EU – Vietnam FTA - golden opportunities for an industrial breakthrough
Last December, Department of Trade Promotion (Ministry of Industry and Commerce) held a seminar on ‘Free Trade Agreement EU - Vietnam (EVFTA)’ to introduce various opportunities from the EVFTA for the industrial development trend in Vietnam until 2025.
The negotiations of EVFTA, which was concluded at the end of 2015, is expected to be signed in 2017 and to officially become effective at the beginning of 2018. The agreement includes the following areas: customs and facilitation of trade relations, services and investment, government spending, sustainable development, cooperation and capacity development, etc. It also offers new and better approaches toward investment dispute protection and settlement. Therefore, this can be considered as the highest level of commitment that Vietnam has made in the FTAs signed to date.
With such high standard, EVFTA is expected to be a vital boost which would foster trade activities between Vietnam and EU, especially for the key products of the parties such as textile, footwear, agricultural and fishery products in Vietnam and equipment, automobiles, alcoholic beverages in the EU. Once the EVFTA become effective, approximately 86% of EU tariff lines on Vietnamese products will be eliminated and this figure will raise to 99% after seven years. Vietnamese textiles, footwear and seafood products will enjoy no import duties within the first seven years after the agreement takes effect. In return, Vietnam will remove 65% of its import duties on EU items and is aiming to eliminate all tariffs over a period of 10 years.
EVFTA is not all about tariff preferences, it is also an effective mechanism to improve the quality and images of Vietnamese exports through its hygiene and safety measures, technical requirements for trade, etc. Deputy Minister of the Ministry of Industry and Commerce – Tran Quoc Khanh emphasized that the FTAs between Vietnam and the developed partners from the EU would widen the doors for Vietnam to access modern technology and absorb advanced management skills in order to increase the labor productivity and the quality of domestic products.
The European Union is a crucial investor for Vietnam with 1100 projects in force, $23 billion of the total registered capital, equivalent to 8% of the total registered capital in Vietnam. With the EVFTA to take effects, these figures are expected to surge and contribute to an industrial breakthrough in Vietnam.
Sources: 1, 2