The Vietnam Trade Facilitation Alliance (VTFA) is a public-private partnership supported by USAID in collaboration with the American Chamber of Commerce (AmCham) and the Vietnam Chamber of Commerce and Industry (VCCI).. The VTFA meets with customs authoritie, “State Management Agencies” and private companies regularly to help address challenges with customs procedures and technical barriers to trade. In addition, VTFA provides practical information and advice to Vietnamese small and medium enterprises (SMEs) on how to join global supply chains.
Reducing technical barriers to trade in Vietnam will help to increase trade flows, boost productivity, and increase profitability for businesses while raising incomes and prosperity in Vietnam.
Representative achievements since the VTFA was launched in December 2014 include,
sponsored by Walmart and organized by VTFA as part of Walmart’s commitment to celebrating, developing and lifting up women around the world, Walmart and VTFA (USAID • VCCI • AmCham) organized the Walmart Women Owned Businesses Supplier Development Conference (WOBSDC). The event included speakers and discussions with Walmart executives, Walmart Women Owned Business (WOB) Suppliers in Vietnam, and explanations of how to become a qualified supplier for Walmart’s global supply chains. Walmart has 11,703 stores in 28 countries around the world, including about 6,000 international stores and 5,412 stores in the USA.
Walmart suppliers in Vietnam usually supply to Walmart’s international stores, such as in Australia or Latin America, where the volume of sales is lower than in the U.S., and more suitable for the lower production capacities of Vietnamese SME suppliers. Click here for a short video about CL-Fish, a Woman -Owned Business in Vietnam that supplies Walmart stores in Latin America.
The conference attracted extensive media coverage and 232 participants representing 120 companies, with attendees consisting of approximately 75% females and 25% males. The Walmart Women Owned Business Supplier Development Conference and meetings were the first event of its kind in Vietnam. It was pronounced a resounding success by Walmart executives in identifying and mobilizing the largest number of WOB SMEs at one time that they had experienced to date. Thanks to the success of the conference, we organized another in March 2017, and plan to organize more in the future.
March 2016 USAID/CBP Technical Assistance Mission
March 2016 conferences in HCM City and Hanoi on implementing the WTO Trade Facilitation Agreement, were led by senior leaders from USAID and U.S. Customs and Border Protection (CBP) Technical Assistance Mission.
Approximately 150 people in HCMC, half male half female, including all the U.S. CBP/USAID/COAC mission members, GDVC representatives, HCMC, Binh Duong, Dong Nai Customs Directors and major Vietnam and foreign business associations in HCMC; and, approximately 80 people in Ha Noi.
The mission members provided very detailed and useful information about requirements of the WTO TFA, best practices from the US CBP COAC activities, supply chain competiveness, “authorized economic operators” and “Trusted Trader”, and good discussions with Vietnamese customs officers and businesses.
The Mission members made very clear three points:
(1) the top priority for Vietnam is to establish a meaningful National Committee on Trade Facilitation (TFA Sec III, Article 23.2)
(2) a meaningful Customs-Business Cooperation mechanism needs to be established to help “communicate with purpose.” and
(3) the Technical Assistance Mission estimates that (1) and (2) should be completed in about six months.
July 2016 visit to Vietnam by senior CBP officials and senior business advisors
was a major turning point. Then CBP Deputy Commissioner (now Commissioner) Kevin McAleenan, Deputy Executive Assistant Commissioner for Trade Brenda Smith led the U.S. CBP officials, while UPS Vice President Norman Schenk and Walmart Vice President Lisa Schimmelpfenning represented the senior business advisors from the U.S. Commercial Operations Advisory Council (COAC). They provided a powerful example of genuine Customs-Business and Border Agencies trade facilitation consultations, to implement the requirements of the WTO TFA and other FTAs that Vietnam has entered into. The endorsement of this 21st century approach to customs reform and trade facilitation by a combined government- business partnership reinforced the urgency of the need in Vietnam to proceed with implementation of the various requirements of the treaties, which corresponds to the desire and exhortations of the political leaders of Vietnam to engage in accelerated improvement in the business environment and trade for national economic competitiveness and economic development in Vietnam.
The goals of Government Resolutions 19/NQ-CP/2014, Resolution 19/NQ-CP/2015 [http://www.amchamvietnam.com/government-pushes-for-reforms-to-improve-business-environment/] and Resolution 35/NQ-CP/2016 are reinforced and the majority of political leaders and progressive elements in ministries and state agencies increasingly look to VTFA and USG to provide technical and other assistance about “how to” implement trade facilitation reforms in practice, rather than debating further about whether such reforms and modernizations are necessary or useful.
A very important element of these efforts is the “empowerment effect” for Vietnamese business and trade stakeholders. In a July 28 morning conference in HCMC, Mr. Huynh Van Hanh, First Vice Chairman of HAWA, the leading furniture industry association, and a VTFA member, spoke up vigorously and at length about the need for U.S. technical training assistance. He expressed his concerns about the GDVC and other border agencies’ management “mindset” involving burdensome and unnecessary paperwork, “specialized inspections” and many other unnecessary administrative processes of Vietnam Customs and other Border Agencies that inflict very significant additional trade costs, time and labor burdens that render Vietnam’s business environment uncompetitive in comparison with other developing countries. He specifically requested that the U.S. Mission provide Vietnamese authorities with technical training assistance to achieve technical and professional capacities. In addition, he asked for U.S.support for reforms of “state management of goods” regulations and procedures (TBT). These involve the various regulatory ministries and state agencies that have yet to commence or fully join the process of reforms and modernization of trade procedures already undertaken by the Ministry of Finance and Vietnam Customs. Absent the public consultations and dialogs organized by VTFA with the support of AmCham Vietnam and with the participation of U.S. official and private stakeholders, it is doubtful that Vietnamese business and trade stakeholders would make such candid requests and voice their views in public meetings.
The July 28-29 U.S. CBP Senior Leaders and Business Advisors Visit also provided an opportunity to reach out to a larger, “whole of government” audience. In addition to official meetings between CBP with GDVC, VTFA scheduled key meetings with thought-leaders in the political, donor and business community, including a Roundtable with over 75 leaders of Vietnam Customs, Business Associations, and leading companies in HCMC, the People’s Committee of HCMC, AmCham (HCMC) Board of Governors, World Bank and Hanoi Business Associations, VCCI Chairman Vu Tien Loc, the Office of Government Deputy Minister Le Manh Ha (former Vice Chairman of the HCMC People’s Committee), and members of the National Assembly Committees on Foreign Affairs, Social Affairs, Economic Affairs, together with key NA and ministry staff. Details are available at Jul 28 CBP Roundtable with Vietnam Customs and Business Associations, Jul 28 – Meeting Book and at Jul 28-29 Meeting Scenarios (BG Lunch, People’s Cmte, World Bank, VCCI Chairman, Office of Govt Deputy Minister, National Assembly Foreign Affairs Committee Deputy Chairman and others)
In a July 29 wrap-up meeting at the Office of Government (equivalent to the U.S. Executive Office of the President) with Mr. Le Manh Ha, Deputy Minister, CBP Executive Assistant Commissioner Smith reported that both CBP and GDVC had had very productive meetings [over five hours] and had agreed to
• A “foundation agreement” on intelligence and information sharing, as a first step toward a full Customs Mutual Assistance Agreement, which was agreed on as a goal to move towards;
• U.S. CBP would share with GDVC “lessons learned” about implementation of a “National Single Window” (called “Automated Commercial Environment” ACE in the U.S.), including technology requirements;
• “Public-Private Partnerships” [and Stakeholder Engagement such as Customs Commercial Operations Advisory Committee, and User Fee Advisory Committee] in consultations on technical requirements and implementing the systems; this public-private partnereship helps both government and business benefit from sharing perspectives of what works to lower costs, improve efficiency and competitiveness;
• coordinating operations with “Partner Government Agencies” [“Specialized State Management Agencies” in Vietnam], through the U.S. version of the National Committee on Trade Facilitation, [the “Border Interagency Executive Council”, established by Executive Order 13659.]
• guidance on TPP and TFA, especially Rules of Origin and government procedures, this is important since transparency and predictability in government helps both business and government;
• technical assistance on risk management by sharing customs enforcement techniques that protect revenue and safety.
At the same meeting and throughout all meetings, both the CBP Senior Leaders and the Business Advisors emphasized that it was essential to have the Prime Minister or a Deputy Prime Minister in charge of establishing and implementing an effective National Committee on Trade Facilitation (NCTF) with “whole of government” authority to establish/implement the TFA commitments.
The meetings we scheduled were designed to create broad, top-level support for the changes needed by the “whole of government,” not limited to the GDVC bureaucracy. We believe that the meetings were very effective.
Vietnam established a National Committee on Trade Facilitation in October 2016,
partly as a result of these meetings and demonstrated high-level U.S. political and business interest, combined with extensive groundwork by GIG in working-level meetings over the preceding months. Regulatory documents to establish a National Committee on Trade Facilitation were prepared, approved by Deputy Prime Minister Vương Đình Huệ in May 2016, and approved by the Prime Minister on October 4, 2016. In addition, the Prime Minister approved a national plan to implement the WTO Trade Facilitation Agreement on Oct 13, 2016, with the participation of 19 agencies, including the General Department of Vietnam Customs, the Office of Government, and the Vietnam Chamber of Commerce and Industry.
WTO Director General meets Vietnam’s leaders, highlights Trade Facilitation Agreement, with Prime Minister Nguyen Xuan Phuc and key members of the Vietnam National Committee on Trade Facilitation, including Deputy PM Vương Đình Huệ, Chairman, 3rd from right in front row
Vietnam Plans to Reduce Technical Trade Barriers to U.S. Food Products
VTFA, together with AmCham’s Food & Beverage Sector Committee and GIG/USAID, working in consultations meetings over a period of six months, helped achieve a major revision in Ministry of Health import procedures (“Decree 38”) for food products in November 2017, “Decree 38” had regularly been cited by the U.S. Trade Representative’s annual National Trade Estimates of foreign trade barriers as a major hindrance to U.S. agricultural exports to Vietnam.
In January 2017, VTFA agreed to a request by a major Vietnamese business group, the “Vietnam High-Quality Products Business Association” to provide information and technical assistance on food safety.
The High Quality Việt Nam Products Business Association, the American Chamber of Commerce in Việt Nam and the Washington-based Global Food Safety Forum (GFSF) signed a memorandum of understanding on co-operation in food safety. The US imports 15% of its food, 20% of vegetables, 50% of fruit and 80% of seafood, according to the U.S. FDA, which has established an International Food Safety Capacity Building Plan to train foreign governments and food producers on U.S. requirements for food safety.
One key objective was to help improve Vietnam’s Food Safety. Under the “International Food Safety Capacity Building Plan,’ the US FDA will provide “training of foreign governments and food producers on US requirements for safe food. AmCham arranged a Vietnam Food Safety Mission to the U.S. in March 2017 to meet with officials from the U.S. FDA, USDA, USTR, USAID, the Senate Committee on Agriculture, and private sector stakeholders such as the Grocery Manufacturers Association, and a consumers’ association.
Between April and June, AmCham representatives spoke about the U.S. food safety system at conferences in HCM City, Hanoi, An Giang, Can Tho, and Ben Tre, the latter three are key agricultural provinces in the Mekong Delta.
In August, VTFA, the High Quality Vietnam Products Business Association, and GFSF organized a Food Safety Summit in HCM City, with the participation of the Minister of Health, and Deputy Ministers of Agriculture and Rural Development, Industry and Trade, and Science and Technology, FDA officials, AmCham FBSC companies, and representatives of the World Bank, WHO, and Food Industry Asia, and over 300 registered participants.
Following up on the summit, VTFA/AmCham cooperated with the Vietnam High-Quality Product Business Association and Bureau Veritas Vietnam, an AmCham firm, to organize three training courses for Vietnamese factories to obtain the Food Safety Modernization Act “Preventive Controls Qualified Individual” (PCQI) Certificate, Seventy-one Vietnamese individuals completed the training and received the certificates.
Under FSMA, food processors need to have one or more “Preventive Controls Qualified Individual (PCQI)” oversee or perform 1) preparation of the Food Safety Plan, 2) validation of the preventive controls, 3) records review, 4) reanalysis of the Food Safety Plan, and other activities as appropriate.
During the same months, the AmCham Food & Beverage Sector Committee (AFBSC) had been participating in regular consultations with the Ministry of Health to discuss revisions of Decree 38.
On September 8, 2017, the AmCham FBSC achieved a break-through in cooperation with the State Management Agency for Food Safety, MoH/VFA, at a consultation in Hanoi, where the Deputy Minister of Health promised to the Deputy Prime Minister to respect industry input in revising Decree 38, about “Conformity Assessment Certifications.” Essentially he agreed to eliminate the “certification” / prior approval requirement, and to replace it with a company “notification,” subject to verification later by the Ministry.
The USTR’s annual National Trade Estimates on “foreign trade barriers” have regularly highlighted Vietnam’s Decree 38, an implementing regulation for its comprehensive Food Safety Law, as an issue for U.S. exporters and Vietnamese importers. “It is broad in scope, containing regulations for a wide variety of horticultural, seafood, and meat products, and it applies to both foreign and domestic products. Its broad scope and uneven enforcement has led to uncertainty for U.S. exporters and Vietnamese importers. The United States will continue to raise these issues with Vietnam.” USTR National Trade Estimates, 2016, page 451, https://ustr.gov/sites/default/files/2016-NTE-Report-FINAL.pdf
According to the Amcham FBSC Committee, “the new draft decree is a great revolution by reducing more than 95% of government importation inspection, reducing the administrative burden to food industries. MOH estimated that the whole industry will save up to 4 million work days [annually] and 3,700 billion VND (about US$ 150 million).”
Comparison of CHANGES IN THE DECREE
DRAFT DECREE SENT TO MINISTRY OF JUSTICE (FINAL) … will be translated in the near future.
Going forward, VTFA will continue to build on the above representative achievements. We are actively engaged now in developing a workplan together with Customs and VCCI-HCMC. Together with the Customs Department of HCMC and VCCI, we share the HCMC Party Secretary’s enthusiasm for the opportunities for efficiencies and economic development offered by the National Asembly’s approval of Resolution 54/ (Nghị quyết số: 54/2017/QH14), which gives the city “exclusive policies” and authority over “certain matters” which are currently controlled by ministries and other central government units.
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This three-volume report explores the role of trade facilitation and logistics in driving export and ultimately national competitiveness. It posits that this area of trade consists of three interrelated pillars: (i) transport infrastructure and logistics services; (ii) regulatory procedures for exports and imports; and (iii) supply chain organization. Transport infrastructure and logistics services relate to the physical aspects of trade flows. Logistics services include a variety of services, the most important of which are transportation, storage and consolidation. This summary is organized into nine sections. After the introduction, section two presents the conceptual framework for this study. The economic context under which trade facilitation is discussed is outlined in section three. It describes Vietnam’s evolving structure of trade and competitiveness. The country’s trade logistics is part of this structure and this is germane to understanding the key issues and solutions proposed. This is followed by discussion of the three pillars of trade facilitation in sections four to six and then section seven presents the institutional framework underpinning these pillars. Section eight then pulls together the diverse roles of government, such as setting policies, acting as regulator, and being the facilitator working in collaboration with key stakeholders. The conclusion, section nine, suggests a set of recommendations.
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