Interview with Ambassador of Vietnam in Mexico, Dr. Le Linh Lan
Mexico and Vietnam are two countries you rarely hear mentioned in the same sentence. Can you explain what has been the relationship between the two countries and what is the current status of the relationship?
During the war time in Vietnam, from 1945 until 1975, the two countries and the two peoples have had mutual sympathy and friendly relation but a distant one. Just a few days after the end of the American War in Vietnam and the Reunification Day of the country (30/4/1975), the history of the relationship between the two countries opened a new chapter with the establishment of diplomatic relations on 19 May 1975. Since then, Vietnam-Mexico relations have always been characterized by cordial friendship, mutual support and dynamic growth of multifaceted cooperation on bilateral level and at multilateral fora.
On bilateral level and onpolitical issues, the Political Consultations Mechanism on Matters of Mutual Interest established in 2002 is a very important channel of dialogue. It has facilitated progress on the bilateral agenda and has strengthen mutual support on important issues on the multilateral agenda, including non-traditional security issues of growing importance to both countries such as coping with Climate change and mitigating its consequences; implementing the 2030 Agenda for Sustainable Development; combating against human trafficking and preventing HIV-AIDS.
In terms of bilateral legal framework for trade, at the Ministerial level, Vietnam and Mexico signed the Agreement to establish the Joint Commission on Economic, Trade and Investment Cooperation, on February 4th, 2016 in New Zealand on the sidelines of the TPP signing. We are actively working with Mexican Ministry of Economy on the First Meeting of the Joint Commision.
The two countries are active members of the United Nations and major regional forums including the Forum for East Asia-Latin America Cooperation (FEALAC), the Asia-Pacific Economic Co-operation Forum (APEC) and the TPP. This year, as Vietnam is the host of the Asia Pacific Economic Cooperation (APEC) 2017, we hope that the upcoming visit of Mexican President Enrique Peña Nieto — first visit at the presidential level- to Vietnam to attend the APEC Leaders and Business Summit in November will give a fresh momentum to the cooperative relationship between the two countries.
How are the two countries connected economically? Are there any special agreements or trade deals in place?
Like Mexico, Vietnam is a very proactive and open economy with our total value of foreign trade reached US$350 billion in 2016, equal 162% of our GDP. Vietnam economic ties have expanded across the globe in an impressive manufacturing and trade network of 200 countries which includes Mexico as an important partner. Vietnam-Mexico bilateral economic exchange has been growing strong in recent years. Bilateral trade has increased by an average of 30% — 40% annually. According to data from the Ministry of Economy of Mexico, our two way trade figure reached over 5 billion US dollars, increased 30% compared with 2015, making Mexico the third largest trading partner of Vietnam in Latin America after Brazil and Argentina while Vietnam is the 8th trading partner of Mexico in the Asia Pacific.
Over the past 10 years, exports from Vietnam to Mexico increased 7 times while exports from Mexico to Vietnam increased more than 30 times. Vietnam main exports to Mexico include telephone and phone parts, computer and electronic computer parts, leather footwear, seafood products, textiles and garments and rubber. Mexico’s exports to Vietnam include computers and electronic parts, animal feeds, heavy equipment, and metals.
As Mexico has begun strengthening ties with Asian Pacific countries, relations with Vietnam grew swiftly but are still below potential especially in sectors of comparative strengths for Mexico such as of manufacturing and assembling automobiles, agriculture, and tourism. In this regard, both countries can work toward more Mexican exports to Vietnam, including beef, pork, chicken, avocado, animal feed, chemicals, minerals, cotton, fertilizers, machinery, iron and steel products.
This year Mexico opened tariff free imports of rice from Vietnam. What has been the effect on rice industry in Vietnam and how has the importation of rice been received by the Mexican marketplace?
Vietnamese rice exports entered the Mexican market for the first time in 2013 with the amount of 12.3 thousand tons. By the end of 2014, Mexico had been importing a modest quantity of rice from major Asian rice producers such as Vietnam (66.6 thousand tons) and Thailand (40.3 thousand tons). However, due to various pressures from domestic rice sector at the beginning of 2015, Mexico decided to reapply tax on rice imports up to 20% which has a drastic impact on Vietnam rice imports which was reduced by more 97% to only 2.1 thousand tons in 2015.
This 20% tariff rate imposed to Asian rice imports made it particularly hard for Vietnam’s rice to compete with that from the US, Uruguay and Argentina, countries that enjoy tax incentives of the FTA with Mexico in the framework of North American Free Trade Agreement (NAFTA) or the Latin American Integration Association (ALADI). In 2016, Vietnam rice export to Mexico was around 4.27 thousand tons of rice (worth US$1.8 million), which accounts for 0.45% of Mexico’s total rice imports.
Recently, the Mexican Government has granted the quota tax waiver for the import of five categories of rice totalling 150,000 tons, with private companies granted a quota of no more than 100,000 tons, valid from March 2 until December 31, 2017. This desicion aimed at diversifying Mexico’s rice imports sources and curbing rising consumer prices is an excellent opportunity for Vietnam’s rice exports and it already has some positive effects. Since the removal, many more Mexican companies have expressed their interests in Vietnam’s rice market. With this positive trade decision, we hope that our rice exports to Mexico will make a comeback in 2017, benefitting Mexican consumers and Vietnam rice exports.
What is your expectation for the future of the trade relationship between the two countries? Do you expect any potential trouble areas?
I am hopeful for the future of the trade relationship for 3 reasons: First, despite the growth of the trade relationship in recent years, this is still below our potentials and especially the dynamic economic development of Vietnam in recent years and the strength of Mexican open economy. Second, with the signing of the Agreement to establish the Joint Commission on Economic, Trade and Investment Cooperation, we look forward to better connect and bring the two countries business communities closer. Third, being the host of APEC 2017 and the Business Summit 2017 will also bring us opportunities to foster our economic, trade and investment relations through interactions at various levels.
At this critical juncture when the world and the region is facing increasing uncertainties, unpredictable challenges due to the rising trend of protectionism,as the host of APEC 2017, Vietnam remains committed to the ultimate purpose of APEC as a champion of economic cooperation and trade liberalization. It is in this context that Vietnam has chosen “Creating new dynamism, fostering a shared future“ as the overarching theme for APEC 2017, and the four priorities: (i) Promoting Sustainable, Innovative and Inclusive Growth (ii) Deepening Regional Economic Integration (iii) Strengthening MSMEs’ micro, small and medium enterprises Competitiveness and Innovation in the Digital Age; (iv) Enhancing Food Security and Sustainable Agriculture in Response to Climate Change. These priorities reflect the common needs and priorities of the member economies including Mexico.
Both countries have been negotiating to be part of the Trans-Pacific Partnership. How important do you believe is this trade agreement?
The Trans/Pacific Partnership agreement concluded and signed on February 4th 2016 in New Zealand as a result of 6 year long, serious and drastic negotiation process. It reflects the common achievement and shared interests of all the 12 member countries. If implemented, TPP is expected to foster a new momentum for economic and trade relations among countries, thus giving a significant impetus to economic growth and regional linkages, stability and prosperity in Asia Pacific.
- Vietnam considers its participation in TPP as well as in other FTAs as one of the major steps to implement the politics of being proactive and active international integration, while improving the domestic legal system and the market economy status and making contributions to the trend of integration and creating economic linkages in the region.
Pending progress on the implementation of TPP, Vietnam remains committed to itreform process, continuing the internal process of preparation to stand by its commitments in the current and future FTAs. Besides 10 bilateral and multilateral FTAs we have signed, Vietnam is also actively participating in the negotiation process of other important FTAs such as the Regional Comprehensive Economic Partnership (RCEP), the Free Trade Area of the Asia Pacific (FTAAP).
Are there any specific policies your government is initiating to bolster economic activity between the two countries?
We have been working together to stimulate economic exchange mainly on three 3 levels. First, we are working on high level exchange of visits which serves as the political drive for our multifaceted cooperation. Second, the Vietnamese Embassy in Mexico and the Mexican Embassy in Vietnam are fully committed to strengthen our ties on all levels. The Embassy’s commercial section stands ready to help Vietnamese companies interested in doing business with Mexico as well as Mexican companies having interest in doing business with Vietnam. Third, we have been working hard to promote mutual understanding and awareness of the two peoples, thus consolidating the foundation of friendship and cooperation.
What has been your working relationship with the government of Mexico? Has it been productive?
The main objective of my mission in Mexico is to work with the Government of Mexico to strengthen and deepen the friendly relations between the two countries, to bring the relations to the next level, so that Vietnam and Mexico are not only good friends but also reliable partners for development and would consider each other as their gateway to the other’s region. In this regard, my mission has 3 major priorities: First, to promote exchanges of visits at all levels, especially at high-level in order to generate momentum for cooperation in other area; Second, to speed up work on creating a legal framework for multi-faceted cooperation between the two sides, especially the establishment of the Joint Economic Comission; signing bilateral cooperation agreements, MOUs on fisheries, agriculture…Third, to bring the image of Vietnam closer to Mexican friends, an image of a beautiful country, increasingly integrated, an open and dynamic economy, a real development success story, thus fostering closer people to people linkages in terms of cultural, business, educational, tourism for the mutual benefits of the Vietnamese and Mexican peoples.
Measured against these priorities, I can say that the working relations with the Mexican have been productive, with significant and tangible results, and I am grateful for the support of Mexican Congress, the Ministry of Foreign Affairs, Ministry of Economy and friends in business and academic circles in their efforts to move our relations ahead.
Do you think there are any cultural similarities between the two countries?
Despite geographical distance, Vietnam and Mexico have more in common than it may seem in terms of historical, socio-economic, cultural values and traditions. Both countries share a profound sense of pride in our long history of national independence, respect of multi-ethnic harmony, sense of community solidarity and the social protection system, cultural heritages, family values and traditions.
Moreover, like Mexico, Vietnam boasts a young and skilled workforce, low costs for manufacturing labor, and a growing middle class. As a middle sized country of 95 million people, with the economic growth rate of more than 6% over the past 3 decades of Renovation, Vietnam is projected to be one of the 20 largest economies in the world by 2030 according to the World Bank. Given the strong foundation of friendship, the tremendous potential of our two open and dynamic economies, we can materialize our potentials by working together on the new opportunities for co-operation, trade and investment, thus stepping up our cooperation and partnership to the next level. In addition, Vietnam is strategically located in Southeast Asia of the Asia Pacific, a member of the ASEAN Economic Community with a population of 620 million people, combined GDP of US$3 trillion, ASEAN today has become an integrated and prosperous region — equal in size to the 7th largest economy in the world and projected to move up to be the 5th largest in the world by 2020. Vietnam can be the gateway for Mexico to foster stronger commercial links with ASEAN and Mexico as with regard to this region.
Finally, I would like to stress that Vietnam warmly welcomes more Mexican trade, tourism, investment and cultural exchanges. As Mexico relies more on Asia to diversify and explore new markets, Vietnam should be considered as an increasingly promising business partner for Mexico. On the other hand, I strongly believe Mexico closer engagement with Vietnam and ASEAN, will no doubt enhance its position in the world as an emerging manufacturing powerhouse, a viable integrated trade and investment partner of the most dynamic region of the world, the Asia Pacific.
