As of January 01. 2014, Vietnam-Chile Free Trade Agreement officially took effect, creating a great opportunity to boost the economic tie between the two countries.
The negotiation commenced in October, 2008 and officially ended in November, 2011. However, since the ratification procedure in each country took a significant amount of time, the agreement did not come into force until January, 2014.
With 14 Chapters and 108 Articles together with 8 Annexes, Vietnam-Chile Free Trade Agreement only targets the trade of goods. For example, the FTA entails provisions on facilitating market access, rules of origin, sanitary and phytosanitary measures, technical barriers, safeguards etc…
According to the agreement, Vietnam commits to abandoning 87.8% the tariff rates (equivalent to 91.22% as of 2007) for Chile for 15 years. In exchange, Chile shall eliminate tariff for the goods accounting for 99.62% of the export value of Vietnam as of 2007 within 10 years; among them 81.8% export value and 83.54% types of tariff would be abandoned immediately.
A number of major exporting products from Vietnam, which would enjoy immediate tariff cut from the current 6% to 0%, includes textiles (203 tariffs would be reduced to 0% instantly, 17 others will be eliminated within 5 years), seafood, coffee, tea, computers and computer components (tariff cut to 0% right after the agreement took effect).
The rule of origin of the agreement is fairly easy to satisfy, most of products merely needs to have its materials originated from member states (Vietnam or Chile) accounting for at least 40% or changes from its initial level 4 position of HS so as to gain the favorable tariff treatment.
Chile is the first Latin-American state Vietnam signs FTA with. This is also the eighth FTAs ever signed by Vietnam. In the meanwhile, Chile had become a partner of 25 FTAs and trading with FTA partners comprises of 80% the total import-export value of the country. Vietnam and Chile are both among the 12 negotiating parties of TPP.
Goods exchanges between the two countries in the last five years have been growing at an average pace of 26.8% per annum. Vietnam’s export to Chile, at the same time, has increased at 41% annually. Being a signatory of this FTA not only help Vietnam’s products access Chilean market but also pave the way for Vietnam to exploit the huge and potential Latin American market.
The fulltext of the agreement can be found and downloaded hereunder: