Utilization of tariff preferences under Vietnam’s FTAs in 202215/05/2023 307
According to data from the Ministry of Industry and Trade, the total export turnover taking advantage of tariff preferences under the FTAs in 2022 reached 78.3 billion USD, accounting for 33.61% of the total export turnover to the markets which signed FTAs with Vietnam. In 2022, 1,380,359 million preferential C/O sets were issued, increasing 13.18% in value and 11.75% in the number of C/O sets compared to 2021.
In terms of turnover taking advantage of tariff preferences, Vietnamese goods exported to China ranked first with a value of 17 billion USD, followed by Vietnamese goods exported to ASEAN, South Korea and the EU with the value of 13.34 billion USD, 12.4 billion USD and 12.1 billion USD respectively. The volume of exported goods taking advantage of tariff preferences from Vietnam to Laos and Cambodia is negligible.
In terms of the utilization rate of FTA tariff preferences: The Indian market accounts for the highest percentage of AIFTA utilization with 66.85%; followed by markets in Chile and EAEU with 64,57% and 59,44% respectively. The utilization rate of FTA tariff preferences with Laos and Cambodia is not high because Laos and Cambodia are both ASEAN members, so businesses often take advantage of tariff preferences directly from the ATIGA. Generally, the utilization rate of FTA tariff preferences of Vietnam in 2022 is 33.61%.
The rate of using preferential C/O is 33.61%, which does not mean that more than 66% of the remaining export turnover of Vietnam is subject to high tariffs. In fact, the MFN import tariff in some markets has been already 0%, or at a very low level of 1-2%, or equivalent to the special preferential rates under the FTA. In these cases, enterprises do not apply for preferential C/O when exporting because the presence or absence of the preferential C/O does not make a difference in tariff. For example, the export turnover to Singapore using C/O form D in 2022 reached 558 million USD, accounting for only about 12.92% of the total export turnover of 4.32 billion USD to this market, the main reason is Singapore’s MFN tariff is already 0%, so businesses do not need to apply for preferential C/O when exporting. Similarly, Australia and New Zealand imposed 0% MFN tariff on many seafood products, so Vietnam's seafood products do not need C/O when exporting to these two countries.
The turnover issued C/O form CPTPP in 2022 reached 2.542 billion USD, equaling 4.91% of total export turnover to member countries that ratified the CPTPP Agreement. The rate of using C/O form CPTPP when exporting to these markets is not high because most partner countries had FTA with Vietnam with looser rules of origin and more preferential tariffs than the CPTPP in the first years when CPTPP takes effect.
In 2022, export turnover using C/O form EUR.1 to the EU and UK markets is not high (at 25.89% and 23.54%, respectively). Some commodities have very good rates of using preferential C/O form EUR.1 such as fibers and textile fibers, technical fabrics (nearly 100%), footwear (99.51%), seafood (82.94%), plastics and plastic products (79.44%). In the coming time, the rate of using preferential C/O in total export turnover may increase because, in 2022, the EU market still granted in parallel 02 incentives of GSP and EVFTA, so enterprises still applied both mechanisms when exporting goods to the EU and chose C/O form EUR.1 or C/O form A or origin declaration under the REX mechanism to enjoy tariff preferences under the corresponding mechanism when exporting to the EU. After GSP ends on December 31, 2022, it is expected that enterprises will use C/O form EUR.1 more and export turnover using C/O form EUR.1 to the EU market and the UK will increase in the near future.
The rate of using preferential tariffs from RCEP in the first year of entry into force of the Agreement (2022) is only 0.67% because partners in this Agreement are all familiar partners which previously had FTA with Vietnam, therefore, tariffs have long been reduced and eliminated under old FTAs.
In terms of product structure: Vietnam's agricultural products (Chapter 01 - 24) have a very good rate of using FTA preferences because most of them meet the WO rules of origin for raw agricultural products and other rules for processed agricultural products. Many industrial products (Chapters 25-98) have a low rate of tariff preference because the ROOs for industrial products are generally more difficult to meet than those for agricultural products.
The summary of the utilization rate of preferential C/O under Vietnam's FTAs over the years to 2022 (Vietnamese) is attached below: