In July 2023 Vietnam and Israel signed a free trade agreement (FTA) in Tel Aviv after seven years of negotiations, making Vietnam the first Southeast Asian country to close an FTA with the Middle Eastern nation.
The FTA will remove duties in steps on at least 86% of Vietnamese exports and 93% of Israeli imports. Besides, the agreement is predicted to significantly accelerate annual bilateral trade by nearly 50%. It is also expect to facilitate the entry of Vietnamese goods throughout the Middle East, North Africa, and Southern Europe. In return, Israeli businesses would be able to gain access to ASEAN and Indo-Pacific markets, as well as other major economies that signed an FTA with Vietnam.
Bilateral trade will soon reach USD 3 billion in 2023 from USD 2.2 billion registered in 2022. The top Israeli imports from Vietnam are electronics and fertilizers, while its top exports to Israel are footwear, seafood, and smartphones. Currently, Israel is the 3rd largest export market and 5th largest trade partner for Vietnam in West Asia.
Since the early 1990s, Vietnam has ratified 16 bilateral and multilateral FTAs to attract more foreign investment into its manufacturing-based economy. The country is also in several FTA negotiations with the UAE, the European Free Trade Association EFTA (Switzerland, Norway, Ireland, and Liechtenstein), and Canada.