Eurasian Economic Union looks towards FTAs in the east and benefits from FTA with VN
VGP – The free trade agreement (FTA) signed with Viet Nam is the first trade deal of the Eurasian Economic Union (EAEU) that took effect in 2016, only one year after the establishment of the union.
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Eurasian Economic Union looks towards FTAs in the east and benefits from FTA with VN |
By 2011, most of the EAEU member nations had a net trade surplus with Viet Nam, which means their exports to Viet Nam overwhelmed their imports from the Southeast Asian country.
According to data from the World Bank, this trend has reversed with a trade deficit of US$1.3 billion in 2018. A trade deficit does not mean a bad thing. It is possible that EAEU countries are importing more from Viet Nam because the FTA makes imports from Viet Nam cheaper compared to other alternatives. Moreover, over recent decades Viet Nam has risen to become a manufacturing nation.
As a young member of the EAEU, Kazakhstan has gained clear benefits from the FTA. Kazakhstan’s exports to Viet Nam soared from about around US$10 million in 2015 to an average of US$226 million in 2017-2018, mainly including minerals such as lead and zinc.
Meanwhile, Russia’s exports to Viet Nam have increased significantly since the FTA was enforced, from US$1.4 billion in 2014 to approximately US$2.4 billion last year. Viet Nam’s exports to Russia have reported an even bigger increase, from US$2.3 billion to US$3.6 billion in the same period.
The EAEU’s reduction of import tariff on Viet Nam’s technology products, including broadcast equipment and computer chips, seems to have enabled Viet Nam to boost its exports to Russia.
However, some smaller countries, such as Armenia, have not benefited properly from the Viet Nam-EAEU FTA. The document not only failed to boost Armenia’s exports to Viet Nam, but also made its imports from the Southeast Asian country increase twofold, mostly technology components.
Anyway, the agreement has contributed to accelerating trade despite the uneven increase level between the member countries and experts’ finding that it is mainly beneficial for Viet Nam.
By Vien Nhu
