EVFTA – A strategic lever in global value chain

EVFTA – A strategic lever in global value chain

Amid intensifying geo-economic competition and complex supply chain shifts, the EVFTA has emerged as a pillar of Việt Nam’s open-door policy and sustainable development strategy.

Production activities at Xuân Hòa Vietnam JSC, Phú Thọ province. — Photo qdnd.vn

 After five years of implementation, the EU–Việt Nam Free Trade Agreement (EVFTA) has not only generated substantial economic value but also demonstrated its strategic significance in deepening Việt Nam’s integration process, helping elevate the country’s standing on the international stage.

Amid intensifying geo-economic competition and complex supply chain shifts, the EVFTA has emerged as a pillar of Việt Nam’s open-door policy and sustainable development strategy.

Việt Nam becomes the EU’s leading partner in ASEAN

Entering into force on August 1, 2020, the EVFTA eliminated over seventy per cent of tariffs immediately, with nearly ninety-nine per cent of remaining tariffs to be phased out over time. Beyond tariff cuts, the deal expands market access, protects intellectual property rights, enhances regulatory transparency, and creates favourable conditions for businesses on both sides to fully capitalise on trade opportunities.

Bilateral trade between Việt Nam and the EU reached US$298 billion from August 2020 to May 2025, accounting for nearly forty per cent of their accumulated turnover over the past three decades. This underscores the EVFTA’s catalytic role in market expansion and strengthening economic ties. Today, Việt Nam is the EU’s largest goods trading partner in ASEAN and its sixteenth globally.

According to Nguyễn Anh Sơn, Director of the Import–Export Department at the Ministry of Industry and Trade, the agreement has delivered positive outcomes, opening up new markets for Việt Nam’s footwear, farm produce, and fruit, while enabling businesses to access advanced technologies and modern equipment. It also facilitates Việt Nam’s institutional, policy, and legal reforms towards greater transparency and alignment with international practices.

The EU is now Việt Nam’s third-largest export market and fourth-largest import source, supplying strategic products including high-tech machinery, transport equipment, pharmaceuticals, and green technologies. With a population of over one hundred million and a workforce exceeding fifty-five million, Việt Nam has become a “strategic ecosystem” for European businesses seeking deeper integration into new supply chains.

A survey by EuroCham Việt Nam reveals that not only large corporations but also SMEs are taking advantage of EVFTA preferences, with the proportion of firms citing tariff reductions as a key advantage increasing from twenty-nine per cent in Q2 2024 to sixty-one per cent in Q2 2025.

Rules of origin – a challenge to overcome

With a GDP of US$29 trillion (purchasing power parity - PPP) and more than 450 million consumers, the EU is the world’s largest single economic bloc. Its per capita GDP surpassed $43,000 in 2024 (World Bank), reflecting strong purchasing power and diverse demand – an ideal market for Việt Nam’s high-quality goods, ranging from agricultural and processed food to textiles, furniture, and technology.

However, opportunities come with challenges. Rules of origin remain the biggest barrier, as most input materials for Việt Nam’s key export sectors are imported from outside the bloc, complicating proof of origin requirements. The EVFTA permits cumulation with certain partners; however, the procedures can be complex, and domestic supply chains are still poorly interconnected.

Ngô Chung Khanh, Deputy Director General of the Multilateral Trade Policy Department at the Ministry of Industry and Trade, warned that without improvements in meeting technical standards and rules of origin, Vietnamese products risk losing their competitiveness, especially as the EU accelerates FTA negotiations with other countries.

In 2024 alone, Việt Nam issued over 1.8 million preferential Certificates of Origin (C/O) with an export value exceeding $100 billion. Notably, 66 per cent of EU firms in Việt Nam file C/Os monthly, underscoring their critical role in securing tariff benefits and maintaining credibility with partners.

Many businesses have called for full digitalisation of the C/O process, adoption of a single electronic declaration system, shorter processing times, enhanced transparency, and stronger supply chain data connectivity. They also stressed the need for targeted technical support programmes to help firms master documentation, validate origin, and stay updated on evolving EU standards.

The EVFTA has opened a “big door,” but how far and fast Việt Nam can move through it depends first and foremost on its internal capacity, proactiveness, and adaptability. To maximise opportunities, Vietnamese enterprises must not only innovate technologically and improve governance but also persistently build stronger domestic supply chains, increase localisation, and pursue sustainable development. 

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