The Vietnam-Israel Free Trade Agreement (VIFTA) was signed on 25 July, with predictions it will boost bilateral trade by 50 percent within two years.
The agreement was signed by each nation’s trade minister after seven years of negotiations. Trade between the two countries was valued at USD 2.2 billion (EUR 2 billion) in 2022, up 18 percent year over year, and is expected to reach USD 3 billion (EUR 2.7 billion) next year thanks to the deal, Reuters reported.
General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said although the Israeli market accounts for a small proportion of Vietnam’s seafood exports, it is a very high-potential market because of its high purchasing power and solvency. Besides, Israel has limited natural resources and domestic labour resources. Although it is a small country, its consumption demand is quite large, meaning the market still has a lot of room for Vietnamese seafood enterprises to operate effectively.
The agreement will scale down duties on at least 86 percent of Vietnamese products sent to Israel, including seafood, eventually zeroing them out. Tariffs will also be eliminated on 93 percent of Israeli products exported to Vietnam, according to Vietnam's Ministry of Industry and Trade.
“[The deal will] facilitate Vietnam's exports of its products not only to Israel but also pave the way for Vietnamese products to access other Middle East, North African, and Southern European markets," the ministry said in a statement.
Israel was Vietnam’s fourth-largest tuna market and 22nd-largest seafood market overall in 2022, and Vietnam was Israel’s top tuna supplier, with USD 36.3 million (EUR 32.9 million) in sales. Vietnam also exported USD 22 million (EUR 19.9 million) in frozen sequid to Israel and USD 21 million (EUR 19 million) in frozen shrimp to Israel last year.
“Vietnamese seafood products exported to Israel now have a stable foothold and are favored and appreciated by domestic consumers. Therefore, the tax reduction schedule in the VIFTA will create great advantages for seafood exporter,” Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said in a release. “Notably, the trade deal is also expected to open up opportunities for cooperation with the potential Middle East region through the gateway of the United Arab Emirates.”
Israel only has one other free-trade deal with an Asian country – a deal with South Korea it signed in 2021 – and VIFTA is Israel’s first FTA with a member of the Association of Southeast Asian Nations.
Israel's Economy Ministry said in a statement the deal will provide "a competitive edge and facilitate activity" for Israeli exports to Vietnam.
Vietnam has signed a combined 16 bilateral and multilateral free trade agreements since the early 1990s. Most recently, it signed a free trade agreement with the European Union in 2020.
Photo courtesy of Vietnam's Ministry of Industry and Trade
