EU approved to sign a free trade agreement with Vietnam
On the 25th of June 2019, The European Council (EC) approved the decision to sign the Free Trade Agreement (EVFTA) and the Investment Protection Agreement (IPA) between the European Union (EU) and Vietnam. Both agreements will be signed on June 30th in Hanoi, according to the EC announcement.
EVFTA is the most ambitious free trade agreement ever signed by the EU with a developing country, which will eliminate 99% of customs duties between the two sides. 65% of taxes on exports from the EU to Vietnam will be removed as soon as EVFTA takes effect, while the rest will be gradually reduced in a period of 10 years. 71% of Vietnam’s export tax to the EU will also be cut out when EVFTA comes into effect and the rest is diminished over 7 years.
EVFTA will also reduce many of the existing non-tariff barriers to trade with Vietnam. The agreement is expected to result in new services in Vietnam and increase the order volume for EU companies from Vietnam, while IPA will strengthen the protection of the EU investment in Vietnam. EVFTA will also include important provisions on intellectual property protection, investment liberalization and sustainable development. In terms of sustainable development, EVFTA holds commitments to implement the International Labor Organization’s core standards, such as the freedom to join independent labor unions and ban the use of child labor, as well as UN conventions related to fighting against climate change or protecting biodiversity.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN), after Singapore, with a trade value of nearly 50 billion euros per year. Although EU investment in Vietnam is only 8.3 billion euros in 2016, more and more European companies are establishing in Vietnam recently. The main EU imports from Vietnam include telecommunications equipment, clothing and food. The EU mainly exports to Vietnam machinery, transport equipment, chemicals and agricultural products.
According to Prime Minister Nguyen Xuan Phuc, Vietnam will have a golden opportunity to gain further access to the market of 28 member countries. “EVFTA has a particularly important meaning for Vietnam, which is a great opportunity for Vietnam to be eligible for a deeper integration in the regional and global markets,” the Prime Minister stressed.