Sourcing from Vietnam: How The New Free Trade Agreement Can Benefit You
The 1st of August 2020 marked a new beginning for trade between the EU and Vietnam with a comprehensive trade agreement that came into effect and will open up trade between these two regions and make sourcing from Vietnam a lot easier. The trade agreement will vastly reduce the trade duties on 99% of all goods that are traded between the EU and the South-Eastern Asia region. This FTA (Free Trade Agreement) will usher in a new era of labor relations in the Vietnam region as the stipulations include a higher commitment to better labor rights and environmental standards. The enforcement of this new trade policy will result in far-reaching benefits for the Vietnamese industrial sector as well as the European consumer market as both regions are looking to recover from the economic and social effects of the current COVID pandemic.
Advantages of Sourcing from Vietnam
In the current economic situation around the world, the drive to recover and rebuild economies has never been stronger. Therefore both parties are looking to take full advantage of the regulations put forth in the FTA. Looking at future trade sourcing companies that are looking to get involved in the EVFTA (European Union Vietnam Free Trade Agreement) several beneficial trade options will come to bear over the next 10 years. With 99% of all traded goods benefiting from the EVFTA, EU manufacturers can already enjoy No-Duties on machinery and chemicals as well as pharmaceutical products – implemented on 1 August 2020. Within 3 years, agricultural products like beef products, olive oil, and rice will have no duties attached to them, with dairy products and produce like fruits and vegetables to be duty-free inside of 5 years.
By 2025 the trade between the EU and Vietnam will be virtually duty-free. It makes for a very lucrative opportunity for manufacturers and producers in the EU trade region. As the trade routes begin to open and produce begins to become widely available these advantages in costing and availability will be the major advantage for the whole industrial and manufacturing sector.
Challenges of Sourcing from Vietnam
Historically there have been several challenges when trading with Vietnam as they have not always had a good reputation for labor and working conditions. With the new FTA and renewed trade interest in this region, many of these conditions will be a thing of the past but there are still some issues that need to be addressed in the course of seeking new trade relationships with the Vietnamese producers and manufacturers. Early adopters should also be aware of the regulation that governs the “duty-free” nature of materials and products that are sourced from the region. 2 very clear rules will guide sourcing agents and EU buyers alike regarding the goods and products:
- Items that are 100% sourced and manufactured in Vietnam from local parts and materials will form part of the agreement.
- Items that are sufficiently worked or machined in Vietnam will also be included in the EVFTA
Although these seem like minor challenges. Careful attention should be given to the stipulations as there will be significant penalties if your sourced goods turn out to be unclassified within the trade agreement. This will result in significant losses if not closure. This is why you should be extremely mindful of the quality rating of your sourced goods so that you can prevent any negative consequences.
Why Quality Control in Vietnam is Vital
Sourcing from Vietnam will at least for the foreseeable future has significant quality control aspects to it. This could be the deciding factor in your ongoing trade in the region. EU Market is used to the wide range of products that the region produces and the high level of quality. You need to have specific product inspection and quality control measures set in place for your goods from Vietnam. In the past, with other newly enforced trade agreements with developing countries, the source buyers have relied on pre-shipment inspections and quality control Vietnam agents. It is to ensure that the good conforms to the various quality standards and that the stipulations of the trade agreement are adhered to. To take full advantage of the Vietnam Trade Opportunity, importers in the EU will need Vietnam inspection agents with the relevant experience to deliver on the expectation.
How Tetra Inspection can help you Trade with Vietnam
With 350 inspectors across 40 countries including Vietnam, our quality inspection services are designed to make your life as a producer or manufacturer of imported goods easier and more convenient. We have the experience and industry knowledge to deliver fully customizable inspection reports for all your imported goods. Our services are packaged to be more than just cost-effective but to become an integral part of your business process so that you can increase your focus on other areas that need your attention. Eventually, this gives you the peace of mind to grow your business knowing that your imported goods are of the highest standard, fully inspected, and of the highest quality.
Our inspection reports are fully customizable and we will even improve your experience by adding video calls with your inspector that will give you the visual and auditory assurance that your goods are on the standard. By using technology in our service offering you can get sample collections with GPS coordinates as well as defect reviews via video call with your inspector.
Using the services of Tetra Inspection in Vietnam will ensure that you always have a reliable inspector on-site where your goods are. So when they ship your goods you know that they are of the highest quality in both material and production. Below are the main areas where our inspectors will benefit your business:
- Pre-Shipment Inspection
- During Production Inspection
- Initial Production Check
- Container Loading Check
- Supplier Verification Audit
- Social Audit (SA 8000)
- Factory Audit (ISO 9001)
- Manufacturing Audit in Vietnam (ISO 9001)
- Amazon FBA Inspection
- Pre-customs Clearance Inspection
Contact us now and we can further explore your opportunities in Vietnam with the EVFTA.