Five Years of EVFTA: US$300 Bln in Trade and Challenge of Compliance

For five years of its implementation, the EU-Vietnam Free Trade Agreement (EVFTA) has become a strong driver of Vietnam’s market expansion and strengthened its position as a leading manufacturing and trading hub in the region. However, together with the growth in export opportunities, Vietnamese businesses now face the critical challenge of “playing by the rules” to fully access tariff incentives while complying with the European Union’s strict standards.

Impressive results

From the moment it came into effect, the EVFTA provided a strong boost to bilateral trade. Over the past five years, total trade between Vietnam and the EU reached US$300 billion, a remarkable figure equal to 40% of the cumulative trade volume recorded in the previous three decades. Vietnam’s exports to the EU increased by 60%, making the country the EU’s largest goods trading partner in ASEAN and the 16th largest globally. Vietnam’s trade surplus with the EU reached a record US$35.2 billion in 2024, the highest among all free trade agreements the country has participated in.

Europe remains the key market for Vietnamese leather and footwear

The benefits of the EVFTA are most evident in key export sectors, where the elimination of roughly 99% of tariff lines has provided a direct competitive edge. For example, shirt export tariffs to Germany dropped from 12% to zero, while roasted coffee now enjoys a 0% tariff instead of the previous 7-11%. The wood industry saw 90% of its products exempted from tariffs early on, helping Vietnam capture more than 10% of Europe’s wooden furniture market.

One of the clearest indicators of the agreement’s success is the growing ability of Vietnamese enterprises to make use of preferential treatment, as shown in the rising rate of EUR.1 Certificates of Origin utilization. According to Trinh Thi Thu Hien, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, the share of goods granted EUR.1 certificates rose from 14.8% in 2020 to 35.1% in 2025, with corresponding export values increasing from US$2.66 billion to US$18.13 billion.

Several sectors have achieved exceptionally high rates of preferential tariff utilization: tea (99.2%), seafood (84.4%), and footwear (nearly 100%). European partners have also strengthened their confidence and expanded cooperation. A EuroCham survey conducted in the second quarter of 2025 showed that the share of European businesses viewing tariff reductions as a key competitive advantage had risen from 29% to 61%.

Challenges and solutions

The main challenge now lies in rules of origin compliance, as many Vietnamese exports still rely heavily on imported materials and cannot fully meet intra-regional content standards. At the same time, businesses must overcome increasingly strict “soft barriers,” including new technical and environmental standards under the European Green Deal.

According to Phan Thi Thanh Xuan, Vice Chair and Secretary General of the Vietnam Leather, Footwear and Handbag Association (Lefaso), the EU will introduce additional regulations, including the Corporate Sustainability Due Diligence Directive (CSDDD) and sustainability reporting requirements. These mandatory standards present significant challenges for Vietnamese exporters, especially in the leather and footwear sectors. The new rules require transparent supply chains, sustainable product design, and greater social responsibility, forcing enterprises to adopt new technologies and shift to green production to maintain their position in the EU market. She also cautioned that Vietnam’s first-mover advantage is narrowing as the EU continues to expand its free trade agreements with other partners. This development requires Vietnamese businesses to adapt quickly, fully leverage the early benefits of the EVFTA, and preserve their competitive edge.

To overcome these barriers, Vietnam needs a comprehensive strategy that focuses on strengthening domestic capacity and restructuring supply chains. The most fundamental solution is to develop local input sources, reduce dependence on imports, and thereby meet rules of origin requirements. Businesses should reinvest profits in materials, design, research and development (R&D), and quality management, enabling Vietnamese products to gradually move into mid- and high-end market segments while building stronger brand credibility.

Encouragingly, many companies have begun to shift their mindset, viewing sustainability standards not as obstacles but as opportunities to upgrade capabilities and gain new advantages. “We are developing a green strategy aimed at achieving Carbon certification to stay ahead of the sustainable consumption trend,” said Ngo Minh Phuong, CEO of Viet Truong Co., Ltd.

From a policy perspective, Trinh Thi Thu Hien said that regulators are rolling out a set of synchronized measures. These include creating a more transparent legal framework, organizing hands-on training sessions for businesses, and digitalizing administrative procedures, especially the Certificate of Origin (C/O) issuance process. The adoption of a one-stop electronic declaration system has shortened processing times, enhanced transparency, and significantly reduced costs.

Sharing the same view, Do Ngoc Hung, Vietnam’s Trade Counselor in the U.S., said that the shift from price-based competition to quality- and brand-based competition is inevitable. He advised businesses to take full advantage of the EU market to mitigate the impact of global trade fluctuations, particularly as the U.S. continues to adjust its reciprocal tax policies.

Clearly, the first five years of the EVFTA marked a golden period of tariff reduction, but the road ahead will be the real test of institutional resilience and compliance capacity. The growth of Vietnamese exports in Europe will depend on how effectively domestic enterprises reform and adapt to this new era.

By Huong Ly, Vietnam Business Forum