EU-Vietnam free trade deal gets green light from trade committee
EU-Vietnam free trade deal gets green light from trade committee
The European Parliament’s Committee on International Trade (INTA) on Tuesday backed the free trade and investment protection agreements between the European Union and Vietnam, paving the way for the full Parliament to cast its final vote in February.
The committee gave its consent to the free trade agreement by 29 votes, six votes against and five abstentions and recommends that the European Parliament plenary should do the same.
The agreement will remove virtually all tariffs between the two parties in ten years. It will protect emblematic European products, and allow Europe to access the Vietnamese public procurement market.
The agreement is also an instrument to protect the environment and further social progress in Vietnam, including in labor rights, the resolution accompanying the consent decision states.
The trade committee’s demands from Vietnam, including on labor and human rights, as well as on the mechanism ensuring the enforceability of the sustainability clauses, was adopted by 29 votes for, nine against and two abstentions.
“With the consent to this trade deal with Vietnam, the trade committee is giving a positive signal to the ASEAN region and the rest of the world at a time when trade tensions are rising,” said Rapporteur Geert Bourgeois in a statement after the vote.
The deal is “a win-win situation.” In absolute terms Vietnamese exports of goods and services to the EU will increase by 15 billion euros while EU exports to Vietnam augment by 8.3 billion euros by 2035, according to Bourgeois.
He added, “Besides its geopolitical and economic importance, I am convinced that this agreement will accelerate the reform process within Vietnam. The ratification will strengthen further progress on labor and environmental standards and the respect for human rights.”
The main elements of the trade include the removal of customs duties. Up to 65% of EU exports to Vietnam will be immediately duty free, with the rest – including motorcycles, cars, pharmaceuticals, chemicals, wines, chicken and pork – gradually liberalized over ten years.
Around 71% of Vietnamese exports to the bloc will be duty free on day one, with the rest catching up in seven years. Duty-free Vietnamese exports of sensitive agricultural products, such as rice, garlic or eggs, will be limited.
Non-tariff barriers will be eliminated in the automotive sector, export and import licensing, and customs procedures. Vietnam accepted the “Made in EU” marking, beyond national markings of origin, for non-agricultural products.
With regards to geographical indications, a total of 169 emblematic EU products, such as Parmigiano Reggiano cheese, Champagne, or Rioja wine, will enjoy protection in Vietnam, as will 39 Vietnamese products in the EU.
EU firms will have improved access to business, environmental, postal and courier, banking, insurance and maritime transport services in Vietnam.
These firms will be able to bid for contracts with Vietnamese ministries, State-owned enterprises, and the governments of Hanoi City and HCMC.
There are legally-binding rules on climate, labor and human rights. The agreement commits Vietnam to apply the Paris Agreement. Vietnam has scheduled the ratification of two remaining bills on the abolition of forced labor and on freedom of association by 2020 and 2023, respectively.
Separately, the trade committee also agreed by 26 votes for, seven against and six abstentions to an investment protection agreement providing an investment court system with independent judges to settle disputes between investors and state. The accompanying resolution passed by 27 votes for, seven against and five abstentions.
The Parliament is set to vote on the trade deal and the investment protection agreement at its February session in Strasbourg in northeastern France. Once the council concludes the trade agreement, it can enter into force. For the investment protection agreement to be effective, the member states first need to ratify it.
Vietnam and the European Union signed the free trade agreement and the investment protection agreement at a ceremony held in Hanoi on June 30, 2019.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth 47.6 billion euros a year and 3.6 billion euros when it comes to services. EU exports to the country grow by 5-7% annually, yet the EU’s trade deficit with Vietnam was 27 billion euros in 2018.
The main EU imports from Vietnam include telecom equipment, clothing and food products. The bloc mainly exports goods, such as machinery and transport equipment, chemicals and agricultural products, to Vietnam.
