European Union signs Free Trade Agreement (EVFTA) with Vietnam
July 1, 2019
After a nearly 9-year journey, the EU–Vietnam Free Trade Agreement (EVFTA) was signed on 30 June, 2019 in Hanoi.
The EVFTA is promised to bring Vietnam and Europe closer – two markets that are very complementary. With European investment and Vietnam exports in goods to the EU expected to grow, positive economic effects for local enterprises and incidentally improvements on the welfare of Vietnamese citizens will follow.
Benefits of the EVFTA
The EVFTA represents a historic change in the relations between the EU and Vietnam. The agreement will boost trade and investment on both sides, and help Vietnam to further integrate into the global economy and the international community.
The trade agreement will eliminate nearly all customs duties on goods traded between the two sides in a progressive way that fully respects Vietnam’s development needs. 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 recognised as 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 an equal footing with domestic companies.
Vietnam is the EU’s second largest trading partner in the ASEAN region after Singapore, with trade worth 49.3 billion EUR for goods and over 3 billion EUR for services. While EU investment stock in Vietnam remains modest standing just at 6 billion EUR in 2017, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, footwear and textiles, furniture and agricultural products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and food and beverages.
Approval by the Council of Ministers
On June 26, 2019 the Council of Ministers approved the EU-Vietnam trade and investment agreements, paving the way for the signature and conclusion.
The President of the European Commission, Jean-Claude Juncker, welcomed the decision taken by EU Member States, adding that “After Singapore, the agreements with Vietnam are the second to have been concluded between the EU and a Southeast Asian country, and represent stepping stones to a 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.“
The EU Trade Commissioner Cecilia Malmström also said “I am very pleased to see that Member States have given a green light to our trade and investment agreements with Vietnam. Vietnam is a vibrant and promising market of more than 95 million consumers and both sides have much to gain from stronger trade relations.“
The EVFTA will eliminate almost all tariffs between the EU and Vietnam. 65% of the value of EU exports will be removed the moment it enters into force, with the remaining tariffs being phased out over the next 10 years. Meanwhile, 71% of EU imports from Vietnam will be tariff-free once the EVFTA enters into force, rising to more than 99% over the following 7 years.
Signing of EVFTA by EU and Vietnam in Hanoi
Following the endorsement by the Council of Ministers, the agreement was scheduled for signing by the EU and Vietnam.
On June 30, 2019, in the presence of the Prime Minister of Vietnam, H.E. Nguyen Xuan Phuc, and the EU Trade Commissioner, Cecilia Malmström, the EU-Vietnam Free Trade Agreement (EVFTA) was officially signed in Hanoi.
This historic event moves the EVFTA one step closer to ratification, ahead of a crucial vote in the European Parliament.
EVFTA strongly supported by EuroCham
The European Chamber of Commerce in Vietnam (EuroCham) has been a strong supporter and integral part of the EVFTA ever since negotiations first began, providing detailed insights and recommendations throughout 14 rounds of negotiations. Once the Agreement was concluded in December 2015, ensuring its swift ratification and implementation has been at the heart of the Chamber’s activities. EuroCham has led three Missions, bringing business leaders to Brussels to highlight the importance of the EVFTA and share the positive changes Vietnam continues to make to its trade environment and legal framework.
Following the signing of the Free Trade Agreement on Sunday, Nicolas Audier, Chairman of EuroCham, said “The official signing in Hanoi will accelerate the strong momentum behind the EVFTA and take us one step closer to ratification. EuroCham congratulates the Government of Vietnam for reaching this important milestone. The fact that the EVFTA is just the second agreement signed between the EU and a member of ASEAN is testament to Vietnam’s growing leadership not just in the region but also on the world stage.“
The Spanish Chamber of Commerce in Vietnam was proudly represented in the signing ceremony of the EU–Vietnam Free Trade Agreement (EVFTA) by our Chairwoman, Ms. Sonia Aparicio, who joined EuroCham delegation in Hanoi on this historic day for Europe and Vietnam.
The EVFTA: What Happens Next?
Following the signing by the EU and Vietnam, the EVFTA agreement will be presented to the European Parliament for ratification. Once the European Parliament has given its consent, the trade agreement can be officially concluded by the Council and enter into force. EuroCham will do all it can to mobilise this momentum and push for a positive vote in the European Parliament, and continue to help Vietnam prepare the ground for smooth and effective implementation of the EVFTA.
Nicolas Audier, Chairman of EuroCham, explained that “The economic benefits of the EVFTA are undisputed: It will boost trade and investment, phase out tariffs and duties, and open up huge new opportunities for companies and consumers on both sides. But it will also help Vietnam to go further and faster on issues like labour rights and increased environmental protection. The final hurdle will be a crucial vote in the European Parliament. So it is now more important than ever that we redouble our efforts to highlight the clear benefits of this agreement to ensure that it is ratified and implemented as soon as possible.“
Following the historic signing in Hanoi, EuroCham is committed to share all the latest updates from both the EU and the Vietnamese Government and will be preparing a series of special events in Hanoi and Ho Chi Minh City. European companies and investors are invited to join and find out what happens next, discover what the agreement means for importers and exporters, and how EU companies can prepare their business for when the EVFTA enters into force.
Source: EuroCham