Vietnam-based South Korean fashion firms are likely to benefit from the European Union-Vietnam Free Trade Agreement (EVFTA), according to a report by the Korea International Trade Association (KITA), which recently said apparel producers in Vietnam can enjoy the benefit of that FTA for goods made with South Korean materials.
Clothes produced with Chinese materials, on the other hand, cannot enjoy the benefits of the EVFTA, as China does not have a pact with the EU, according to South Korean media reports. South Korea implemented its own FTA with the EU in 2015.
Vietnam's imports of South Korean materials to produce clothes reached $1.7 billion in 2019, accounting for 11.5 per cent of the total. Those of Chinese goods reached $6.7 billion, or 58.9 per cent. KITA said exports of South Korean materials to the Southeast Asian nation may also increase on the back of the EVFTA.
Vietnam was the third-largest export destination for Asia's No. 4 economy in 2019, with China and the United States standing as the top two.
South Korea's combined exports to Vietnam in 2019 reached $48 billion, down by 0.9 per cent from a year earlier. Over the cited period, the country's exports dipped 10.4 per cent amid the growing protectionism around the globe and falling prices of memory chips.