Developing Vietnam-EU Cooperation

According to statistics, in the last 11 years (2000 - 2011), Vietnam - EU trade turnover increased by 5.9 times, from US$4.1 billion in 2000 to US$24.29 billion in 2011; Vietnam's exports to the EU increased by 5.9 times, to US$16.5 billion and imports from the EU increased by 5.9 times, to US$7.74 billion. Two-way trade turnover between Vietnam and the EU in the first quarter of 2012 was over US$6 billion, up 22.6 percent compared to the same period in 2011. The main products imported by Vietnam from the EU in the first three months of 2012 are products in demand on the domestic market or that cannot be produced here such as fertilizers, chemicals, pharmaceuticals, dairy ... mainly from Germany (US$472 million), France (US$231 million), Italy (US$222 million) and the Netherlands (US$194 million).

 

On investment, the first quarter saw 6 out of 27 EU member states establish new investment projects in Vietnam, including: Netherlands, 3 projects with registered capital of US$46 million; France, 5 projects with total registered capital of US$21 million; Germany, 3 projects with a total capital of approximately US$1.3 million; and Spain, Cyprus and Denmark each have one new project.

 

According to Dr Doan Duy Khuong, Vice President of VCCI, the EU has always been an important partner, in both political and economic and trade relations. The EU is the market where Vietnam exports surplus in recent years and this potential market is expected to grow more in the near future.

 

Deputy Director Nguyen Duc Thuong of the European Market Department of the Ministry of Industry and Trade stressed that Vietnam-EU bilateral trade relations in recent years have had significant developments. The EU is the fourth biggest investor in Vietnam in 2011 with a commitment of US$1.77 billion, equivalent to more than 12 percent of the total foreign direct investment (FDI) in Vietnam. In general, European investors have the advantage of technology, thus contributing to creating a number of new industries and new products with high technology content. In the context of the global recession and the debt crisis still posing potential risks to some countries in Europe, the two sides will continue to develop trade relations. There are now 22/27 European Union countries having investment projects in Vietnam, including the Netherlands, ranking first with 157 projects with total registered investment capital of US$5.78 billion, followed by France at US$4.3 billion, and the UK.

 

About restrictions in investment cooperation between Vietnam and the Netherlands, and Vietnam-EU, Dr Doan Duy Khuong emphasized that the Netherlands in particular and Europe in general has long been a familiar customer of Vietnam. The Netherlands’ main projects are in areas such as telecommunications, financial, office for lease and retail. However, this cooperation is not commensurate with the potential and desire of both parties. By February 2011, there had been only one new Vietnam investment project to the Netherlands. Vietnam's exports to the EU market still face many challenges such as lack of information, and a number of Vietnamese products being subject to anti-dumping duties (leather shoes and bicycles). It is these difficulties that limited the export of these items.

 

In fact, Vietnam now has only 42 percent of the goods it exports to the EU entitled to 0 percent tax (including the preferential tariff items), while the proportion of Malaysia ranges from 80-85 percent.

 

In addition, Vietnam's investment to European countries is limited, only concentrated in a few countries such as the Netherlands, Czech Republic and Germany. In particular, Vietnam has 10 valid projects in the Federal Republic of Germany with capital of US$2.24 million, one project in the Netherlands with a capital of US$1.6 million, two projects in Poland with capital of more than US$8 million, and three projects in the Czech Republic with capital of US$5.3 million.

 

To overcome this situation, according to experts, Vietnam and the EU should immediately promote the process of negotiating a bilateral free trade agreement (FTA). Currently, Vietnam and the EU are promoting the bilateral FTA negotiations. The two sides have agreed reference and declared to launch the official commercial activity of Vietnam and EU in June 2012. This agreement will create favourable conditions for both sides. If the FTA takes effect, the percentage of Vietnamese goods to the EU receiving 0 percent tax rate will rise to 90 percent. FTA will also contribute to promoting European investment in Vietnam in the coming time.

 

In addition, on 27 June 2012, Vietnam and the European Union signed a new Partnership and Co-operation Agreement (PCA), which replaces the EC-Vietnam Co-operation Agreement signed in 1995 and provides a comprehensive new legal framework, expanding cooperation between Vietnam and the EU in the years to come in the direction of equal partnership, long-term and comprehensive cooperation, for peace and development of the region and the world. This event will open up many opportunities and the potential development of cooperation between Vietnam and the EU, and the Netherlands in particular.