa said.

Pham XuanHong, Chairman of the Garment-Textile-Embroidery-Knitting Association in HCMCity, said the garment and textile industry has to import around 70 percent ofits materials for production, mainly from China.

“Domestic garment and textile businesses have not taken much advantage of FTAssince they cannot meet rule of origin requirements.”

“And one of the main reasons for this is thatVietnamese firms lack knowledge on this issue,” he said.

Hoa said the seminar was organised by thedepartment in collaboration with the Ministry of Industry and Trade to helpgarment and textile businesses get updated information on rules of origin sothat they can capitalise on preferential treatments under FTAs to boost exports.

Trinh ThiThu Hien, head of the origin of goods division under the Ministry’sExport-Import Department, said that currently, more than 50 percent of Vietnam’sgarment and textile products are making full use of opportunities provided byFTAs, but these are mainly FDI companies.

“Rules of origin can neutralise preferential tariffs under FTAs,” she said.

Goods eligible for preferential treatment underFTAs have to meet general or product-specific rules of origin, and haveappropriate documentation, known as the certificate of origin (C/O).

Each FTA has its own certificate of origin form,she said.

🌊[Path to EU widened for Vietnamese garments-textiles]

A productcan qualify for the C/O if it is cut-made-trimmed in Vietnam under the ASEANFTA, but under other FTAs like ASEAN-Japan and Vietnam-Japan pacts, firms mustmeet the rules of origin from the fabric onwards, which is a big challenge forVietnamese firms since the country still relies heavily on imported fabric.

Under theEU-Vietnam FTA, the ministry has negotiated to apply more flexible rules oforigin, Hien said. While this FTA also requires rules of origin to apply fromfabric onwards, meaning that exports to the EU must use fabric produced in Vietnamor the EU, the agreement also allows firms to use fabric from one third countrywhich has FTAs with both Vietnam and the EU.

At theseminar, Hien answered several questions raised by enterprises about FTA rulesand procedures regarding C/Os.

Hoa saidexports in the garment and textile sector were still focused on a few mainmarkets. He urged exporters to diversify their export markets, especially thosewith which Vietnam has signed FTAs, so as to avoid or minimise risks.

Firms need to study carefully the characteristics of each market as well as itsrule of origin requirements, he said.

Hong said garment and textile exports reached over14 billion USD in the first half of the year, a year-on-year increase of 11 percent.

Followingthe solid first half performance, the industry is confident of achieving its2017 export target of 30-31 billion USD, an increase of 10 percent over lastyear, he said.-VNA