EVFTA - Freest and Fairest Agreement

2:20:42 PM | 11/7/2019

Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), underlined this statement regarding the historic event of officially signing the EU - Vietnam Free Trade Agreement (EVFTA) in Hanoi.

Dr. Loc stressed “We consulted business opinions and found on consensus that this is the best agreement: the freest and the fairest pact. These are the two most important words in world trade.”

Remarking on the importance of entering new-generation free trade agreements, he said that Vietnam joined two key FTAs in the first six months of this year. Specifically, on January 1, 2019, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to which Vietnam was a signatory, officially took effect, and on June 30, 2019, EVFTA and IPA pacts were inked. So, we have got one pact to cross the Pacific and the other two to bring us closer to the Atlantic. This is the journey to conquer the Atlantic and the Pacific.

“I think this is an East-West dialogue between two cultures, typically between developed countries and developing countries. I think this agreement is significant because it is complementary and supportive, benefiting 600 million people in Vietnam and the EU and fills the development divide between the EU and Vietnam in the future,” he said.

In the perspective of business support, the VCCI President said that, within this framework, small and medium-sized enterprises (SMEs) are prioritized entities. As in Vietnam, 98% of businesses in the EU are SMEs. So, if SMEs were not the key players of this deal, we would fail. For that reason, it is essential to support SMEs to enter the market.

By industries that benefit from EVFTA, Dr. Loc said, in addition to garment and textile, footwear, agricultural products and woodworks, Vietnam still has a wide range of commodities for the EU market, especially agricultural products. “In our view, boosting agricultural and aquatic exports to the EU is not only economically important for Vietnamese farmers who earn less than US$1,000 a year or developing garment and textile and footwear industries will open up opportunities for tens of millions of jobs,” he analyzed.

EU businesses are expected to invest more in Vietnam, especially in infrastructure in the form of public-private partnership (PPP). Powered by high levels of management and technology, they can help Vietnamese partners. At the same time, the Government of Vietnam and the EU will support SMEs.

EVFTA is the best agreement that Vietnam has ever achieved, meeting both requirements: Freest and fairest, he noted. Accordingly, signing EVFTA, beside ensuring free and fair trade principles, the two sides also have a common vision of sustainable development. Presently, Vietnam is aiming for a new-generation foreign direct investment (FDI) that features better quality, higher technology, greater value added and more environmental friendliness. Therefore, EVFTA is an opportunity for EU businesses to do this. Vietnam and the EU both expect great benefits that EVFTA brings to both sides.

Indeed, EVFTA is both a pressure and a motivation for institutional reforms enabling businesses, particularly SMEs, to grow strongly and improve competitiveness. Besides, the Government needs to have substantial reforms, support for the business community because enterprises alone can hardly overcome these hardships. To address challenges, institutional openness is particularly important.

Moreover, they must improve personnel quality and corporate governance. Most importantly, they must find out specific information about the agreement so as to restructure their products, technology, partners and markets to successfully compete in the home market and gradually increase exports to the EU market.

“For Vietnamese businesses and economy, EVFTA and IPA with the highest standards will promote the second wave of reforms in Vietnam and this will be one of the first bricks to build institutions,” said the VCCI President.

Huong Ly