Enterprises must solve this problem in order to enjoy the recent ratification of the EU-Vietnam Free Trade Agreement (EVFTA). Under the tariff reduction plan, most yarn and fabric products will be immediately exempted while tariffs on garments will gradually decrease to 0 percent over 6 to 8 years.
However, the EVFTA's impact will be marginal in the short term due to the limited capability of material autonomy.
The EVFTA includes a "fabric-forward" rule of origin, which means that in order to enjoy preferential tariffs, the products must be made from fabrics of Vietnamese origin.
Experts are telling Vietnamese businesses to increase their capacity to produce raw materials or build a production chain to meet the requirements on the origin of products in order to fully exploit the benefits brought about by the FTAs.
