Israel-Vietnam free trade agreement takes effect

The agreement also eases regulatory barriers across several fields, particularly in services, standardization, and investments.

By Pesach Benson, TPS

A free-trade agreement between Israel and Vietnam signed in 2023 took effect on Friday as Israel’s Ministry Economy and Industry said it anticipated a boost in bilateral trade.

The free trade agreement is Israel’s first with a member of the Association of Southeast Asian Nations (ASEAN), a political and economic union made up of 10 countries, including several that do not have diplomatic ties with Israel.

“The trade agreement with Vietnam is a leap forward in the Israeli economy – another step on the way to deepening Israel’s cooperation with leading economies in the world,” said Minister of Economy and Industry Nir Barkat.

“Israel brings innovation and unique technological advantages that will reach the Vietnamese market, and this is a connection that the world cannot ignore. I instructed the Foreign Trade Administration teams to continue to strengthen the network of agreements and open new doors for the Israeli industry and exporters – which will result in a significant contribution to the consumer public in Israel and to lower the cost of living.”

The agreement reduces customs tariffs on a wide range of products, ranging from chemicals and electronic equipment to agricultural products and medical devices.

It also eases regulatory barriers across several fields, particularly in services, standardization, and investments.

Israel also imports significant consumer goods from Vietnam, such as clothing, footwear, coffee, and mobile phones,

With a steady increase in trade between Israel and Vietnam — reaching $1.3 billion in 2023 — the Foreign Trade Administration projects even greater growth in 2024, despite supply chain constraints stemming from the war with Hamas and Hezbollah.

The anticipated customs reductions and the simplification of trade barriers are expected to inject tens of millions of shekels into the Israeli economy annually.

“This agreement is an expression of our commitment to expand Israeli export options to the world. Southeast Asian markets, and in particular Vietnam, are a reliable, stable and growing destination for Israel, and we will continue to create relative advantages for Israeli industry in these markets,” said Roy Fisher, director of the ministry’s Foreign Trade Administration.