Workers process shoes at a local company. Footwear, along with garment and textile, farm produce and seafood will especially see opportunities from the VN-EAEU trade deal. -- Photo thuongmai.vn

HA NOI (Biz Hub) — Trade revenues between Viet Nam and the Eurasian Economic Union (EAEU) are expected to increase to US$10-12 billion by 2020, after a free trade agreement between the two sides takes effect this year.

News website ndh.vn reported, citing a Ministry of Industry and Trade (MoIT) estimate, that this triples total bilateral trade revenue of roughly $4 billion in 2014. Viet Nam's exports to the union alone are expected to grow by 18-20 per cent per year.

The MoIT said in a statement this week that the Viet Nam-EAEU FTA will become effective on October 5, following confirmation from the Ministry of Foreign Affairs.

The union consists of Russia, Belarus, Kazakhstan, Armenia an Kyrgystan. The related countries have ratified the agreement after signing it in Kazakhstan on May 29, 2015.

After the agreement takes effect, Viet Nam and the union will establish a joint committee, along with a committee on trade of goods, and a sub-committee on goods origin regulations.

MoIT's Europe Market Department Director Dang Hoang Hai told a conference in Ha Noi last month that Viet Nam, as the first FTA partner of the union, would improve the competitiveness of its export goods.

The agreement covers a market of almost 183 million people and accounts for 3.2 per cent of global gross domestic product.

Viet Nam and the union will cut about 90 per cent of their lines of tariff.

They will slash the rate for nearly 60 per cent of tariff lines to zero per cent immediately after the agreement becomes effective.

Viet Nam will immediately lift import duties for EAEU products such as salmon, which is taxed by 10 per cent; and tilapia and tuna, now seeing tariff rates of 15-20 per cent.

The EAEU will apply a zero per cent tariff for Vietnamese products such as uncondensed milk and ice cream with no sugar and sweet substance, which has an import tax of 15 per cent; and fresh chestnut and turkey meat, which are subject to import duties of 5 per cent and 20 per cent respectively.

Hai said Viet Nam's major exports such as garment and textile, footwear, farm produce and seafood will have opportunities due to the tax cuts.

The content of the agreement can be seen on the website of MoIT, http://www.moit.gov.vn.

The EAEU-Viet Nam FTA, initiated in March, 2013, was signed after eight official rounds of negotiations. — VNS