EU-MUTRAP Technical Assistance Team Leader Claudio Dordi writes how
Vietnam’s private sector companies can benefit from the EU-funded multilateral
trade supporting project
“Aid for trade” identifies the
support provided by advanced economies to promote the integration of developing
countries in the world trading system and to improve the national legal
framework for trade and investment.
Many different instruments are
traditionally part of an “aid for trade” activity. This includes capacity
building for government (training, policy researches, infrastructures,
technical workshops), support for the private sector, trade and investment
promotion. In Vietnam there are a number of technical cooperation “aid for
trade” projects supporting the government in the above mentioned tasks.
However, these projects proved to be particularly effective in dealing also
with the trade policy issues which are of particular interest for the business
sector.
MUTRAP, financed by the EU and
implemented by the Ministry of Industry and Trade, has dedicated part of its
budget to deal with some key problems faced by the business community in
Vietnam, supporting four business associations (VCCI, Lefaso, Eurocham and
Vinasme) in implementing sub-projects specifically tailored to promote a better
interaction between the government and the business sector.
The following are some examples
of the concrete contributions that an “aid for trade” project can provide to
the business community.
Promoting the participation of businesses into the trade policy
formulation
The business community in Vietnam
has traditionally been reluctant, especially small- and medium-sized
enterprises, to raise concerns or formulate proposals to the government to
promote modifications of commercial-related legislation or suggesting
trade-policy strategies to be adopted in international trade agreement
negotiations.
Lobbying policy-makers, in most
developed countries, is considered as a normal activity of enterprises and
business associations. Besides the pathological aspects which are present in
all human activities, is conducted in a very transparent and responsible manner
by both the lobbyists and the public institutions.
To deal with these difficulties
in Vietnam, the VCCI promoted the creation of a Committee on International
Trade Policies (the Committee), participated in by government negotiators,
representatives of industrial associations and experienced specialists in
international trade policies. A number of recommendations have been issued by
the Committee, with some proving effective in influencing policy-makers.
One in particular, focused on the
necessity to provide a transparent and mandatory system to consult with the
business community during the negotiations of an international trade
agreements, fully achieved the expected results as testified by Decision
06/2012/QD-TTg that created a mechanism allowing local businesses to provide
inputs, comments and raise concerns during negotiations for international trade
agreements.
Stimulating the Government to participate to advantageous international
trade agreements
Under the auspices of the
Committee, a number of recommendations (23, until mid-June 2012, in the form of
policy or position papers) have been drafted and sent to the government. One of
them, based on an economic assessment, showed the benefits that a Free Trade
Agreement with the European Union would bring to Vietnam and strongly suggested
the government soon start negotiations.
The FTA negotiations between
Vietnam and the EU started in early October. Even if other important variables
contributed to convince the government about the relevance of the agreement,
the VCCI recommendation played an important role, raising the awareness in the
country and in the government regarding the specific advantages following from
the FTA with the EU.
Promoting a Government –to-Business and Business-to-Business flows of
information
Promoting transparent flows of information
between the businesses and policy-makers has been also the target of the MUTRAP
sub-project managed by the Vietnamese Association of Small and Medium
Enterprises (Vinasme). Even in this case, a Trade Advisory Committee was
established to promote trade policy advocacy with stakeholders throughout the
country.
Besides that, the project managed
by Vinasme promoted the creation of 12 groups of export oriented entrepreneurs
(“trade nuclei”) in eight provinces to provide two different types of services
- collecting opinions and recommendations from the SME community to
policy-makers and providing trade counseling services to associated
enterprises.
The good outcomes of the
activities carried out by the existing Nuclei convinced the local business
associations and their Trade Nuclei counselors to establish further groups in
various sectors, self financed. Similar to this, the Lefaso managed sub-project
set up a consultation group to provide assistance to its members on trade and
branding issues, with the idea of creating a Vietnam brand to promote the
distribution of footwear in the exporting markets.
Benefiting from the experience of the European counterparts
All the above mentioned projects
had been implemented in cooperation with European business associations, the
cooperation proved to be useful for Vietnamese associations, as like in the
case of Vinasme “Trade nuclei”, it was possible to implement in Vietnam one of
the practices already tested in other developed and developing countries.
An important example of the
benefits for Vietnam from a European partner’s work is the publication by
EuroCham, in the framework of another mentioned sub-project, of a white book of
“Recommendations on trade policy from Vietnam Business Associations-VBAs” which
analysed part of the existing commercial and tax legislation and proposed
recommendations to improve the business climate and to solve difficulties and policy
constraints faced by VBAs and their members.
It is the first time that a group
of Vietnamese Business Associations prepared recommendations raising in a
transparent and direct way concerns regarding the present commercial
legislation in Vietnam. It is worth remembering that EuroCham, since 2008 has
been publishing a yearly White Book, compiled from the position papers drafted
by its associates, focused on the problems inhibiting business in Vietnam,
between Vietnam and the EU and other relevant areas such as WTO commitments and
compliance to international commitments.
In the context of the sub-project
EuroCham has also set up a European Trade Information Center (ETIC) in
EuroCham’s office in Ho Chi Minh City with basic facility for visitor
(www.eticvietnam.org ). This centre’s functions as an access point for SMEs to
information and advice on the European market access requirements and other
trade related issues.
Phu Quoc Sauce receiving in EU the same protection as Champagne wine
Traditionally trade policy is
seen as an instrument to protect national industries from the competition of
foreign products. However, international trade rules offer important
opportunities to Vietnamese enterprises to protect their interests and
production abroad. For example, there are instruments to fight the practices of
some foreign producers located to illegally use Vietnamese geographical
indications to label Vietnamese-type foodstuffs and agricultural products.
However, the main Vietnamese
export markets offer legal instruments to protect national geographical
indications. In the European Union, for example, many agricultural products and
foodstuffs which are produced, processed and prepared in a given geographical
area (even outside the EU territory) using recognised know-how are protected by
a specific regulation.
The legitimate producers can
obtain the registration of the geographical indications in the EU, preventing
its utilisation by non-authorised producers. Recently, the producers of Phu
Quoc Fish Sauce, with the support of MUTRAP experts, completed all the
procedures necessary for filing an application to the European Union and
finally, in October, the Phu Quoc Sauce became the first Vietnamese
Geographical Indication protected in the EU (according to the EU legislation is
a PDO – Protected Designation of Origin), like Champagne, Parmigiano-Reggiano
cheese and other famous food products. It has to be noted that only 11 non
EU-geographical indications are at present protected in the EU market.
“Aid for trade” projects and business sectors
The examples above are taken from
the activity of EU-MUTRAP project and they show that the contribution of
technical assistance projects can go much further than the capacity building to
local governments. The support to businesses will still be at the core of the
fourth phase of MUTRAP, which recently started and will last until 2017.
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