AANZFTA plays an important role in promoting economic, trade and investment relations between ASEAN and Australia and New Zealand. It is the first multilateral agreement between ASEAN and Australia, while New Zealand signed a multilateral agreement with Brunei, Singapore and Chile within the framework of Agreement P4 and is negotiating a Trans-Pacific Strategic Economic Partnership Agreement (Trans-Pacific SEP Agreement). AANZFTA is the first agreement between regions and regions in which ASEAN participates, and the first trade agreement between ASEAN and Australia and New Zealand. It is also the first agreement in which ASEAN negotiates and signs comprehensive commitments with a partner outside ASEAN. AANZFTA includes commitments on trade in goods and services, electronic commerce (e-commerce), personal travel, investment, economic cooperation, policies on dealing with disputes and detailed regulations on customs formalities, epidemic prevention measures, technical standards, intellectual property and competition.
According to AANZFTA, ASEAN, Australia and New Zealand are committed to beginning step-by-step tariff liberalization as soon as the agreement takes effect and abolishing at least 90 percent of all tax lines within a certain period of time. Regarding trade in services, the three parties agreed upon gradually liberalizing barriers to trade in services and paving the way for service providers to approach markets in a more favorable manner. AANZFTA is the first agreement in which ASEAN commits to creating favorable conditions for the travel of people involved in trade and investment operations in the region. The agreement has advanced provisions related to treatment in investment, compensation for those suffering from losses, profit and capital transfer, and investment right and request transfer. Paving the way for goods exchange through application of concrete regulations on origin, customs procedures, Sanitary and Phytosanitary Measures (SPS), technical standards and standard satisfaction evaluation procedures is an important content upon which ASEAN, Australia and New Zealand agreed. This agreement is significant, as Australia and New Zealand are among countries that have the strictest SPS requirements in the world.
Tariff cuts are the most important part of AANZFTA. Countries joining the tariff cut commitment are divided into four groups: 1) Australia and New Zealand, 2) ASEAN 6, 3) Vietnam and 4) CLM (Cambodia, Laos and Myanmar). Each ASEAN country, Australia and New Zealand have their own commitment tables that include tariff cut and sensitive lists. Of all tariffs, the normal track (NT) accounts for 90 percent and sensitive tariffs (ST) represent the remaining 10 percent. Of the 10 percent of sensitive tariffs, six percent are ST1 and four percent are ST2. Of the four percent of ST2, one percent is excluded from tariff cut or abolishment. Actually, Australia, New Zealand and ASEAN-6 countries pledged to see the rate of NT tax lines bigger than 90 percent or reach 96-98 percent.
For Vietnam, NT lists account for 90 percent of all tax lines, of which 85 percent will be abolished in 2018 and five percent will be terminated in 2020. ST1 tax rates subject to seafood, canned fish, some kinds of drugs, gas, petroleum, material plastics, tires and inner tubes, paper, some kinds of steel, iron and steel products, spare parts, automobile and motorbike engines, automobiles of a large tonnage, vehicles for special use, and large cylinder capacity motorbikes will be gradually reduced to the lowest rate of five percent in 2022. ST2 tax rates subject to poultry, fruits (mandarin oranges and oranges), liquor, beer, cigarettes, sugar, steel and iron, human transport automobiles, trucks of less than 10 tonnes and trawlers will be maintained at a high rate.
Vietnam has committed to abolishing tariffs subject to some products in which Australia and New Zealand are highly interested, such as beef, lamb, material milk, milk products and plywood.
New opportunities for Vietnamese businesses
Australia and New Zealand are important partners of Vietnam. Bilateral cooperation between Vietnam and these two countries has been growing well. Australia is the tenth largest trade partner of Vietnam and the fifth largest importer of Vietnamese goods . Trade between Vietnam and Australia came to more than US$4.1 billion including US$2.7 billion worth of Vietnamese exports, mainly crude oil, seafood, cashews, timbers and wood products, machinery, equipment and spare parts. Australia ranks 18th among the 77 countries and territories directly investing in Vietnam. Vietnam is the fifth biggest beneficiary of Australian non-refundable aid.
Bilateral relations between Vietnam and New Zealand have also been growing well with bilateral trade increasing an average of almost 30 percent per annum in recent years. Vietnam-New Zealand trade amounted to US$475 million in 2010 (up 48.6 percent from 2009) including almost US$123 million worth of Vietnamese exports.
New Zealand ranks 42nd among the 77 countries and territories investing in Vietnam. Although New Zealand is not a big official development assistance (ODA) donor its ODA for Vietnam has constantly increased.
In general, AANZFTA will bring in major benefits for ASEAN, Australia and New Zealand, as it opens markets deeper and wider to exporters and producers in the region, promotes product cost reduction and creates opportunities for expanding job networks and strengthening cooperation between businesses in the region. The agreement will help create a sustainable, explicit and transparent business environment through which economic operations of parties and businesses can be promoted.
With the actual situation of Vietnam-Australia and Vietnam-New Zealand trade relations, AANZFTA is expected to create many opportunities for businesses. Regarding trade with Australia, Vietnamese businesses would considerably benefit from textile, garment pulp, and farm produce export promotion. Referring to trade with New Zealand, Vietnamese businesses would benefit from exporting textiles, garments, footwear, timber, wood products, machinery, equipment and spare parts. AANZFTA is expected to make it possible for Vietnamese businesses and consumers to access high quality machinery, materials and goods and advanced technology at more reasonable prices./.