Issuing special preferential import tariff schedule between Vietnam and Korea

In order to implement the Vietnam-Korea Free Trade Agreement (VKFTA) in the field of tariffs, the Ministry of Finance has just issued Circular 201/2015/TT-BTC promulgating the Special Preferential Import Tariff Schedule implementing the Vietnam-Korea Free Trade Agreement for the period 2015-2018.

Fruit is one of Vietnam's main export products. (Photo: Phuong Vy/VNA)

The tariff includes 9,502 tax lines, of which 9,445 tax lines are at the 8-digit level and 57 tax lines are detailed at the 10-digit level.

The Circular clearly states that imported goods subject to VKFTA preferential tax rates must meet the following basic conditions: being included in the VKFTA Tariff Schedule; being imported from Korea to Vietnam; being transported directly from Korea to Vietnam according to regulations of the Ministry of Industry and Trade; meeting regulations on origin of goods in the Vietnam-Korea Free Trade Agreement; having a certificate of origin of goods according to regulations of the Ministry of Industry and Trade.

Goods from duty-free zones (including processed goods) imported into the domestic market to be subject to VKFTA tax rates must be included in the VKFTA Tariff and have a certificate of origin as prescribed by the Ministry of Industry and Trade (C/O VK).

Goods produced in the Kaesong Industrial Zone in the territory of the Democratic People's Republic of Korea (GIC goods) re-imported to Korea and then exported to Vietnam are also entitled to preferential tax rates if they are items with the GIC symbol in the VKFTA Tariff; are imported and transported directly from Korea to Vietnam according to regulations of the Ministry of Industry and Trade; meet the regulations on origin for special goods in the VKFTA; have a KV C/O printed with the words "Article 3.5" in box 8 issued by the Korean Customs authority.

The preferential tax rates in this Tariff will be effective from December 20.

The Ministry of Finance said that in recent years, trade and investment relations between Korea and Vietnam have grown strongly.

As of February 2015, Korea leads in the number of projects and registered capital with over 4,237 projects and 37.8 billion USD. In 2014, two-way trade turnover between Vietnam and Korea reached 28.8 billion USD, making Korea the third largest trade partner of Vietnam after China and the United States.

Reaching an agreement on opening the goods market in VKFTA on the basis of the commitment level of the ASEAN-Korea Trade in Goods Agreement (AKFTA) is expected to bring significant increased benefits to both countries.

On the Korean side, Korea has committed to giving Vietnam preferential treatment in eliminating tariffs and opening quotas for 11,679 tariff lines; including Vietnam's key export products such as seafood (shrimp, crab, frozen and canned fish); agricultural products; fresh flowers; tropical fruits; industrial products such as textiles, garments, and mechanical products.

For some products such as garlic, ginger, honey, red beans, sweet potatoes... (which have high MFN tax rates from 241-420%), Korea has committed to opening its market for these products, creating a significant advantage for Vietnam compared to other competitors in the region.

With high tariff barriers on Korean agricultural and aquatic products, Vietnam reaching an agreement with Korea on agricultural and aquatic products will facilitate Vietnamese goods to access the Korean market.

On the Vietnamese side, compared to the commitment in AKFTA to liberalize 8,320 tariff lines, Vietnam committed to adding 201 liberalized items according to the VKFTA roadmap such as textile and garment raw materials, footwear; household electrical appliances; machinery and equipment (batteries, transformers, electric motors); electronic products and components; electric wires, cables; engines, auto parts; automobiles (1 truck line over 10 tons, 1 car line over 3,000cc).

The roadmap for tariff elimination from 3 to 15 years is built on the principle that domestic goods in need of import to support production and key exports will have a short tariff reduction roadmap from 3 to 7 years; goods that can be produced domestically will have a long tariff elimination roadmap to create conditions for domestic manufacturing industries to have time to develop and improve competitiveness.

According to the Ministry of Finance, implementing tariff reduction commitments will create conditions for Vietnamese enterprises and Korean FDI enterprises to import raw materials at lower costs, creating conditions to improve import efficiency to serve key manufacturing and export industries; thereby increasing competitiveness in exports./.

According to Vietnam+