Vietnam, RoK agree on cumulation of origin of textile materials14/12/2020 32
The Ministry of Industry and Trade (MoIT) and the Ministry of Trade, Industry and Energy of the Republic of Korea (RoK) recently signed an exchange letter on the implementation of the cumulation of origin of textile between the two nations under the EU-Vietnam Free Trade Agreement.
The letter was inked in the framework of the 10th meeting of the Vietnam-RoK Joint Committee on Energy, Industry and Trade Cooperation and the 4th meeting of the joint committee on the implementation of the Vietnam-RoK Free Trade Agreement (VKFTA), the MoIT’s Asia-Africa Market Department said, adding the document is significant to help Vietnamese firms easily access high-quality textile materials from the RoK for production for export to the EU.
The EU needs to import more than 250 billion USD worth of garment and textile products each year; however, Vietnam accounted for only 2 percent of share in this potential market, according to the MoIT.
The EVFTA, effective from August 2020, is expected to help Vietnam’s textile and garment industry to increase its shipments to the EU by some 67 percent by 2025 as compared to the scenario without the pact.
However, according to the commitments of the EVFTA, besides meeting strict quality criteria, to enjoy preferential tariffs local businesses must implement strict origin requirements. Specifically, exports to the EU must use fabric produced in Vietnam or the EU. The agreement also allows firms to use fabric from countries which have FTAs with both Vietnam and the EU.
This issue is still a weakness for the local textile and garment industry because most raw materials are imported from countries that have not signed FTAs with the EU.
In this context, Vietnam negotiated with the EU countries on cumulative rules of origin, allowing Vietnamese exporters to use fabric made by a third-party country that has an FTA with the EU like the RoK.
Before the EVFTA took effect, the MoIT conducted a negotiation with the Korean Ministry of Trade, Industry and Energy to carry out the cumulative rules under the EVFTA.
Source: Vietnam Plus