Vietnamese Clothing Made from Korean Textiles Also Benefits from 'KOR-EU FTA Tariff Reduction'

South Korea, 2nd Largest Fabric Supplier to Vietnam... Expecting Increase in Fabric Exports to Vietnam

[Sejong=Asia Economy Reporter Joo Sang-don] Garment products processed in Vietnam using South Korean fabrics (HS chapters 61 and 62) will now be recognized as Vietnamese origin when exported to the European Union (EU), allowing them to benefit from tariff reductions under the Vietnam-EU Free Trade Agreement (FTA). As a result, fabric exports to Vietnam are expected to increase.

On the 8th, the Ministry of Trade, Industry and Energy announced that the Vietnam-EU FTA exceptionally includes a cumulation provision recognizing 'South Korean fabrics' as Vietnamese origin, enabling preferential treatment. This cumulation provision is retroactively applied from December 23 of last year (EU customs clearance standard).

An official from the ministry explained, "Both governments have closely cooperated to fulfill the administrative requirements necessary to receive these benefits, including signing a 'cumulation exchange of notes.' In particular, Minister Sung Yun-mo visited Vietnam during the 4th Korea-Vietnam FTA Joint Committee meeting, signed the 'cumulation exchange of notes' with the Vietnamese Minister of Industry and Trade, and urged the Vietnamese side to expedite the procedures."

Subsequently, both countries notified the EU Commission of the exchange of notes, and the EU officially informed on the 4th that preferential tariffs would be retroactively applied from December 23, when the notification was received.

Vietnam relies on imports for about 80% of the fabrics used in garment production (based on 2019 data). Vietnam imports 16% of its total fabrics from South Korea. Since South Korea is the second-largest fabric supplier after China (55%), if the Vietnam-EU FTA cumulation provision applies only to South Korean fabrics, demand for South Korean fabrics is expected to increase compared to competitors such as China and Taiwan.

The Ministry plans to provide more detailed guidance and support for utilizing the preferential origin provisions for South Korean fabrics through the Korea Federation of Textile Industries FTA Support Center and the FTA Comprehensive Support Center, so that the Korean textile industry can fully benefit.

This content was produced with the assistance of AI translation services.