Internation bussiness

1. INTERNATIONAL
ECONOMICS
VIETNAM-CHILE
FREE
TRADE
AGREEMENT
MEMBERS
GROUP 4
46K01.1
Nguyen Thi Bich Dao
Le Thi Huong Giang
Nguyen Binh Anh Phuong
Nguyen Thi Thu Hong
Tran Nguyen Giang Thanh
Nguyen Thi Xuan Trang

2. INTERNATIONAL
ECONOMICS
I. OVERVIEW OF
THE
AGREEMENT
Vietna m-Ch ile Free Trade Agreeme nt
1.History:
VCFTA stands for Vietnam-Chile Free Trade Agreement
which officially ended in November, 2011 in Hawaii,
US. However, since the ratification procedure in each
country took a significant amount of time, the
agreement officiallytook effect since January 01, 2014,
creating a great
opportunity to boost the economic ties between the
twocountries.
Chile is the first Latin-American state Vietnam
signs anFTA with. It is the eighth FTAs which was
signed by
Vietnam. In the meanwhile, Chile had become a partner
of 25 FTAs and trading with FTA partners comprises
80% of the total import-export value of the country.

3. NTERNATIONAL
ECONOMICS
2.Context:
After joining the World Trade Organization (WTO) in
2007, Vietnam has begun to join some free trade
agreements (FTAs) which includes VCFTA (2011). At
the moment (before 2011), Vietnam clearly does not
have many opportunities to approach and compete in
the Latin-American states’ markets.It is reported that
in many years before this agreement, there has been a
trade surplus in favour of the South American country.
Moreover, China, Korea, and Malaysia are some main
countries which have been good competitors of
Vietnam in Chile’s market. Because of high import tax,
the retail price of Vietnamese goods in Chile is often
higher and more difficult to consume than goods of the
same type imported from countries with import tax
priority.Therefore, it is VCFTA which creates
significant chances to promote commerce between both
countries as well as between Vietnam and Latin
America.
3.Timeline of formation:
On November 11th, 2011, during the Asia-Pacific
Economic Cooperation (APEC) meeting in Honolulu,
Hawaii, Chile and Vietnam signed a Free Trade
Agreement (FTA). It is officially effective since
January 1st, 2014.

4. INTERNATIONAL
ECONOMICS
GROUP 4
II.SUMMARY OF CONTENT,
COMMITMENTS IN THE
AGREEMENTAND INCENTIVES THAT
VIETNAM RECEIVES
1.SUMMARY OFCONTENT
With 14 chapters including 104 Articles and 8 annexes, the VCFTA only deals with trade in
goods, including regulations on market access facilitation, rules of origin, sanitary and
phytosanitary measures, and control measures. Animal and plant diseases, technical barriers,
trade remedies...Accordingly, Vietnam committed to eliminating 87.8% of tariff lines (91.22%
of import turnover as of 2007) for Chile within 15 years. In return, Chile will eliminate tariffs
for 99.62% of Vietnam's exports (as of 2007) within 10 years, of which 81.8% of turnover and
83.54% of tariff lines will be deleted immediately. Some of Vietnam'skey export products that
will receive immediate and quick tax cuts from the current 6% are textiles and garments (203
tariff lines will be reduced to 0% immediately, 17 tax lines will be reduced to 0% after 5
years), aquatic products, and more. products (36 tariff lines are reduced to 0% immediately,
28% of tax lines are reduced to 0% after 5 years), seafood, coffee, tea, computers, and
components (tax reduction to 0% as soon as the Agreement comes into effect) (VCCI, 2014).
The rules of origin of the agreement are also relatively simple, most goods only need to have
a percentage of materials produced from member countries (Vietnam or Chile) accounting
for 40% or more or through code conversion. Students at the 4-digit level are entitled to tax
incentives.
Based on the Agreement, Vietnam and Chile agreed on specific directions and measures to
promote bilateral cooperation in all fields: economy, trade, investment, agriculture, education,
health, etc. science and technology.

5. II. SUMMARY OF CONTENT,COMMITMENTS IN THE
AGREEMENT ANDINCENTIVES THAT VIETNAM
RECEIVES
2.COMMITMENTS INTHE
AGREEMENT
1. Vietnam's commitment to cut tariffs
Vietnam committed to eliminating
tariffs on 87.8% of tariff lines
(accounting for 91.22% of import
turnover from Chile in 2007). Within 15
years, the final roadmap is expected in
2029, the number of uncommitted tariff
lines or only partially committed
accounts for 12.2%, focusing on few
sensitive areas such as agriculture,
petroleum…
By 2023, Vietnam has promised to
eliminate 1163 more tax lines than at the
outset,increasing the entire number of tariff
lines with a 0% tax rate to 3860,
corresponding to 42.42 percent of the total
sea. The speed at which the VCFTA
Agreement commits to eliminating tariffs
will be enhanced in the last five years of the
Agreement, reaching a maximum
commitment of 87.8 percent by 2028.
Chemicals, timber, textile materials,
equipment, poultry, oranges, tangerines,
wine, seafood,beer, construction steel... are
among the Vietnamese items dedicated to
removing tariffs.
In order to fulfill the commitment to cut
tariffs in the VCFTA, the Ministry of
Finance issued Circular No. 162/2013/TT-
BTC in November 2013, promulgating the
special preferential import tariff schedule of
Vietnam for the period 2014-2016.
Vietnam's commitment to abolish 2697 lines
as soon as the Agreement comes into effect,
equivalent to 29.64% of the tariff schedule.
2. Chile's commitment to cut tariffs
Chile has a more liberal attitude toward
Vietnamese goods. For example, when the
Agreement enters into force, 83.54 percent of total
tariff lines would be abolished,accounting for
81.8 percent of Vietnam's export turnover to Chile
in 2007. Textiles, seafood, coffee, tea,
computers, and components are among the
important export items of Vietnam that will be
able to reduce taxes from the existing 6% rate
immediately and quickly. By 2029, Chile will
abandon most of the product lines from Vietnam,
accounting for 99.62% of the tariff and
equivalent to 100% of Vietnam's export turnover
to Chile in 2007.

6. INTERNATIONAL
ECONOMICS
GROUP 4
3.INCENTIVES THAT VIETNAM
RECEIVES
The VCFTA has boosted trade relations between Vietnam and Chile, particularly Viet
Nam's exports to Chile, which have been in constant surplus for the past four years after
several years of deficit.
Since the VCFTA went into effect in January 2014, Viet Nam has faithfully followed the
agreement's terms and worked to strengthen the business environment and domestic
investment to create favorable conditions for both firms and investors, as well as promote
the export of goods.
Being a party to this FTA will not only assist Vietnam's products gain access to the
Chilean market, but will also help Vietnam tap into the vast and promising Latin
American market.
This agreement is also vital for fostering Vietnamese society's growth, economic
transition, and spiritual and material well-being. In addition, compared to what it was
previously, per capita income has increased significantly.
FTAs help to improve the business environment and institutions, giving Vietnam the
opportunity to reform its import-export system to be more balanced. Vietnam is
motivated by the VCFTA to improve the investment environment, conduct business in a
transparent and safe manner for investors from all economic sectors.
Vietnam's exports have made significant progress in recent years as a result of tax
reductions achieved through FTAs. Furthermore, because of the effectiveness of various new-
generation FTAs, Vietnam's export commodities have a stronger competitive advantage as
tariff barriers are steadily lifted.

7. INTERNATIONAL
ECONOMICS
GROUP 4
III.MFN AND
NT
- Most Favoured Nation Treatment (MFN):
Each country affirms their existing rights and obligations with
respect to each other under the WTO Agreement and other
agreements in which both nations participate
- National Treatment (NT):
1. Each country shall accord national treatment to the goods of
the other country in accordance with Article III of GATT 1994,
including its interpretative notes, and to this end, Article III of
GATT 1994 and its interpretative notes, are incorporated into and
made part of this Agreement, mutatis mutandis.
2. The provisions of paragraph 1 regarding national treatment
shall also apply to all laws, regulations and other measures,
including those of local government at the subnational level.
IV.LCR
- Local content requirement (LCR):
The rules of origin of the agreement are also relatively simple, most
goods only need to have a proportion of materials produced from member
countries (Vietnam or Chile) accounting for 40% or more or through code
conversion HS at the 4-digit level are entitled to tax incentives.
- Certificate of origin:
A claim that a good shall be accepted as eligible for preferential tariff
treatment shall be supported by a Certificate of Origin (Form VC), as set
out in Annex 4-C issued by the issuing authority and notified to the other
Party in accordance with the Operational Certification Procedures.
- Issuance of the Certificate of Origin:
1. The Certificate of Origin (Form VC) shall be issued prior to or at the
time of shipment.
2. Notwithstanding paragraph 1, the Certificate of Origin (Form VC) may
be issued retroactively but no longer than one (1) year after the date of
shipment and shall be duly and prominently marked “Issued Retroactively.
Validity of the Certificate of Origin The Certificate of Origin shall remain
valid for a period of twelve months from the date of issuance.

8. INTERNATIONAL
ECONOMICS
V.IMPACTS OF THE AGREEMENT ON TRADE
FLOWS BETWEEN VIETNAM AND CHILE
Previously, when there was no free trade agreement,Vietnamese goods
were subject to import tax into Chile (average 6%),and Chilean goods
imported into Vietnam were still subject to high tax rates. Two-way
import-export turnover between the two countries is only nearly 500
million USD/year and Vietnam always has a trade deficit from Chile.
Annual import-export turnover between Vietnam and Chile: Total trade
turnover between the two countries in the period 1995-1999 reached an
average of 14.2 million USD/year
Since the Agreement was ratified and officially entered into force,it has
contributed to the leaping growth two-way trade turnover between the two
countries.
The above table shows the export turnover of goods to the Chilean market increased over the years from 2011 to 2016.
In 2012, export turnover increased by more than 43 million USD at 46.16%. After that, the turnover increased steadily
until 2014, reaching nearly 220 million USD. However,in the period 2011-2014, Vietnam had a trade deficit in goods
from Chile, evidenced by the negative trade balance in this period (2011: - 197 million USD; 2012: -198 million USD;
2013: - 201 million USD; 2014: -95 million USD). From 2015, the new trade balance shows Vietnam's trade surplus. In
2015, export turnover increased significantly, up to 522 million USD at 138%, the trade balance had a surplus of more
than 154 million USD and continued to increase in 2016 when the trade surplus reached the highest level, more than 360
million USD.

9. INTERNATIONAL
ECONOMICS
IV. IMPACTS OF THE AGREEMENT
ON TRADE FLOWS BETWEEN
VIETNAM AND CHILE
In 2017 , 4 years after the Vietnam -
Chile Free Trade Agreement came
into effect, the total two- way turnover
reached 1 . 28 billion USD, 2 . 5 t imes
higher than the turnover in 2013 -the
time before its implementation
Vietnam - Chile Free Trade
Agreement. This f igure increased
24 .3% compared to 2016 , of which
export turnover to Chile reached
999 . 3 million USD, up 24 .1% over the
same period, import turnover reached
282 $ 2 . 7 million, up 22 . 01 % over the
same period.
By the end of June 2018 , the
import and export turnover of
Vietnam and Chile reached over
601 million USD. In which,
Vietnam' s exports to Chile reached
442 . 665 million USD; Vietnam' s
imports from Chile reached over
158 .657 million USD. In 2018 ,
pangasius exports to the Chilean
market reached 8 . 85 million USD,
accounting for 0. 39 % of total
pangasius exports and an increase
of 24 . 3% compared to that of Chile
by 2017 .

10. INTERNATIONAL
ECONOMICS
V. IMPACTS OF THE AGREEMENTON
TRADE FLOWS BETWEEN
VIETNAM AND CHILE
In 2019, Vietnam - Chile trade turnover reached
1.23 billion USD, up 13% compared to 2018. In
which, Vietnam's exports reached 940 million
USD-up 20.3%, imports reached 289 million
USD-down 5.9% compared to 2018.
In 2020, the totalturnover between the two
countries reached 1.28 billion USD, an increase of
4.43% compared to 2019 and 2.5 times higher
than the turnover in 2013 (the time before the free
trade agreement between Vietnam and Vietnam
Chile officially took effect).
In the first four months of2021, trade turnover between the two countries continued to maintain good growth
momentum, reaching 401.1 million USD. Vietnam's exports to Chile reached 321.3 million USD,up 15.3%;
Vietnam's imports from Chile reached 79.8 million USD, up 31.6% over the same period in 2020
Despite being affected by the COVID-19 epidemic, by the end of August 2021, the two-way trade turnover
between the two countries reached 1.27 billion USD; In which, Vietnam's exports to Chile grew by 44%, imports
increased by 15% over the same period.

11. INTERNATIONAL
ECONOMICS
V. IMPACTS OF THE AGREEMENTON
TRADE FLOWS BETWEEN
VIETNAM AND CHILE
*Main export and import items of Vietnam to Chile
The export products of Vietnam to Chile are
mainly consumer goods such as shoes of all
kinds; raw materials for textiles, leather and
footwear; computers, electronic products and
components; textile products; seafood;
products from iron and steel; machinery,
equipment, tools and spare parts; cement;
electric wires and cables; cassava products;
rice; bags, wallets, suitcases, hats, umbrellas;
plastic products; wood products; parts of car
with 9 seats or less…
The import products of Vietnam from Chile are
mainly raw materials for the production of export
goods such as copper for making electric wires
and cables, plantation forestry for furniture
production, fish meal for processing cattle and
poultry feeds and raising shrimp, fish, pulp. In
addition. Vietnam also import some other
products such as wine, fresh fruit, poultry meat.

12. INTERNATIONAL
ECONOMICS GROUP 4
INTERNATIONALECONOMICS GROUP 4
VI . A S S E S S O P P O R T U N I T I E SA
N D C H A L L E N G E S F O R
V I E T N A M A T T H E T I M E O F
S I G N I N G T H E A G R E E M E N T
1.MARKET
Vietnam could be able to widely approach Chile’s market as well
as other countries’ markets which belong to Latin America. Firstly,
besides the fact that this agreement could increase the production and
consumption in Vietnam, the operation of VCFTA brought more
chances for Vietnamese firms to access more customers and new
markets. The firms now can increase their outputs to export to Chile
thanks to the reduction of barriers in the agreement. They also can
diversify products which had suffered from many exporting
requirements before the agreements. Secondly, Chile is the first Latin
American country that signed theFTA with Vietnam. Chile also has
entered many bonds with other countries in the same region (Mexico,
Peru, Colombia,..) so the FTA with Chile would be the opportunity
for Vietnamese products to be introduced to foreigners.
2.RESOURE
Chile is famous for its abundance of natural resources. This
country ranked first in exploitation and processing bronze, litio
and ranked second in producing Iod, Molyden. Moreover, Chile
also owns a huge source of gold, silver and many kinds of gems.
Therefore, this FTA would be a great opportunity for Vietnam to
import high quality resources
OPPORTUNITIES

13. INTERNATIONAL
ECONOMICS
GROUP 4
3.EXPORT
Necessaries (such as rice, clothes, shoes,..) require a huge source
of labour to produce but Chile’s population is dominated by
elderly. As a result, the supply of these kinds of products is not
enough for people in Chile. The VCFTA would be a great
opportunity for Vietnam to specialize and export necessary
products in order to gain more profit. In addition, Chile’s
requirements for those products are more simple than those in
other European countries (the US, the UK,..)
4.FOREIGN INVESTMENTS
The VCFTA would allow more Chilean firms to invest in
Vietnam. In fact, while Vietnam mainly imported resources from
Chile and exported mostly necessaries, Chile invested in their
strength. Basically, the products which two countries exchange do
not compete with each other but may also support each other.
Furthermore, Chile has many advanced technologies that Vietnam
could gain through their investments.
OPPORTUNITIES

14. INTERNATIONAL
ECONOMICS
GROUP 4
VI . A S S E S S O P P O R T U N I T I E SA
N D C H A L L E N G E S F O R
V I E T N A M A T T H E T I M E O F
S I G N I N G T H E A G R E E M E N T
5.COMPETITIVENESS
Currently, many Vietnamese enterprises exporting goods to the
Chilean market are still facing many difficulties in competing with
goods from other countries such as China, Malaysia, etc. The main
reason comes from the limitations in competitiveness of
Vietnamese enterprises. It should be noted that according to
established trade agreements, goods exported from other countries
to the Chilean market still enjoy the same tariff preferences as in the
VCFTA. Therefore, when this Agreement comes into effect,
Vietnamese enterprises will have an equal environment to compete
with competitors from other countries, rather than being more
preferential. In addition, the structure of Vietnam's exports to the
Chilean market has not changed significantly, still focusing mainly
on consumer goods, whichare labor-intensive. The added value
of items is still limited andhas a significant impact on the efficiency
of exports to this market.
6.MARKET
Chile signed 23 free trade agreements prior to the VCFTA, with
countries including the US, Mexico, Canada, China, EU... As can
be seen, Vietnamese enterprises in the Chilean market face a slew
of competitors, many of whom are from countries with themost
developed products in the world. In the context of Vietnamese
enterprises still having many disadvantages such as a lack of
market information, a lack of highly professionalhuman resources,
management flaws, and a lack of advanced technology... from
countries such as the US, Japan, and China...is extremely difficult.
CHALLENGES

15. INTERNATIONAL
ECONOMICS
GROUP 4
7.PROFESSIONAL
ORGANIZATIONAL AND
MANAGEMENT CAPACITY
State management agencies face the challenge of improving and
effectively implementing mechanisms and policies on the development
of domestic industries, especially supporting industries. aid. This
limitation has greatly affected the competitiveness of Vietnamese
exporters because they are not supported by the internal capacity of
the economy. Vietnam'sexports to markets in general and Chile, in
particular, will continue to be at a disadvantage in competition with
goods from other countries as this situation remains unchanged. In
addition, currently, Vietnam has not yet built and operated a trade
remedy warning mechanism in the South American market in general
andChile in particular.
8.LACK OF MARKET
INFORMATION
The above analysis shows that Chile is a new market for many
Vietnamese enterprises. Due to geographical distance and differences
in consumer culture, before deciding to enter the market, businesses
need to learn and fully grasp information about this market through
different channels such as the Vietnam TradeOffice. In the South in
Chile, Vietnamese enterprises have been exporting goods to the
Chilean market, Chilean importers...
CHALLENGES

16. INTERNATIONAL
ECONOMICS
GROUP 4
9.INNOVAION & GOODS QUALITY
Chile has a high degree of integration and has signed
several free trade agreements. As a result, this
country's technological obstacles, as well as its
sanitary and epidemiological rules, are inline with
contemporary international trends. The application of
measures on production protection, technical
regulations, requirements on food safety and hygiene,
requires labeling of goods, traceability, design
requirements, social responsibility... will become
difficult barriers for Vietnamese exports, despite the
factthat the import tax into this markethas beenreduced
to 0%. Furthermore, it is clear that the structure of
Vietnam's exports toChile is dominated by labor-
intensive, consumer goods, which is a category of
goods that are strictly subject to these regulations.
CHALLENGES

17. VII. REFERENCE
Nguyễn Tiến Hoàng, n.d. Hiệp định Thương mại Tự do Việt Nam Chile: Cơ hội và thách thức với
Việt Nam. Tạp chí KTĐN số 97.
Phòng Thương mại và Công nghiệp Việt Nam-VCCI , 2014. Văn bản Hiệp định thương mại tự do
Việt Nam – Chile.
Phòng Thương mại và Công nghiệp Việt Nam-VCCI, 2015. Hồ sơ thị trường Chile.
https://wtocenter.vn/upload/files/fta/174-ftas-concluded/190-vietnam---chile/233-full-
text/Hiep%20dinh%20thuong%20mai%20tu%20do%20VN-
Chile%20(TA)%20.pdf?fbclid=IwAR2_T2NomCQTiHLpONS3SpLWYaXDbgFfcz0HswVsZlk3yYfPVoozBRRx4XI
https://wtocenter.vn/chuyen-de/4688-vietnamchile-free-trade-agreement-
vcfta?fbclid=IwAR1C8J7bXsshC_chCFGvM3fulDkzqlmN4uOcM7RTtWWiMfReW9uguaNKeyo
https://trungtamwto.vn/upload/files/fta/174-da-ky-ket/190-viet-nam---chi-le/233-noi-dung-hiep-
dinh/Hiep%20dinh%20thuong%20mai%20tu%20do%20VN%20-
%20Chile%20(TV).pdf?fbclid=IwAR3Y5HEl6mDHYZW-kTErp_EG2Lp6WrnTiU16cUE850f4Crgs7ZdORJc3cTM
https://www.wto.org/english/tratop_e/tpr_e/g410_e.pdf?fbclid=IwAR28-
zvGKlhUHci3K3tpHTJaShmdXHoTMLxCp5VtlYeOE_a_V_liTacr03U
https://moit.gov.vn/tin-tuc/quoc-te/buoc-nhay-vot-trong-quan-he-kinh-te-thuong-mai-giua-viet-
nam.html?fbclid=IwAR3RcVTbUqolvwAXiFU_sEL04GuW9bJ4B1hIOVVZlpItuZ-iZMt8SjOyv3g

18. Table of Contents
V IE T N A M - C H I L E FREE ............................................................................................................................. 1
I. O VERV IE W OF T HE AGR EE MEN T ........................................................................................... 2
II.SUMMARY OF CONTENT,....................................................................................................................... 4
1.SUMMARY OFCONT ENT ............................................................................................................... 4
2.COMMITMENTS INTHE AGREEMENT........................................................................................ 5
3.INCENTIVES THAT VIETNAM RECEIVES .................................................................................. 6
III.MFN AND NT ............................................................................................................................................... 7
IV.LCR .................................................................................................................Error! Bookmark not defined.
V.IMPACTS OF THE AGREEMENTON TRADE FLOWS BETWEEN........................................... 8
VI. A S SE S S O P P O R T U N IT I E SAND CHALLENGES FOR.......................................................... 12
1.MARKET ................................................................................................................................................. 12
2.RESOURE................................................................................................................................................ 12
3.EXPORT................................................................................................................................................... 13
4.FOREIGN INVESTMENTS..................................................................................................................... 13
5.COMPETITIVENESS .............................................................................................................................. 14
6.MARKET ................................................................................................................................................. 14
7.PROFESSIONAL ORGANIZATIONAL AND MANAGEMENT CAPACITY .................................. 15
8.LACK OF MARKETINFORMATION.................................................................................................. 15
VII. REFERENCE............................................................................................................................................ 17