Wines made from fresh grapes, apples and pear, liquor with under 80% alcohol content and strong liquor will be taxed at 65% instead of the earlier 80%.

The MOF, on January 18, issued decision 04/2005 reducing tax on wines and alcoholic beverages with product codes 2204, 2205, 2206 and 2208. These include wines made from fresh grapes, apples and pear, liquor with under 80% alcohol content and strong liquor. Under the new decision, the products will be taxed at 65% instead of the earlier 80%.

 The new rates will apply for customs declaration documents from January 1, 2005 onwards.

 Tax reduction on wine has been among the EU’s top interests during negotiations for Vietnam’s accession to WTO, along with apparel and motorbikes. That is the reason why the MOF move has been long expected by EU wine producers and Vietnamese importers.

 The tax reduction comes as a shot in the arm for the European wine producers. With an eye on the tax reduction, in September 2004, French wine producer Baron Philippe de Rothschild officially introduced Mouton Cadet in Hanoi dozens of years after it first came to Vietnam. The lower taxes will certainly make this French wine cheaper.

 Wine is France’s second biggest export item after Airbus craft.

 In related news, on the same day, the MOF signed decision 05/2005 to allow a preferential tax rate of 70% on a consignment of 3,500 motorbikes of EU origin. The decision was made after the Ministry of Trade (MOT) assured the consignment was for specific purposes.

 EU-origin motorbikes are normally imposed 100% import tax, and the number allowed to be imported is limited by MOT quotas. 

Nguyet Ha

The agreement will pave the way for apparel exports to the EU.

The agreement to abolish the apparel export quota mechanism to the EU was signed yesterday afternoon, paving the way for Vietnam's apparel exports to the EU.

International visitors on Cat Ba Island, North Vietnam. Tourism is a field that Vietnam and EU had to make concessions to reach the deal. (Photo An Thanh Dat)

EC President Romano Prodi and Trade Commissioner Pascal Lamy left Vietnam this afternoon after wrapping up a bilateral agreement between Vietnam – EU on the road to WTO accession.

The deal covers commitments on behalf of Vietnam in goods and services with accession, and rests upon a framework that further opens Vietnam ’s market, while reflecting Vietnam ’s status as a low income developing country.

The average tariff level that Vietnam will apply is around 16% for industrial goods, 22% for fisheries products and 24% for agricultural goods.

As Mr Lamy explained, taxation is “somewhat between the levels for Cambodia , at 20% and China , at 10%. “It is a good result, satisfying the both sides,” he said.

In services, Vietnam made commitments in a wide range of sectors. The commitments gained with the agreement, according to Mr Lamy, “are not all the things that the EU asks, but they cover a large proportion”.

“We had to make concessions in telecommunications and tourism,” he said, “as we understand that these are the most ‘sensitive’ sectors for Vietnam ”.

The EU pushed for 100% ownership in telecommunications, but finally accepted the limited capital contribution in enterprises of this field.

Mr Tuyen said, commitments were only reached by concessions on both sides.

For example, in tourism, Vietnam does not allow foreign travel companies to organise outbound tours. In return, Vietnam committed to open the market for foreign owned hotels and restaurants. Meanwhile, already-established foreign travel joint ventures will be allowed to hold majority capital.

Regarding financial services, Mr Lamy said all requirements by the EU were accepted by Vietnam , except the establishment of foreign branches in insurance. In the banking sector, Vietnamese requirements focused on technical issues rather than on the market access, such as minimum capital levels of a foreign owned bank and capital mobilisation in local currency VND.

Asked to compare the level of commitments under the Vietnam – EU bilateral deal compared to the Vietnam – US Bilateral Trade Agreement (BTA), Mr Lamy said that “it’s the BTA and more”.

Mr Tuyen concurred, adding that in some fields, the commitments are equal to that of BTA, while in others, the commitments are stronger.

The agreement, which brings Vietnam a step closer to the WTO, was inked after 10 rounds of negotiations of which the final one in Hanoi this week was toughest. Officials worked late into the night with a deal signed 1pm on day four (October 9).

The EU opened the first door for Vietnam ’s entry into WTO with the conclusion of a bilateral deal, said Mr Tuyen. This is the first major deal for Vietnam after reaching bilateral deals with Cuba and Chile .

The EU has been the Vietnam ’s biggest partner accounting for 20% of export value and 10% of import.

Vietnam is striving to join WTO by 2005, and the process would have been a more distant reality without an agreement with the EU at this time.

According to Mr Tuyen, Vietnam is beginning talks with China , and is going to negotiate with the US this October. It is also preparing for negotiations with Japan and other WTO members.

Mr Tuyen said yesterday he met with his Chinese counterpart and the two sides committed to accelerate negotiations to quickly conclude bilateral talks.

Vietnam recognised China 's status as a full market economy and pledged not to apply restrictions on trade with China as documented upon China 's accession to the (WTO).

Nguyet Ha