The Vietnam - European Union Free Trade Agreement (EVFTA) is expected to be signed later this year after the European Commission (EC) approves the pact.
Prime Minister Nguyen Xuan Phuc’s visit to Europe from October 14 to 21, 2018, opened new cooperation opportunities between Vietnam and the EU. During his official visit to Austria, Belgium, Denmark and the EU, he attended the 12th Asia - Europe Summit (ASEM 12) in Brussels and the Summit for Partnering for Green Growth and the Global Goals 2030 (P4G) in Copenhagen.
‘Golden opportunity’ to sign EVFTA
Since EVFTA negotiations were formally concluded three years ago, Vietnam and the EU have entered into a legal review of the agreement. Thus far, everything has come to maturity and the Prime Minister's visit is expected to complete final stages for the two sides to officially sign the pact in November in Brussels.
Prior to the Prime Minister’s tour, officials of the Ministry of Industry and Trade, especially Deputy Minister Tran Quoc Khanh, paid a working visit and attended a hearing in the European Parliament on the shortcomings of the draft agreement.
Earlier in June 2018, at a meeting with European Commissioner for Trade Cecilia Malmstrom in Brussels, Belgium, Vietnam and the EU agreed to split investment protection and investor-state dispute settlement (ISDS) mechanism from EVFTA into a separate agreement called Investment Protection Agreement (IPA). The two sides also agreed on the full legal review process of EVFTA and the content of the IPA.
With such moves, it was no coincidence that, at the meeting with Mr Bernd Lange, Chairman of the European Parliament Committee on International Trade (INTA), in Hanoi in June, Prime Minister Phuc said this was a ‘golden opportunity’ to sign the EVFTA and hoped the two sides would accelerate the signing process.
Taking advantage of opportunities
For its part, this is one of the most comprehensive and ambitious trade agreements the EU has ever signed with a developing country like Vietnam. Perhaps, after Singapore, this is the second agreement that the EU signed in the ASEAN region and expected to strengthen the bilateral relationship between Vietnam and the EU.
Minister of Industry and Trade Tran Tuan Anh said, the EVFTA is a high-quality agreement as it eliminates tariff barriers at the highest level and brings the highest benefit for Vietnamese companies, industries and products. Accordingly, nearly 99 per cent of goods, Vietnamese products enjoy preferential taxes.
For example, agricultural products, seafood, sugar, honey, furniture, textiles, leather shoes and automobiles enjoy tariff preferences from Europe. Vietnam’s export growth to the EU will be driven by this agreement. The export is expected to grow by 4 - 6 per cent. The value will rise by US$19 billion in 2019 and by US$70 billion in 2028.
“Services, finance, automobile, manufacturing, processing, information technology, high technology, foodstuff and agricultural products will be strongly invested by the EU in Vietnam and the country needs to make comprehensive investment and development,” said Minister Tran Tuan Anh.
But taking advantage of EVFTA is not easy because about 97 per cent of Vietnamese enterprises are micro or small, typical of having limited resources and having weak access to information.
| EVFTA is expected to positively impact Vietnam's export growth to the EU. The export is hoped to grow by 4 - 6 per cent. The value will rise by US$19 billion in 2019 and by US$70 billion in 2028. |
In the past two years, the Vietnam Chamber of Commerce and Industry (VCCI) has coordinated with ministries, sectors and localities to spread communications on this matter like summarising each business-related EVFTA chapter to enable them understand more about this pact, review the compatibility of Vietnam's legal system with the major EVFTA institutional commitments.
Meanwhile, some associations such as textile, footwear and seafood clubs and many big corporations have actively prepared to explore opportunities and challenges with the EU market, seek solutions to improve product quality, and promote competitive advantages to utilise most EVFTA benefits. Nevertheless, many small and medium enterprises remain indifferent to this agreement. Recently, Vietnamese seafood was booked a “yellow card” by the EU, a very dear lesson for Vietnamese companies.
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