Vietnam - Australia trade is booming

The Australia’s Department of Foreign Affairs and Trade said that Vietnam was Australia's fastest growing export market in ASEAN during the 10-year period 2003-2013 with the average annual growth of 1

The leading export products from Vietnam to Australia comprise of crude oil, mobile phones and accessories, textiles and garment, footwear, seafood, timber and timber products, machinery, equipment, other tools and spare parts, computers, electronic products and spare parts... while Australia’s main exports to Vietanm are timber products, plastic materials, oil and steel scraps.

Although, the oil’s export revenue of Vietnam to Australia is decreasing due to the drop in oil price, some other Vietnam’s export products to Australia are surging including transportation and spare parts, vegetables, steel originated products, handbags, wallets, suitcases…

Currently, Vietnam and Australia have become critical trading partners. Trade revenue between two countriesclimbed to nearly 4.93 billion USD in 2015 from 3 billion USD in 2005. While Australia is the 8th biggest exporter and 12th biggest importer of Vietnam, Vietnam ranks the 14th in both export to and import from Australia.Until now, Vietnam has always experienced trade surplus to Australia which was 883.33 million USD in 2015.

The lastest report of HSBC also pointed out that Vietnam-Australia trade is booming with Vietnam is Australia’s fastest growing ASEAN trading partner. This is a result of trade deals like ASEAN Australia New Zealand FTA and proposed ones like the Regional Comprehensive Economic Partnership and Trans-Pacific Partnership (TPP).

The HSBC’s ASEAN Connected report which studied the trade between Australia and six ASEAN countries showed thatVietnam is the second smallest trading partner of Australia in 2015. This is around a third of Australia’s trade with Singapore and half of the trade with Thailand and Malaysia. However, the report said that the growth rate of Vietnam – Australia’s trade is rapidly growing, increasing by 12 percent last year. The other five countries in this report are Singapore, Malaysia, the Philippines, Indonesia, and Thailand.

According to Vietnam Trade Promotion Agency, during the implementation of ASEAN - Australia - New Zealand Free Trade Agreement (AANZFTA), the revenue grew up to 9.89%/year which was significantly higher than before (2.04%/year).

Under the AANZFTA, tariffs imposed by Australia will be reduced or gradually eliminated. The main content of AANZFTA states that Australia and New Zealand will eliminate 100% tariffs to Vietnam export products in 2020. From 2015 to 2019, 96.3% of tariffs will go down to 0% and the remaining 3.7% including insect control drugs, tanned leather, cloths, floor carpets, textiles and garment, machinery, equipment will fall in a range from 5% to 10%.

TPP agreement’s advantages

Furthermore, the TPP agreement will promote trade between Vietnam and Australia in the coming time. Within the TPP framework, Australia has pledged to apply zero per cent tariffs for 94 per cent of Vietnamese products. In return, Viet Nam's commitment to open its market to Australian products under the TPP is stronger than that of the AANZFTA,

The TTP agreement will promote investment and production activities in the value chain mentioned above and encourage bilateral trade between two countries. It is expected that the improvement in transparency regulation and the trade and customs simplification will creat favorable conditions for trading between Vietnam and Australia. Moreover, strict regulations on intellectual properties and investment will fuel investment from Australia to Vietnam.

TPP agreement also allows materials from member countries to be accumulated, therefore, products made by materials imported from TPP countries will gain preferences when exported to Australia. Export enterprises should recruit material suppliers from TPP member countries to fulfill requirements for tariff preferences when entering TPP.

Mr. Bruce Gosper - CEO of Australian Trade Commission said that the signing of TPP will create more opportunities to strengthen economic relation between two countries through the implementation of commitments of this agreement. Both Vietnam and Australia will have good chances in the exchange of goods and services, as well as support each other to strengthen the economy of member countries and integrate successfully to the regional and global economy.