German Market

How to take advantage of the EVFTA to effectively import goods from Germany?

Question: How to take advantage of the EVFTA to effectively import goods from Germany?

Answer: 

To take advantage of the EVFTA to increase access for German goods to  Vietnamese market, German exporters and Vietnamese importers need to pay attention to the following issues notes:

  • Tariffs

Vietnam's commitments on tariff reduction for German goods in the EVFTA are very significant. However, this reduction is made under a schedule, businesses need to follow Vietnam's regulations on implementation of EVFTA tariff commitments in each period to know the exact tariff rates applied on their goods. As German goods are also subject to MFN tariffs that Vietnam applies to WTO members, it is necessary to also check whether the EVFTA rate is lower than the MFN rate or not. If the EVFTA rate is lower, then it should be applied but the goods must meet the EVFTA rules of origin and be attached with an EVFTA Certificate of origin. However, in case the EVFTA rate is higher, MFN rate should be used as usual without the requirement for a Certificate of origin.

  • Rules of Origin and Procedures for Certification of Origin

In order to enjoy EVFTA preferential tariffs when imported into Vietnam, German goods must meet the EVFTA's rules of origin (ROO) and have a valid certificate of origin. Therefore, German exporters need to research the ROO of the Agreement to adjust their source of materials and production processes accordingly in order to meet the EVFTA origin criteria for goods. It should be noted that when negotiating a contract with German exporters, Vietnamese importers should clearly state the issues of tariffs and corresponding ROO. For example, the contract should have a clause stipulating that German exporters shall provide sufficient documents to prove that goods can enjoy preferential tariffs under the EVFTA, otherwise, the contract value will have to decrease to compensate for the additional amount paid for MFN tariff rate instead of EVFTA tariff rate... In addition, Germany currently applies the REX system of the EU for self-certification of origin, so the certificate of origin will be self-issued by the German exporter. When a Vietnamese importer imports goods from Germany, the German exporter only needs to provide this self-certificate of origin and this will be accepted by the Vietnamese customs.

  • Import regulations

Regulations and procedures for importing goods from Germany are basically similar to those for importing goods from other countries into Vietnam. However, under the EVFTA, the import of German goods may have some differences. For example, if Vietnamese importers want to enjoy EVFTA tariff preferences, they must require German exporter to provide EVFTA self-certificate documents; if the German goods are remanufactured goods, they will treated as new ones (remanufactured goods imported from other sources will not enjoy this benefit)…

It should be noted that the specific regulations on the import procedure may be adjusted/changed over time. Therefore, businesses need to regularly update new regulations to fully comply with (see also Question 22 on the procedure of importing goods into Vietnam).

  • Promoting German products to Vietnamese businesses and consumers

Many German products have good quality and design but are not known to Vietnamese importers and consumers. For example, Vietnamese consumers know a lot about German household products, electronics and automobiles, but may not know that Germany also has a very developed agriculture and food processing industry with a wide range of famous food products. Therefore, it is necessary to have strategies to promote and introduce German products to Vietnamese buyers. The forms of product promotion can be through trade fairs, exhibitions, advertising through social networks... Vietnamese consumers are increasingly interested in product quality, product brands, and reputation of suppliers, warranty and after-sales policies… Therefore, an increase of promotion focusing on the quality and reputation of products from Germany can be an effective way to reach Vietnamese consumers.

  • Reducing price

Prices of German products are generally much higher than those of products from other traditional import markets of Vietnam (China, ASEAN), in addition to higher shipping costs due to the long geographical distance between the two countries. However, if the products are imported in large volumes through more economical forms of transportation (for example, instead of being transported by air, it should be transported  by sea), the product prices could be reduced. Therefore, increasing product promotion to increase sales and thereby increase import volume, finding optimal transport methods will help reduce product prices, increase the competitiveness of German goods in Vietnam.

  • Seeking information and support from the government, industry associations

In order to take advantage of the benefits from the EVFTA, in the coming time, the Vietnamese Government, business associations, promotion units, etc. will have a lot of activities to support businesses to increase import and export with EU region. Vietnamese importers can take advantage of these supports to get information and advice on EVFTA commitments, connection with German manufacturers and exporters, and product promotion of German products to Vietnamese consumers.

EVFTA full text for more information: https://wtocenter.vn/chuyen-de/12778-eu-vietnam-trade-and-investment-agreements 

Source: The Center for WTO and International Trade

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