Israel and Vietnam have confirmed the signing of a new free trade agreement (FTA) between the two nations that is set to significantly increase trade on both sides.

According to forecasts from Vietnam's Ministry of Industry and Trade, the deal will increase bilateral trade by nearly 50 percent to around $3 billion a year. This follows on from an 18 percent increase in year-on-year trade seen in 2022, which highlights the growing relationship between the countries.

The deal was agreed earlier this year following seven years of negotiations. It is the first FTA Vietnam has signed with a west Asian nation and the first between Israel and a Southeast Asian partner. 

It is expected to remove tariffs on 86 percent of Vietnamese exports to Israel, as well as 93 percent of duties on goods heading in the other direction, in addition to strengthening cooperation in areas such as investment, services, digital transformation and technology.

Major exports from Vietnam to Israel include smartphones, footwear and seafood, while electronics and fertilizers are among Israel's biggest exports to Vietnam, Reuters noted.

The Vietnamese government added that the deal would "facilitate Vietnam's exports of its products, not only to Israel, but also pave the way for Vietnamese products to access other Middle East, North African and southern European markets".

Meanwhile, Israel's Economy Ministry said the FTA would give "a competitive edge and facilitate activity" for Israeli exporters to Vietnam.

Vietnam has made trade agreements a central part of its economic strategy in recent years as it aims to position itself as a key manufacturing economy. Since the 1990s, it has signed 16 bilateral and multilateral trade agreements, and is a member of regional pacts including CPTPP and RCEP.