The EU-Vietnam Free Trade Agreement (EVFTA) is a free trade agreement between the European Union (EU) and the Socialist Republic of Vietnam. The EU-Vietnam Investment Protection Agreement (EVIPA) was also concluded, which is a bilateral investment agreement. [1] Previously, remanufactured products were considered “used” in Vietnam and were generally not approved for import. However, the text of the agreement allows the import of remanufactured products and will open up trade in high-quality products such as medical devices and auto parts for after-sales service. Vietnam can continue to restrict certain second-hand goods under most-favoured-nation (MFN) conditions. TUEFTA contains Vietnam`s commitment to the World Intellectual Property Organization (“WIPO”) as a means to prevent unauthorized access to creative works and to protect material exchanged over digital networks, including the Internet. In particular, Vietnam undertook to accede to the WIPO Copyright Treaty (1996) and the Performances and Phonograms Treaty (1996) within three years of the entry into force of CEFTA. According to reports, the Vietnamese government is working to finalize its internal procedures and the necessary documents to accede to the two treaties. TUEFTA also contains strict provisions on the protection of trademarks, patents, designs, plant varieties and data protection (five years) for pharmaceutical, biological and agrochemical products. Like the provisions of the World Trade Organization (WTO), the EVFTA is a comprehensive and beneficial agreement for Vietnam and the EU. The agreement “will abolish 99% of its import duties over a period of 10 years, and the EU will do the same over seven years.” Vietnam will levy 49% of its import duties on EU exports and phase out the rest over a 10-year period. EvFTA has created sustainable growth and mutual benefits in different sectors and is certainly an effective tool for balancing EU-Vietnam trade relations. Vietnam is making continuous efforts and progress to meet the high standards of the EVFTA and is currently offering more opportunities for foreign companies to enter the Vietnamese market.
Now is the time for foreign investors to implement their business and investment plans and take advantage of these incredible opportunities. As regards the regionalisation of supply chains, the EVFTA and the other free trade agreements signed by the EU with the major Asian economies, namely Japan, South Korea and Singapore, together offer the EU institutional flexibility to engage in the increasingly integrated intra-Asian market. In the textile sector, the EU`s fully liberalised exports to Vietnam under EVFTA allow it to gain an advantageous position in the export of luxury and technical textile materials to meet the growing demand of the Asian market. Immediately after the entry into force of the EVFTA, tariffs on 65% of EU exports to Vietnam and 71% of Vietnamese exports to the EU were lifted. For example, all EU textile exports to Vietnam are now subject to zero tariffs. Similarly, Vietnamese shrimp will become duty-free and rice will benefit from duty-free tariff quotas. However, tariffs on most major commercial goods on both sides will only be gradually lifted after 5-7 years. This is the case, for example, with EU vehicles and car parts, as well as Vietnamese shoes that are entering the market. Almost all tariffs – more than 99% of tariff items – will be abolished over the next 10 years. The remaining small number are partially liberalized through duty-free quotas. As a developing country, Vietnam liberalized about 65% of the value of EU exports, which corresponds to about half of the tariff items, when it entered into force. The remaining tariffs will be abolished over the next decade.
This is an unprecedented and far-reaching tariff abolition for a country like Vietnam, which demonstrates its quest for deeper integration and trade relations with the EU. Market access for EU service providers: Although Vietnam`s WTO commitments serve as a basis for services commitments in the EVFTA, Vietnam has not only opened additional (sub)sectors to EU service providers, but has also made deeper commitments than those set out in the WTO in order to provide the EU with the best possible access to the Vietnamese market. (Partial) Sectors that are not bound by the WTO but in which Vietnam has made commitments include interdisciplinary research and development (R&D) services; nursing, physiotherapists and paramedics; packaging services; Fair and exhibition services as well as building cleaning. If these meet international standards, Vietnam will have the opportunity to export high-quality services, which will lead not only to an increase in the value of exports, but also to the efficiency of exports, thus contributing to the improvement of the trade balance. The entry into force of the EUSFTA comes against a backdrop of growing global trade tensions with China. This, coupled with the current COVID-19 pandemic, has contributed to the growing trend of companies diversifying their supply chains, with Vietnam quickly becoming a major beneficiary. The EU is already Vietnam`s second destination (value) for goods. The EUVFTA will give new impetus to this important trade route and is an important step in providing Vietnamese EU investors and other global companies wishing to establish or further develop Vietnam-EU trade relations with the basis for establishing and maintaining fair and efficient trading conditions.
A historic new free trade agreement between Vietnam and the European Union entered into force on August 1, 2020. On June 8, Vietnam`s National Assembly overwhelmingly approved the agreements, with 457 lawmakers voting in favor of the free trade agreement and 462 in favor of the API. According to some Vietnamese newspapers, the agreements could enter into force in July. At the most basic level, the agreements between Vietnam and the EU will promote jobs and growth. The agreements will gradually remove most tariffs, regulatory hurdles and bureaucracy and are expected to create opportunities for EU entrepreneurs to do business and invest in Vietnam. UNCTAD, Will COVID-19 reverse the decline in trade in ICT goods before the pandemic? In addition, the positive outlook for trade between the EU and Vietnam is expected to lead to new demand in multimodal maritime transport (rail-ocean freight). The multimodal solution hitherto mainly conceptual Southeast Asia-Europe via China now seems more than likely to become a real offer on the market. DHL already offers a multimodal shipping link from Hanoi via China (Chengdu/Shenzhen) to Poland and Germany. Since February 2021, Nippon Express has also been offering China-Europe freight rail transport from Suzhou to Hamburg and Duisburg as well as China-Southeast Asia freight rail transport from Suzhou to Hanoi. European Commission, Guide to EU-Vietnam Trade and Investment Agreements Vietnam and the EU have set a timetable in which they have committed to liberalise all tariffs.
These commitments include a seven-year deadline for Vietnamese textile and footwear products. The sector`s exports reached about $9 billion in 2018. Since a large part of Vietnam`s exports to the EU are consumer goods such as clothing, textiles and footwear, the free trade agreement could significantly increase their trade volume. The EVFTA is seen as a model for the EU to continue to conclude free trade agreements with various ASEAN countries with the ultimate aim of concluding a free trade agreement from one region to another once there is a sufficient critical mass of agreements with the various ASEAN countries. [7] This process could take about 10 to 15 years. .