Utilization of tariff preferences under Vietnam's FTAs in 2021

12 tháng 10. 2022

According to data from the Ministry of Industry and Trade, the total export turnover taking advantage of tariff preferences under the FTAs in 2021 reached 69.08 billion USD, accounting for 32.66% of the total export turnover to the markets which signed FTAs with Vietnam. In 2021, 1.2 million preferential C/O sets were issued, increasing 24% in value and 23% in the number of C/O sets compared to 2020.

In terms of turnover taking advantage of tariff preferences, Vietnamese goods exported to China ranked first with the value of 18.9 billion USD, followed by Vietnamese goods exported to ASEAN and South Korea with the value of 11.6 billion USD and 11.2 billion USD respectively. The volume of exported goods taking advantage of tariff preferences from Vietnam to Laos, Cambodia and Cuba is negligible.

In terms of utilization rate of FTA tariff preferences: The Indian market accounts for the highest percentage of AIFTA utilization with 68.7%; followed by markets in Chile and South Korea with 61.8% and 51% respectively. Regarding 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, utilization rate of FTA tariff preferences of Vietnam in 2021 is 32.66%. 

The rate of using preferential C/O is 32.66%, which does not mean that nearly 67% of the remaining export turnover of Vietnam is subject to high tariff. 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 2021 reached 322.7 million USD, accounting for only about 8.13% of the total export turnover of 3.97 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 2021 reached 2.5 billion USD, equaling to 6.34% 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 tariff than CPTPP in the first years when CPTPP takes effect.

In 2021, export turnover using C/O form EUR.1 to the EU and UK markets is not high (at 20.18% and 17.19%, respectively). Some commodities have very good rates of using preferential C/O form EUR.1 such as rice (100%), footwear (98.02%), seafood (76.9%), plastic and plastic products (70.63%). In the coming time, the rate of using preferential C/O in total export turnover may increase because the EU market now still grants in parallel 02 incentives of GSP and EVFTA, so enterprises still apply both mechanisms when exporting goods to the EU and choose 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.

In terms of product structure: In the group of industrial products, the total turnover of footwear issued preferential C/O reached about 9.25 billion USD, decreased about 2.78% compared to 2020. Origin criteria for footwear in FTAs are assessed to be suitable with the ability of Vietnamese enterprises to meet. Therefore, footwear is always the commodity with high rate of using preferential C/O when exporting to FTA markets. For some markets, this rate is 100%, which means that 100% of export shipments used preferential C/O. Plastic and rubber have the rate of using preferential C/O of 69.02% and 67.37% respectively, with export turnover granted with preferential C/O reaching 2.87 billion USD and 2.38 billion USD, increasing 33.25% and 30.42% respectively compared to 2020. Followed by textile and garment products which has granted preferential C/O export turnover of 9.14 billion USD, accounting for 59.90% of the total export turnover of this commodity group to FTAs markets and increasing by 13.35% compared to 2020.

Many items in the group of agricultural and aquatic products have the high rate of using preferential C/O when exported to FTA markets such as seafood (66.34%), vegetable and fruit (65.16%), tea (47.35%) and pepper (42.03%).

The summary of the utilization rate of preferential C/O under Vietnam's FTAs over the years to 2021 (Vietnamese) is attached below: