The European Union − Vietnam Free Trade Agreement (EVFTA): an extraordinary advantage for Vietnam and the EU
EVFTA, which is heading to the European Council and Parliament for the final approval necessary for it to come into force, brings extraordinary advantages and benefits for Vietnam and the EU. Vietnam is one of the fastest growing economies in the region, with 6.8% growth in GDP in 2017 and 7.3% in Q1 2018 – the highest in the last 10 years. The European Commission has described the EU-Vietnam FTA (EVFTA) as the most ambitious free trade deal ever concluded with a developing country.
Vietnam is one of the 10 members of the Association of Southeast Asian Nations (ASEAN) and has become the EU’s second-most important trading partner in the region after Singapore. In turn, the ASEAN represents the EU’s third-largest trading partner outside Europe (after the US and China). Hence, getting better access to the ASEAN market for its exporters has become a priority for the EU.
The biggest impact will be the elimination of customs duties on goods traded between the EU and Vietnam. 65% of import duties from the EU to Vietnam will be eliminated immediately, with the remainder being removed over the next 10 years.
Vietnam’s companies rely heavily on export to the EU (footwear, textiles and clothing along with other products), and the country is a massive recipient of Foreign Direct Investment from the EU (a flow of €1.6 billion in 2017, for a total stock of €19.2 billion). The EVFTA opens up better opportunities for EU multinationals to do direct investment, through mergers & acquisition or greenfield projects. This makes the trade agreement even more desirable for both parties.
The EU shall enjoy better market access in the Vietnamese market which will enable them to bid for public contracts, for instance in infrastructures, which are worth billions of Euros. The EVFTA will reduce tariffs on goods by 99% bilaterally, as a matter of fact, many Vietnamese products have been already enjoying trade preferences offered unilaterally by the EU under the General Scheme of Preferences (GSP).News Region Vietnam