EU set to lift duties on most Vietnamese exports
EU set to lift duties on most Vietnamese exports
Nearly all exports of Vietnam to the European Union will have their customs duties removed shortly after the European Union-Vietnam Free Trade Agreement (EVFTA) is signed later this month, according to the Ministry of Industry and Trade.
Minister of Industry and Trade Tran Tuan Anh told the local media that the EVFTA and the European Union-Vietnam Investment Protection Agreement will be signed in Hanoi on Sunday, June 30.
The trade pact is expected to boost trade between Vietnam and the bloc and expand the country’s export markets, according to the Cabinet member.
Given their commitment to abolishing import duties for 100% of tariff lines, the pact will present opportunities to raise exports of Vietnamese goods, such as textiles and garments, footwear and agricultural and aquatic products.
Once the trade pact comes into force, the European Union will remove some 85.6% of tariff lines immediately, equivalent to 70.3% of Vietnam’s export turnover to the bloc.
After seven years, the European Union will abolish import duties on 99.2% of tariff lines, equal to 99.7% of the country’s export turnover.
Meanwhile, Vietnam has committed to slashing 48.5% of tariff lines, equivalent to 64.5% of EU imports. A decade later, the figure will rise to some 98.3% of tariff lines, or 99.8% of EU imports.
For the remaining tariff lines, Vietnam will follow the tariff quota from the World Trade Organization.
The European Commission noted in a statement on Tuesday that the free trade agreement is expected to bring unprecedented benefits to European and Vietnamese companies, consumers and workers, while promoting respect for labor rights, environmental protection and the fight against climate change under the Paris Agreement.
The commission’s president, Jean-Claude Juncker, stated that he welcomed the decision of the EU Member States. Vietnam is the second Southeast Asian country, after Singapore, to sign a free trade agreement with the European Union, allowing greater engagement between Europe and the region.
“It is also a political statement by two partners and friends standing together for open, fair and rules-based trade,” he said.
According to Commissioner for Trade Cecilia Malmström, Vietnam is a vibrant and promising market of more than 95 million consumers, and both sides have much to gain from stronger trade relations. Beyond the clear economic benefits, this deal also aims to strengthen respect for human rights and protect the environment and workers’ rights.
“I welcome Vietnam’s engagement in the process so far; their recent ratification of the International Labor Organization (ILO) Convention on collective bargaining is an excellent example of how trade agreements can encourage higher standards,” she added.
The agreement also contains specific provisions to remove technical obstacles, such as those in the car sector, and will ensure that 169 traditional European food and drink products recognized with Geographical Indications are protected in Vietnam.
Thanks to the agreement, EU companies will also be able to participate in bids for procurement tenders in Vietnam on equal footing with domestic companies.
In addition to offering significant economic opportunities, the European Union and Vietnam have agreed to strong sustainable development measures. This includes a commitment to adopting the Paris climate agreement.
The agreement also commits both sides to respecting and effectively enforcing the principles of the ILO in terms of fundamental workers’ rights. To this end, Vietnam has recently ratified the ILO Convention on collective bargaining and has notified the European Union of its intention to ratify the two outstanding fundamental ILO conventions by 2023 at the latest.
Vietnam is also in the process of reinforcing its labor legislation. The agreement also establishes dedicated platforms for the European Union and Vietnam to involve civil society in the execution of these commitments.
The investment protection agreement includes modern rules on investment protection that are enforceable through the new Investment Court System and ensures that the rights of governments on both sides to regulate in the interest of their citizens are preserved.
It will replace the bilateral investment agreements that 21 EU Member States currently have in place with Vietnam, putting in place new legal guarantees to prevent conflicts of interest and increase transparency.
Vietnam is the European Union’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) region after Singapore, with trade worth EUR49.3 billion for goods and over EUR3 billion for services. While EU investment stock in Vietnam remains modest, standing at just EUR6 billion in 2017, an increasing number of European companies are being established in the country to set up a hub to serve the region.
The main EU imports from Vietnam include telecommunications equipment, footwear and textiles, furniture and agricultural products. The European Union mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and food and beverages.
The agreements reached with Vietnam, alongside those signed recently with Singapore, help pave the way for a future region-to-region agreement with the entire ASEAN.
