Hanoi (VNA) - Vietnamese businesses should be aware of the potentiallyhuge pitfalls of trading with the Eurasian Economic Union (EAEU), and theimportance of tackling these together, experts said at a recent conference.

Representatives from the Ministry of Industry and Trade (MoIT) emphasised atthe conference that Vietnam’s  producers and exporters must be aware ofboth the pros and cons of conducting trade with the Eurasian Economic Union(EAEU).

The conference was held to mark one year of the Vietnam-Eurasia Economic UnionFree Trade Agreement (VN-EAEU FTA).

Ngo Chung Khanh, Deputy Director of the MoIT’s Multilateral Trade PolicyDepartment, said that his chief concern was the trigger safeguard measurewithin the EAEU in the textile and furniture industries and its effect onVietnamese exports to this market.

He asked Vietnamese textile exporters to be extremely careful of this safeguardmechanism, and only allow a limited number of consignments to be shipped out tothe EAEU each year. He warned that should one company break the rule, all willsuffer the consequences.

Khanh explained that even though the EAEU had agreed at the start ofnegotiations to bring tariffs down to zero percent with no rule of originsrequirement for thread or fabric, as in other FTAs that require the wholeproduct to be made in Vietnam from scratch, the bloc was not in total favour ofopening its textile market to Vietnamese goods.

As such, they apply a trigger mechanism that takes effect if the total exportturnover from Vietnamese producers to the EAEU grows to twice the averagevolume that Vietnam has exported to the region over the last three years.

If Vietnam’s textile export exceeds this volume, the EAEU will conduct aninvestigation to decide whether to apply tariffs of 20 percent instead of zeropercent.

Khanh also stressed the importance of following the rules set by the VN-EAEUFTA, one of which is the prohibition on dividing shipping consignments betweendifferent countries.

This means for a shipping container to be subjected to the zero percent tarifftreatment, it must be shipped directly and wholly from Vietnam to an EAEUmember, even if it belongs to a multinational company with factories in manycountries.

The EAEU has also made it clear that should any company forge a certificate ofgoods origin, the entire industry may be forbidden from exporting to theirmarket.

"Altogether, these risks mean that Vietnamese producers in all fields mustband together to ensure their rights and benefits, as well as the benefits to thesector as a whole," said Khanh.

Duong Quoc Thanh, partner at the DIMAC Independent Law Firm, said that EAEUmember countries, especially Russia, are concerned about the consistency ofVietnamese products’ quality, so businesses should keep this in mind andrespond accordingly.

With the EAEU’s rising influence, Vietnamese firms are gaining market share inthis region through the signing of the VN-EAEU FTA in October 2016.

Along with other FTAs, it elevated Vietnam’s status among East Asian countries,as the country was the first in the ASEAN community to sign an FTA with theEAEU.

In addition to favourable conditions for the fabric, textile and garmentindustry, the VN-EAEU FTA also brings up to 90 percent tariff reductions forother export sectors like seafood, footwear, handbags and suitcases.

The conference was jointly organised by the Hanoi Centre for Small and MediumEnterprises Support, Hanoi Department of Planning and Investment under theDepartment of Planning and Investment and the Hanoi SupportingIndustries Business Association (HANSIBA).-VNA