However, to make the most of the advantages of this agreement, businesses and management agencies need to pay attention to specific factors.
Tariffs on 99% of exports eliminated
The UAE holds a strategic position at the trade gateway among the three continents of Asia, Europe and Africa and is one of the world's commercial and financial centers. Therefore, the UAE is an important trade gateway to the Middle East, with the potential to connect with many countries in the region. Through the UAE, Vietnamese products will get easier access to large markets in the region, such as Saudi Arabia, Qatar and Kuwait and some countries in North Africa and West Asia.
The signing of the CEPA Agreement, as Minister of Industry and Trade Nguyen Hong Dien said, is an important lever for Vietnam to take advantage of trade and investment opportunities in the Middle East, a region with many dynamic economies with large economic scale but not yet noticed by Vietnamese enterprises in the past.
Currently, the UAE is Vietnam’s largest export market and second largest trading partner (after Kuwait) in West Asia.
Statistics from the Vietnam Customs showed that in the 2018-2023 period, the average annual trade turnover between the two countries reached nearly USD 5 billion. In terms of trade balance, Vietnam ran a large trade surplus with the UAE market from USD 3 to 4 billion a year.
In commodity structure, Vietnam's main exports to the UAE included mobile phones, computers and parts, electrical products, household electronics, pepper, seafood, footwear, textiles, grain products, plastic products, and wooden furniture. Vietnam's main imports from the UAE were raw plastics, liquefied petroleum gas (LPG), petroleum-based products, animal feed ingredients, common metals, and chemicals.
With comprehensive negotiation contents, the CEPA agreement promises to bring balanced benefits to both countries, in line with the desire to enhance cooperation in various fields between the two countries.
The CEPA agreement covers areas, such as trade in goods, services-investment, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, customs, trade remedies, government procurement, intellectual property, and legal and institutional affairs. Notably, both sides made strong commitments to trade liberalization, with the UAE pledging to phase out tariffs on 99% of Vietnam’s exports, and Vietnam to remove tariffs on 98.5% of the UAE’s exports. The agreement also includes various provisions facilitating trade and investment, in alignment with digital transformation and green development trends.
Analyses by the Ministry of Industry and Trade show that the Vietnamese industries benefiting the most from this agreement are farm produces because the UAE has a great demand for high-quality agricultural products, especially clean and organic products and Halal certified products. The UAE also has strong needs for consumer goods, including textiles, footwear, electronics, seafood, wood and wood products, which are Vietnam’s strength. Tariff reduction from CEPA would help these products compete better in terms of price and expand market share in the UAE, a market with high demand for quality consumer goods.
Understanding business practices
The main route for Vietnam’s exports to the UAE in particular and the Middle East in general has become much wider. However, products from Vietnam are still not popular with the majority of UAE consumers. Therefore, Vietnamese businesses should pro-actively learn about the commitments of the agreement and understand the business practices of the UAE market in particular and the Middle East in general.
For Arab countries, the requirement for Halal certification is very important. Additionally, the UAE's working hours are from Sunday to Thursday, with Friday and Saturday off. The UAE people prefer meeting in person to calling or sending emails. Therefore, businesses need to have a thorough investment strategy to build their brand and market their products in this potential market.
To realize the commitments in CEPA agreement, the Ministry of Industry and Trade plans to develop a detailed plan to implement the agreement, focusing on three main groups of tasks: disseminating the content and expected impacts of the agreement and more works needed to be implemented to take advantage of the opportunities bought by the agreement; building laws and institutions, including the Government's decree on promulgating the CEPA's special preferential import tariff schedule to apply to the UAE, and the circular on rules of origin in CEPA; and connecting UAE businesses to invest in industrial production, energy, logistics fields.
Other works should be carried out include building support programs, improving competitiveness for industries and businesses, especially small-, medium- and micro-sized enterprises and helping businesses meet requirements in importing countries, including Halal certification.
Translated by Mai Huong