Question:
One of the sectors expected to benefit significantly from the free trade agreements (FTAs) that Vietnam has been participating in, including the EVFTA, is the textile and garment industry. What are the provisions of the EVFTA regarding rules of origin for this sector?
Answer:
– The EVFTA requires a “2-step” rules of origin (from fabric onwards) for textile and garment products. This means that to enjoy preferential tariff rates under the EVFTA, Vietnam’s textile and garment products must be made from fabric originating in Vietnam. Furthermore, for textile and garment products falling under Chapter 61 and 62 of the tariff schedule, the EU allows the use of fabric imported from South Korea to produce final products for export to the EU while still enjoying EVFTA’s preferential tariff rates.
– In contrast, the CPTPP has relatively stricter rules as it requires textile and garment products to have an origin “from yarn onwards,” meaning that yarn and fabric must be produced and/or imported from CPTPP member countries to qualify for preferential tariff rates when exporting to other CPTPP member countries.
