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Russian automobiles to have free access to ASEAN via Vietnam – EAEU minister (English)

Russian automobiles to have free access to ASEAN via Vietnam – EAEU minister (English)

09.08.2016
The Eurasian Economic Union’s Minister of Trade Veronika Nikishina talks to RBTH about the Union’s s free trade agreement with Vietnam, and explains why a similar agreement with Singapore should cover services and investment, and not just reduced tariffs on goods.

In late July, the Eurasian Economic Union (EAEU) ratified its first free trade agreement with a third country, Vietnam. In an interview with RBTH, EAEU Trade Minister Veronika Nikishina outlines what the Union has achieved in terms of cooperation with Asia-Pacific countries.

The EAEU has received around 40 proposals for free trade agreements (FTAs) and quite a few of them from Asia-Pacific countries. Do EAEU countries offer some unique benefits to their potential partners?

We do not conduct a dedicated promo campaign though the fact that the EAEU’s market is not yet as deeply integrated into global economy as many others makes it rather attractive for numerous trade partners across the globe and on the Asia-Pacific in particular.

Look, in the Asia-Pacific region, practically all the countries have free trade arrangements with each other, so they take this preferential regime for granted. No Asia-Pacific country has such a trade regime with the EAEU yet (the FTA deal with Vietnam will come into effect in October 2016). Therefore we have a limited presence in the markets of those countries. However, if the current rather protectionist regime is replaced with a more liberal one, the EAEU market would have a great potential for trade. This is perhaps what attracts Asia-Pacific countries.

On the FTA with Vietnam

The FTA with Vietnam was ratified on July 28 and will come into effect in October. It is the first agreement of its kind for the EAEU with a third country. What are the main goals of such an agreement?

The main thing that we hope for is an increase in trade, both export and import. This is what we have been working for.

We are now undergoing a "mindset revolution" because in recent years the EAEU has persistently been developing integration within set borders, whereas integration with third countries was not a priority. The free trade agreement with Vietnam is the first case that is changing our approach.

Before this free trade zone agreement was signed, some commentators in Russia warned that opening the country’s market to Vietnamese goods would be a disaster for domestic manufacturers. How did you address this problem?

We decided not to cancel duties for commodities that are the most sensitive for EAEU countries. Duties on them either remain the same or are reduced with lengthy transition periods.

How advantageous are the preferential terms that you managed to secure?

Before the free trade agreement was signed, we had absolutely no competitive advantages on the Vietnamese market because other key trade partners – China, India, the USA, and others – had signed similar agreements with Vietnam before us. Once the FTA comes into force, the average level of duties on EAEU goods will drop from 10 to 1 percent. Thus, our goods will enjoy terms on the Vietnamese market that put us on par with our competitors.

Once the agreement comes into force, which goods will have zero duty?

Vietnam has reduced or eliminated it's import duties on 91 percent of its goods' nomenclature. Zero duties will apply to beef, dairy products, tinned fish, flour, cereals as well as to rolled steel, pipes, asbestos, ships, petroleum products and many other categories of goods. The duty on petrol will be reduced from 19 to 0 percent with a transition period; on cables, from 20 to 0 percent over a period of 10 years; for large goods vehicles, from 17 to 0 percent.