What is the Vietnam – Korea Free Trade Agreement (VKFTA)?
- Full name: Vietnam – Korea Free Trade Agreement
- Abbreviation: VKFTA (Vietnam – Korea Free Trade Agreement)
- Members: Vietnam and the Republic of Korea (South Korea)
- Date of signing: May 5, 2015 (in Hanoi)
- Date of entry into force: December 20, 2015
Negotiation Background and Reasons for the FTA Formation
Background: The Vietnam – Korea Free Trade Agreement (VKFTA) is a bilateral trade agreement between Vietnam and the Republic of Korea (South Korea), signed on May 5, 2015, and effective from December 20, 2015. This agreement, negotiated over two years from August 2012 to late 2014, builds upon the existing ASEAN–Korea Free Trade Agreement (AKFTA) with deeper and broader commitments to enhance economic cooperation between the two nations.
Reasons for formation:
- Comprehensive Partnership: South Korea is one of Vietnam’s leading economic, investment, and trading partners (the largest FDI investor and Vietnam’s second-largest trading partner). The Agreement aims to elevate bilateral economic relations to a higher level, complementing the commitments under AKFTA.
- Complementary Economies: Vietnam and South Korea have highly complementary economic structures. Korea is strong in technology, machinery, components, automobiles, and chemicals, while Vietnam has advantages in textiles, footwear, and agro-fisheries. The VKFTA maximises mutual benefits arising from these complementarities.
- Market Expansion: The Agreement allows Vietnam greater market access to South Korea, especially for agricultural, fishery, and light industrial products, while Korea gains opportunities to expand exports of industrial goods and investments into Vietnam.
What are the main benefits and commitments of the VKFTA?
The VKFTA is a comprehensive agreement structured across 17 chapters and numerous annexes, designed to significantly boost market access and foster economic growth between Vietnam and South Korea. Its key commitments focus on tariff elimination, enhanced access for agricultural and fishery products, and clear rules of origin to facilitate trade.
| Chapter | Chapter Title | Main Content |
|---|---|---|
| 1 | General Provisions | Objectives; definitions; and scope of application. |
| 2 | Trade in Goods | Rules on tariff reduction and elimination for goods. |
| 3 | Rules of Origin | Criteria to determine the origin of goods eligible for tariff preferences (C/O Form KV). |
| 4 | Customs Procedures and Trade Facilitation | Provisions ensuring transparent and expedited customs procedures. |
| 5 | Sanitary and Phytosanitary Measures (SPS) | Ensuring food safety and protection of animal and plant health. |
| 6 | Technical Barriers to Trade (TBT) | Minimizing trade barriers caused by technical standards and regulations. |
| 7 | Trade Remedies | Rules for applying safeguard; anti-dumping; and countervailing measures. |
| 8 | Trade in Services | Commitments on market access and national treatment in services. |
| 9 | Telecommunications | Specific commitments on telecommunications services. |
| 10 | Financial Services | Specific commitments on financial services. |
| 11 | Movement of Natural Persons | Provisions on temporary entry of professionals and business persons. |
| 12 | Investment | Commitments on investment protection and facilitation. |
| 13 | Intellectual Property | Protection of intellectual property rights (consistent with WTO level). |
| 14 | Competition | Rules on competition policy. |
| 15 | Economic Cooperation | Areas of cooperation to support economic and trade development. |
| 16 | Institutional Provisions | Establishment of the VKFTA Joint Committee. |
| 17 | Dispute Settlement and Exceptions | Mechanism for dispute settlement and applicable exceptions. |
Key Commitments
Tariff Elimination:
- South Korea commits to eliminating import tariffs on 95.43% of its tariff lines.
- Vietnam commits to eliminating import tariffs on 92.74% of its tariff lines.
Agricultural and Fishery Products: South Korea provides additional market access for many key Vietnamese products such as shrimp, crab, fish, tropical fruits, garlic, and ginger.
Rules of Origin: Goods must use the C/O Form KV to qualify. The rules are relatively flexible, applying either the Regional Value Content (RVC) or Change in Tariff Classification (CTC) criteria depending on the product.
Where can I find official VKFTA documents and implementation guidelines?
For the most complete and official information regarding the VKFTA, the Vietnam FTA Portal, managed by the Ministry of Industry and Trade (MOIT), serves as the primary reference. This portal provides the full text of the FTA in both Vietnamese and English, along with key annexes such as tariff schedules, services commitments, and specific product rules of origin.
- Full text of the VKFTA (Vietnamese & English versions).
- Key annexes include tariff schedules, services commitments, and specific product rules of origin.
- Link: search for “VKFTA” at https://vntr.moit.gov.vn/
Implementation Guidelines and Legal Documents:
- Ministry of Industry and Trade (MOIT):
The lead implementing body. Issued circulars on the rules of origin and the procedure for issuing the C/O Form KV. - Ministry of Finance (General Department of Customs): Government decrees on Vietnam’s preferential import tariff schedules to implement VKFTA.
- Business Support Organisations: The Vietnam Chamber of Commerce and Industry (VCCI) provides practical guides, handbooks, and training materials to help enterprises utilize VKFTA tariff preferences, rules of origin, and commitments on services and investment.
See other FTAs:
