1

METHODS OF EVALUATING THE IMPACT OF THE FREE TRADE

AGREEMENT BETWEEN VIETNAM AND EURASIAN ECONOMIC UNION
ON VIETNAM'S AGRICULTURAL EXPORTS TO EAEU
PhD. Candidate Nguyen Lan Huong
Email: nguyenlanhuong.npa@gmail.com
Institute of Economics, Ho Chi Minh National Political Academy

Abstract: The paper presents methods used to evaluate the impact of a free trade
agreement (FTA) on a country's trade activities during the implementation of the free trade
agreement. Following that, the paper proposes an appropriate method to evaluate the impact of the
free trade agreement between Vietnam and the Eurasian Economic Union on Vietnam's
agricultural exports to the EAEU market.
Keywords: method, FTA, VN-EAEU FTA, agricultural exports.

1. Introduction
In the context of broad international economic integration, more and more free trade
agreements have been signed between economic communities and non-regional countries. Once
the free trade agreements come into effect, they are deemed to have a great impact on trade
relations in general and agricultural exports in particular between partners in different directions
and degrees. Obviously, evaluating the impact of the free trade agreement between Vietnam and
the Eurasian Economic Union on Vietnam's agricultural exports to the Eurasian Economic Union
(EAEU) as the two sides have signed a free trade agreement will provide concrete empirical
evidence as a basis for improving the effectiveness of state management on agricultural exports,
thereby promoting Vietnam's agricultural exports to this economic union market during the
implementation of the free trade agreement signed by the two sides.
2.The theoritical background
The impact of a free trade agreement on trade relations between members in general and on
a specific country's agricultural exports, in particular, is an issue that has received much attention
from economic researchers. There have been many studies on the impact of free trade agreements
on the flow of trade between countries that have signed the agreement. To date, there are two
methods commonly used in empirical studies on assessing the impact of free trade agreements on a
country's agricultural exports to a signed trading partner, which are (1) the GTAP model based on
the general equilibrium model theory CGE and (2) the gravity model.
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Theory of the general equilibrium model

Based on the theory of the general equilibrium model (CGE), empirical studies often use
the GTAP (Global Trade Analysis Project), which exploits the global trade database to simulate,
analyze, and evaluate the impact on a country's economy when participating in international trade.
The GTAP model was built and developed by Thomas Hertel (1997) at Purdue University - USA,
allowing to analyze the interactions between economies in the context of globalization. The GTAP
model assumes that in a perfectly competitive market, production efficiency does not vary with the
size of commodities differentiated on the basis of origin (Armington, 1969). The GTAP model
provides an analytical framework for assessing the impact of policies and changes in the structure
of resource distribution by clarifying the beneficiaries and those subject to damage due to the
impact of the policy (Dimarana & Dougall, 2022; Todsadee et al., 2012). The characteristics of the
GTAP model are as follows: first, the consumer is the one who decides the consumption of goods,
the level of saving, and the level of government spending to maximize the Cobb-Douglas utility
function, and the government is a component of the model; second, the representative of each
industry in each territory is the decision maker for the production inputs and intermediate goods;
prices of goods and factors of production are determined at the equilibrium level of supply and
demand in the market. In Hertel's GTAP model (1997), supply and demand are in equilibrium in
all markets, i.e. the cost of a product is equal to marginal cost. The government uses tax and
subsidy instruments to create the difference between the price that producers get and the price that
consumers pay. Government policy intervention is expressed in the form of percentage taxes, tax
subsidies, or quantitative norms.

 Advantages of GTAP model

In the CGE model, the economy of each country is divided into many different sectors and
fields; therefore, it is possible to assess the impact of participating in international trade relations
on the entire economy as well as on each specific industry.
The database in this model is global, based on I/O tables of many countries. This data sheet
has been calibrated to ensure consistency and minimize discrepancies in the timing and
sectoralization of the data.
The GTAP model is suitable for analyzing the impact of international trade participation on
individual countries in the context of globalization.
This is a built-in model that everyone can use for their own analysis and research purposes.

 Disadvantages of GTAP model

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The GTAP model has the following disadvantages: first, this model cannot analyze the
transition between two equilibria; second, there is no financial market in this model, hence it is not
possible to deal with issues related to exchange rates, interest rates, inflation as well as the impact
of monetary policy; third, the database is integrated from many countries’ data, with differences in
structure and timing, thus consistency is not guaranteed; fourth, the model is complicated and
difficult to apply.
It can be seen that the GTAP model is used as an analytical tool to predict the impacts of
FTAs on the economy, and the economic structure between sectors, thereby identifying the
industries with bigger advantages to develop in each country. However, due to inherent
disadvantages including the complexity of the model, the application of the GTAP model in
experimental studies is limited.
The gravity model
The gravity model was first used by Tinbergen (1962) and Poyhonen (1963) to assess
bilateral trade between European countries. Since then, the gravity model has gradually become a
useful and commonly used tool in empirical studies to estimate, analyze, and evaluate issues
related to international trade.
The gravity model is widely used in research to estimate the impact of exchange rate
fluctuations, the implementation of free trade agreements, geographical distance, etc. on trade
turnover between parties due to the need to understand the factors and extent of influence of the
participation in international trade relations on the socio-economic fields of a country and due to its
following advantages (Baldwin and Taglioni, 2006):
First, the database used in the model is standardized, hence it has a high degree of
reliability and is easier to access.
Second, the gravity model has been applied by many researchers, thereby forming a
standard procedure and principles to ensure the reliability of the estimation results.
Third, the gravity model can consider the effects of groups of factors affecting supply,
demand, and trade between two countries simultaneously. This model measures the effects of both
qualitative and quantitative variables.
However, in the gravity model, it is assumed that trade flows between two countries depend
only on the economic characteristics of that pair of countries while in reality, the degree of
multilateral trade dependence is very large. It can be seen that several assumptions in the model are
not reliable as important variables may be omitted (for example, variables regarding the trade cost
gap between two countries, the quality of infrastructure, and waiting time at the border). This is a
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significant limitation of the model. Therefore, when using this model, policymakers as well as
researchers must be very careful during the interpretation of research results since the estimated
effects of an FTA are only genuinely effective if the estimated data are reliable.
The use of the gravity model in international empirical studies is quite diverse and
widespread. When studying bilateral trade between European countries, Tinbergen (1963) and
Poyhonen (1963) used the gravity model to explain the effects of economies of scale (measured in
GNP or GDP) and the gap between two countries on a country's export performance. After that, the
gravity model has been widely used and become increasingly popular in the empirical study of
international trade. The gravity model was used by McCallcum (1995) to measure the impact of
borders on trade. In the gravity model used by Endoh (1999), trade flows were said to be
negatively affected by the population variable. Another variable, income per capita, was also
included as a variable that had a positive effect on international trade (Frankel, Stein, and Wei,
1995; Elliott and Ikemoto, 2004). In addition, a number of other variables such as geography,
culture, and institutions were included in the model to help analyze the impact on trade and
investment flows better. In the gravity model derived from the partial equilibrium model of
Radman (2003), trade flows between two countries i and j were explained by the following factors:
country i's total potential supply, country j's total potential demand, and barriers to trade. Radman’s
research (2003) showed that Bangladesh's trade is determined by the size of the economy, GNP per
capita, geographical distance, and market openness. In a study on China's tea exports from 1996 to
2009, Wei et al. (2012) used the gravity model to assess the impact of food hygiene and safety
standards on tea exports in China. Hygiene and safety variable was included in the model as
dummy variables and there was no obvious impact because food safety standards were different
among consuming markets. Yang (2006) and Martínez - Zarzoso (2004) used the gravity model in
which, besides GDP, population, and language variables, the authors included two more variables,
including shared borders and free trade agreements, to measure the impact of these factors on the
export turnover of countries in the ASEAN - China free trade area.
It is clear that over time the gravity model has been developed both in theory and in
practical application. From a model that lacked a theoretical foundation, the gravity model has
been developed to become a tool with a solid foundation for research and estimation purposes.
In Vietnam, a lot of research on Vietnamese trade during the implementation of free trade
agreements has utilized the gravity model.
Tu Thuy Anh and Dao Nguyen Thang (2008) used the gravity model to explain the impact
of factors such as economic growth (through GDP, GDP per capita, geographical distance, and
trade relationship in the ASEAN+3 region) on the level of trade concentration of Vietnam in these
countries throughout the period 1998 - 2005. In the model, the authors included independent
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variables including GDP, GDP per capita, geographical distance, and dummy variable ASEAN and
assessed the impact of these factors on the dependent variable, which was the indicator of trade
concentration between Vietnam and ASEAN+3 countries. The results showed that economic
growth had a great impact on the level of trade concentration of Vietnam in ASEAN+3;
geographical distance affected exports, but did not affect the concentration of trade, the actual
implementation of commitments with ASEAN+3, and did not significantly affect the growth of
trade between Vietnam and ASEAN+3 countries. In this study, the gravity model successfully
quantified the factors affecting the level of trade concentration of Vietnam in the context of
implementing commitments with ASEAN+3.
In a study to analyze the impact of the ASEAN and Korea free trade area on Vietnam's
trade by Nguyen Tien Dung (2011), the gravity model with secondary data in the period 2001-
2009 was used to analyze the influence of GDP, GDP per capita, income disparity, geographical
distance, exchange rate and FTA (dummy variable) on Vietnam's import and export turnover. It
was shown that GDP had a positive impact on both exports and imports; geographical distance had
a negative effect on both exports and imports; exchange rate had a positive impact on exports and a
negative impact on imports; dummy variables received positive coefficients in both exports and
imports. These findings were consistent both in theory and in practice.
Ngo Thi My (2016) used the gravity model to analyze the factors affecting the export of
Vietnamese agricultural products, including the economic size of the importing and exporting
countries (GDP); the population of exporting and importing countries; agricultural land area of
exporting and importing countries; quality of agricultural products; prices of agricultural products
on the world market; inflationary; infrastructure for export activities; comparative advantage;
science and technology; export promotion/management policies; distance between two countries;
openness of the exporting country's economy; international relations. The research results showed
that these factors all had an impact on Vietnam's agricultural exports with the tendency and the
level of impact consistent with the model's hypothesis. In particular, the exchange rate was the
factor that had the strongest impact on Vietnam's agricultural export turnover.
Nguyen Thi Thanh Huyen (2019) used the gravity model to assess the impact of trade
agreements on Vietnam's rice exports. The dependent variable in the model was the value of
Vietnam's rice exports. The independent variables included the GDP of Vietnam, the total final
consumption expenditure of the importing country, the actual bilateral exchange rate between
Vietnam and the importing country, and the geographical distance between Vietnam and the
importing country (distance between two capitals). Dummy variables such as the sharing of
borders, colonial history, contiguity to the sea, and participation in regional trade agreements were
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included in the model for estimation. The results showed that the signing of free trade agreements
did not always have a positive impact on Vietnam's rice exports.
In the gravity model done by Bui Quy Thuan (2021) to study the impact of the Vietnam -
Eurasian Economic Union free trade agreement on trade between Vietnam and the Russian
Federation, the independent variables were taken into account including the GDP of exporting and
importing countries; the population of exporting and importing countries; the distance between the
two capitals of the two countries; the real exchange rate between the two countries; the import
country's tax rate applied to imported goods along with a dummy variable that measured the
impact of FTAs on imports and exports between two countries. The dependent variables in the
model were the export turnover and import turnover of Vietnam. This research showed that the
free trade agreement between Vietnam and the Eurasian Economic Union had a positive impact on
bilateral trade between Vietnam and the Russian Federation. This finding was consistent with the
assumption and previous empirical studies on the impact of FTAs on international trade flows.
In the gravity models mentioned above, the following variables are included:
Dependent variables: Export turnover and import turnover or two-way trade.
Independent variables: The variables related to the supply of the exporting country, the
variables related to the demand of the importing country, the variables related to the degree of
trade attractiveness or trade barriers, the variables related to population which represents the
market size, real exchange rate, average tax rate; while WTO and FTA are listed as dummy
variables.
In summary, two popular methods used in studies on the impact of free trade agreements on
trade flows in general and agricultural exports, in particular, are the GTAP model based on the
theory of the equilibrium model CGE and the gravity model. The CGE model-based approach
helps to review the overall linkages in the economy, forecast trends, explain resource allocation
mechanisms when implementing FTAs, and impacts on economic growth in the context and
specific conditions of each country. The gravity model, with its advantages, is more commonly
used to evaluate the impact of signing free trade agreements on the country's agricultural exports.
3. Proposing a framework for analyzing and evaluating the impact of the Vietnam-
EAEU free trade agreement on Vietnam's agricultural exports to the EAEU during the
implementation of the free trade agreement
It can be seen from the literature review of methods used in evaluating the impact of a free
trade agreement on a country's international trade that the gravity model has outstanding
advantages. Therefore, it would be reasonable to choose this model to evaluate the impact of the
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free trade agreement between Vietnam and the Eurasian Economic Union on Vietnam's
agricultural exports to the EAEU market since the FTA came into force.
The first gravity model applied by Tinbergen (1962) quantified the effects of three factors
including the size of the exporting country's economy, the size of the importing country's economy,
and the distance between the two countries on trade turnover between the two countries, using the
following simple formula: Tij = AYi1Yj2DISij3euij

In which:
Tij: Trade volume between country i and country j
A: Drag coefficient
Yi: The size of the economy of country i
Yj: The size of the economy of country j
DISij: The distance between country i and country j

1; 2; 3: Individual regression coefficients of the influencing factors in the model

uij: Random error

In the application process, factors such as the population size of the exporting and
importing countries, the exchange rate/real exchange rate policy, the gap in the level of
development between the two countries, and the policies related to trade barriers have been
added to the gravity model.
Accordingly, factors affecting the export of Vietnamese agricultural products to the
EAEU market in the context of the implementation of the VN-EAEU FTA include GDP,
population size, total agricultural land area, economic development gap, geographical distance,
exchange rate, participation in free trade areas, etc.

 The size of the economy of the exporting country (GDP)

The scale of GDP reflects the production capacity or ability to produce and supply
goods and services of an economy. However, the degree of impact of GDP size on
agricultural exports varies across different economies, depending on the socio-economic
development strategy of that country/territory. If the economy is export-oriented, GDP scale
and agricultural export turnover are closely related. On the contrary, if the economy is not
export-oriented, the size of GDP and export turnover of agricultural products have little to do
with each other. Because in that economy, goods and services are produced mostly to meet
domestic consumption needs. Theoretically, a variety of scenarios can be put forward
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regarding the magnitude of the impact of the exporting country's econom ic size on export
turnover. However, in the process of international economic integration, these two factors
have a positive relationship and are closely linked (Tinbergen, 1962).

 The size of the economy of the importing country (GDP)

The size of the importing country's economy has a great influence on the import and
export turnover between the two countries (Tinbergen, 1962). First, the high GDP size of the
importing country shows that the country has a large purchasing and importing demand. GDP
also reflects the country’s production capacity; a high GDP size means a large production
capacity. Therefore, imported goods will face stiff competition from domestic goods. On the
other hand, the demand for imported goods also depends on the nature and necessity of each type
of product. Hence, the size of the economy of the importing country affects the export and
import turnover of each commodity in different directions and degrees. For that reason, it is
difficult to clearly state whether the impact of the size of the importing country's economy on the
export value of agricultural products of the exporting country is positive or negative. However, it
should be noted that agricultural products are essential goods, and most countries consider them
important goods to serve the basic needs of the people. When the GDP of the importing country
increases, it means the country has focused on production to increase output and the quality of
domestic agricultural products, which indicates that the demand for agricultural imports will
decrease. At that time, the impact of the size of the importing country's economy on the export
turnover of agricultural products was negative.

 The population of the exporting country

Population is a factor that directly affects the production capacity of a country (Nguyen
Thi Huyen, 2019). The level of impact of population on export turnover of goods in general and
on agricultural exports in particular is considered in the following aspects:
- Firstly, when the population increases, the size/number of labor increases, contributing
to the increase in production capacity and in the output of exported goods. However, this also
creates competitive pressure on businesses (Bui Ngoc Son, 2019). This encourages domestic
enterprises to promote technical innovation, increase productivity, improve quality, and diversify
products, increasing the supply of goods and creating favorable conditions for export promotion.
Besides, in the context of advancing science and technology, a highly qualified labor force will
gradually replace unskilled labor. Therefore, when considering this factor, it is necessary to
consider both sides: quantity and quality, so that results will be reflected in a complete and
accurate manner. Clearly, the size of the population of the exporting country has a positive effect
on the export turnover.
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- Second, a large population means a large consumer market. This means that the
production and supply of goods mainly serve domestic consumption needs. Export activities will
receive less attention. That is, export activities in general and agricultural exports in particular
will most likely be constrained by the large population size. From this perspective, large
population size has a negative impact on export turnover. Thus, in theory, the exporting country's
population can have a positive or negative impact on the export value of agricultural products of
a country.

 The population of the importing country

Since agricultural products are considered essential goods, an increase in the size of the
population of the importing country means an increase in demand for agricultural products
(Linnemann, 1966). This also causes certain impacts on agricultural product exports. However,
whether the population size of the importing country has a positive or negative effect on the
agricultural exports of the exporting country depends on the quality of the labor source of that
country. Firstly, an increase in population size also means an increase in demand, which causes
an increase in the import demand for goods, or an increase in the export turnover of the exporting
country. Second, an increase in population also means an increase in the importing country's
labor force. This means that the production capacity of the importing country increases, leading
to an increase in the scale of goods in general and agricultural products in particular to meet
domestic consumption demand. At that time, the demand for importing agricultural products will
decrease, which means that the export turnover of agricultural products of the exporting country
will decrease.

 Total agricultural land area of the exporting country

This is the area of land used for agricultural production of a country. The area of
agricultural land not only determines the scale of domestic production but also affects the
agricultural import and export strategy of that country. When the area of agricultural land
increases, the scale of agricultural production is expanded, thereby, the output of agricultural
products is increased, raising the supply of agricultural products for export and reducing the
demand for imported agricultural products. Thus, for the exporting country, the area of
agricultural land has a positive relationship with the export turnover of agricultural products.
However, while studying this factor, it is essential to consider it in the current context, where the
urbanization process is taking place widely, making the possibility to increase the total arable
land very difficult. Furthermore, the increase in total agricultural land area has different impacts
on different types of agricultural products, depending on the suitability of each type of
agricultural product with each type of arable land (Ngo Thi My, 2016).
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 Total agricultural land area of the importing country

Similar to the exporting country, the agricultural land area plays an important role in the
agricultural production of the importing country (Ngo Thi My, 2016). For the importing country,
if the scale of agricultural land is large, it means the scale of agricultural production is large,
helping to produce a larger output of agricultural products. At that time, the demand to import
agricultural products from other countries decreases, which means that the export turnover of
agricultural products of the exporting country decreases. In brief, the agricultural area of the
importing country has a negative impact on the export turnover of agricultural products of the
exporting country.

 The quality of agricultural products

The quality of agricultural products has a great impact on the export turnover of the
exporting country. Because the quality of agricultural products is considered as a barrier to the
market entry of agricultural products, especially in large and difficult markets such as the EU,
Japan, and the United States... Besides, globalization encourages countries to make efforts to
improve the quality of agricultural products, thereby enhancing their competitiveness against
other competitors. In summary, there is a positive relationship between the quality of agricultural
products and the export value of agricultural products of the exporting country (Wei et al., 2012).

 Prices of agricultural products on the world market

The price of exported agricultural products has a great impact on domestic production,
thereby affecting the import and export turnover of a country. If a country has an advantage in
the production and export of agricultural products, that country will aim at agricultural exports to
earn foreign currency for domestic socio-economic development. For agricultural exporting
countries, high prices of agricultural products in the international market will arouse the desire to
export agricultural products, thereby increasing export turnover. Conversely, if the price of
agricultural products is low, it will reduce the export turnover of agricultural products (Flawewo
and Olakojo, 2010).

 Inflation
Inflation (in the exporting country), meaning a decrease in the purchasing power of the
local currency, is likely to cause a certain impact on the export turnover of goods in general and
agricultural products in particular. Rising inflation causes the prices of goods in general and
agricultural products in particular to increase in the domestic market. This will reduce the
competitiveness of domestic enterprises, thereby affecting the export turnover of agricultural
products. When inflation decreases, domestic commodity prices fall, leading to an increase in
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agricultural the export turnover. Thus, inflation negatively affects export turnover of goods in
general and agricultural products in particular (Sevela, 2002).

 Infrastructure for export activities

The infrastructure for export activities includes a logistics system, banking system,
insurance system, goods quality inspection, etc. In which, the modern logistics system will
reduce loading and unloading time, simplify delivery procedures as well as ensure the safety of
exported goods, thereby increasing export turnover, especially for agricultural products whose
quality is greatly affected by storage conditions and delivery time. In addition, the development
of the banking system allows exporters to make payments and mobilize capital more
conveniently. Along with that, the system of insurance and quality inspection allows export
activities to be carried out in a safer way, and at the same time reduces damage when risks occur.
Thus, the modern export infrastructure will create more favorable conditions for the export of
goods, especially the export of agricultural products (Robert, 1994).

 Comparative advantage
Comparative advantage is a fundamental requirement in international trade. A country's
comparative advantage ranges from advantages in resources such as land, labor, mineral
resources, and capital to advantages derived from government policies and business operations.
Making good use of advantages will help countries improve their competitiveness in the
international market, thereby increasing the export turnover of goods, including agricultural
products (Balassa, 1965, 1975, 1977).

 Science and technology

In production, the presence of science and technology contributes to both increasing the
output and improving the quality of products to meet the increasing demand of consumers.
Science and technology directly increase labor productivity, reduce production costs, increase
the proportion of intellectual capital in products, and increase the diversity of products. In
agriculture, the research for new varieties of plants and animals or the invention of new
production and processing technologies have created agricultural products with higher
productivity and quality. These factors play an important role in improving the competitiveness
of products in the international market, thereby directly affecting the import and export results of
a country. Evidently, science and technology is a factor that has a strong impact on a country's
agricultural product exports.

 Export promotion/management policy

Government policies of exporting countries that have a direct or indirect impact on the
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export performance of that country may include:

- Tariff and non-tariff policy
Barriers to international trade include tariff and non-tariff measures. An increase in
import tax or a higher standard of imported goods in general and of agricultural products, in
particular, will have the effect of reducing a country's export and import turnover. On the
contrary, when these barriers are reduced (i.e. countries participate in free trade areas, sign
economic cooperation agreements, reduce taxes, provide flexible standards, etc.) it will lead to
an effect of boosting exports) (Hatab et al., 2010).
- Exchange rate policy
Exchange rate is the price of one currency compared to another. In essence, the impact of
exchange rate policy on exports is the impact of exchange rate changes on exports. The exchange
rate directly affects the price of exports - an important factor in determining market demand. As for
the volume of exported goods, when a country's domestic currency depreciates relative to other
foreign currencies, the price of exported goods in the value of foreign currency will decrease, then
the demand for this good will increase, causing the volume of exports to increase (Krugman,
1996). Conversely, if the domestic currency depreciates relative to the foreign currency, it will
cause export output to decrease. For export turnover, the extent and tendency of impact of the
exchange rate policy on export turnover depends on the price elasticity of export demand. If the
demand for goods is price elastic, an increase in the value of foreign currency will cause the total
export value measured in the value of foreign currency to increase. If the demand for goods is
inelastic, an increase in the exchange rate will cause a decrease in exports in the value of foreign
currency. The price elasticity of demand is varied across different groups of goods. Therefore, the
impact of the exchange rate will also be uneven across export categories. Besides, the exchange
rate also affects the supply of export goods. When the exchange rate changes causing the revenue
of enterprises to increase, the decrease in input costs will promote the expansion of production and
increase the supply of goods for export. In some specific situations, when the exchange rate
fluctuates, exporters have to spend some extra costs to hedge against risks, which reduces
motivation for export. However, if the enterprise stops exporting due to exchange rate risk, it will
have to bear the cost of exiting the market. Thus, exchange rate fluctuations cause unclear impacts
on commodity exports.

 The distance between the two countries

The distance between the two countries includes both the geographical distance and the
discrepancy in the level of development (level of socio-economic development, level of science
and technology, ...).
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- Geographical distance
The geographical distance between the two countries will directly affect the freight
charges (Tinbergen, 1962) as well as the risks in the transportation of goods, especially
agricultural products. The longer the distance between two countries, the greater the
transportation cost, the longer the delivery time, affecting the quality of the goods. Particularly
for agricultural products, whose quality is greatly affected by transportation time and storage
conditions. Therefore, the geographical distance between two countries has a huge impact on a
country's agricultural exports.
- Development gap
The gap in the level of development can attract or hinder import and export activities
between the two countries (Dao Ngoc Tien, 2008). Two countries with the same level of
development are deemed to have similar needs and tastes for goods and quality requirements.
Therefore, the goods of one country will meet the needs of the other country. Clearly, this is a factor
that facilitates exports. On the contrary, if a big gap exists between the two countries, it will be
difficult or impossible for the goods of one country to enter the other one, reducing the export
turnover.
Besides the two factors mentioned above, there are many other factors that also cause
indirect effects on trade exchanges between countries such as culture, history, political
institutions, etc. through production relations, affecting export supply and through consumer
tastes, affecting export demand. Thus, the impact of these factors is often unclear on a
country's exports.

 Openness of the exporting country's economy

Economic openness is the result of the implementation of a country's foreign trade policy,
which is calculated as the ratio of total import and export turnover to GDP. Foreign trade policy
in the direction of liberalization will lead to an open economy that helps increase the scale of
commodity exports. Thus, the openness of the economy has a positive impact on the export of
goods in general and agricultural products in particular (Rahman, 2009).

 International economic relations

In the context of international economic integration, international economic relations
have a great influence on the import and export activities of goods in general and agricultural
products in particular (Rahman, 2009). When exporting goods to a certain country, it means
that the goods enter another market and the exporter will face barriers such as import taxes,
import quotas, etc. Whether these barriers are tightened or loosened depends a lot on the
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bilateral economic relationship between the exporting country and the importing country.
Meanwhile, the current trend of globalization has facilitated many economic alliances to
form at different levels such as ASEAN, APEC, EU, etc. Many bilateral and multilateral trade
agreements between countries and economic blocs have been signed aiming at reducing tariffs
among the participating countries in order to promote trade relations between the countries. If the
exporting country and the importing country have a good relationship, it will create a favorable
premise for the increase in export turnover of goods in general and agricultural products in
particular of the exporting country. Therefore, joining economic unions or signing
bilateral/multilateral free trade agreements is considered one of the measures to help increase a
country's export turnover.
4. Conclusion
Up to now, there has been no work using the gravity model to evaluate the impact of the
free trade agreement between Vietnam and the Eurasian Economic Union on Vietnam's
agricultural exports to the EAEU market. In fact, the gravity model has been used relatively
commonly, and it is considered as a superior method in analyzing and evaluating the impact of a
free trade agreement on the international trade of a country. Therefore, it is practically significant
to use this model to study and evaluate the impact of the free trade agreement between Vietnam
and the Eurasian Economic Union on Vietnam's agricultural exports to the EAEU.
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Education India.
2. Martinez-Zarzoso I. and Nowak-Lehmann (2003), Gravity Model: An Application to
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