Vietnamese Minister of Industry and Trade Vu Huy Hoang and European Commissioner for Trade Cecilia Malmstrom, witnessed by Vietnamese Prime Minister Nguyen Tan Dung and President of the European Commission (EC) Jean-Claude Juncker, signed an announcement on the official conclusion of negotiations on the EU-Vietnam Free Trade Agreement (EVFTA) in Brussels, Belgium on December 2, 2015.
Balanced interests
In October 2010, the Prime Minister of Vietnam and the EC President agreed to commence talks on the EVFTA after completing necessary technical procedures. On that basis, the two sides announced the official start of negotiations on June 26, 2012. With an active and flexible spirit in negotiations as well as the care and guidance of leaders of both sides, negotiations progressed expeditiously. After nearly three years with 14 official rounds of talks and multiple mid-term negotiations at ministerial, head of delegation, and technical group levels, Vietnam and the EU completed the negotiations on EVFTA. With this result, the two sides achieved a significant step on their roadmap of enhancing Vietnam - EU comprehensive and profound political partnership, especially trade and investment ties.
Given commitments achieved, EVFTA is an inclusive and high quality agreement that ensures the balance of interests for both Vietnam and the EU, with due consideration of the gap of development between the two sides. Main EVFTA contents include trade in goods, rules of origin, customs and trade facilitation, sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), trade in services, investment, trade remedies, competition, State-owned enterprises, Government procurement, intellectual property, sustainable development, cooperation and capacity building, and legal and institutional issues. The pact also includes new progressive approaches to investment protection and settlement of investment disputes.
New opportunities
EVFTA was commenced and concluded in the context of fine-growing relations between Vietnam and the EU, particularly in economy and trade. The pact will continue to create motivations to promote trade, investment and economic growth and create more jobs for both Vietnam and the EU. With highly supplementary and less directly competitive import-export structure, Vietnam and the EU expect EVFTA will bring in big economic benefits for both sides as follows:
Regarding import-export, the two sides’ strong EVFTA commitments to market opening will open the door wider for various kinds of export products, especially those of their strengths such as Vietnam’s garment and textile, footwear, agricultural products, seafood, and timber products and the EU’s machines, equipment, automobiles, alcoholic beverages, and some agricultural products. Vietnam and the EU will eliminate tariffs on over 99 percent of tariff lines. For remaining tariff lines, the two sides will give each other certain tariff quota or partial tariff reductions.
On investment, the two sides pledged to ensure a favourable, open business and investment environment as a result of EVFTA, which is expected to boost capital flows from the EU and other foreign partners into Vietnam. With the EU’s investment development scale and potential, Vietnam is likely to become a centre to connect the EU’s trade and investment activities in the region. This will promote the country’s process of economic restructuring and changing growth model in a positive direction.
Bilateral commitments to investment, liberalisation of trade of services, Government procurement and intellectual property protection are expected to open up opportunities for the two sides to make inroads in each other’s market and ensure their balanced and overall benefits. This will help Vietnam integrate into the global economy as a full market economy.
During EVFTA negotiations, Vietnam and the EU agreed on the framework of cooperation programmes and capacity enhancement in the fields of mutual concerns. This framework will enable Vietnam to build a legal system to support the realisation of EVFTA commitments and increase competitiveness for small and medium enterprises (SMEs). In addition, the signing of an FTA with such a developed partner as the EU will give Vietnam greater access to modern technologies and management skills to generate more jobs for workers and ensure social welfare and security.
The two parties agreed to complete the ratification process of the deal as soon as possible to put the pact into effect at the outset of 2018.
The EU is currently the second biggest trade partner and one of the two largest export markets of Vietnam. The two-way trade value climbed from US$17.75 billion in 2010 to US$36.8 billion in 2014. The value reached US$19.4 billion in the first six months of 2015, up 11 percent year on year, of which Vietnam fetched US$14.9 billion and the EU took US$4.5 billion. Import-export structures of Vietnam and the EU are highly supplementary and less directly competitive. Vietnam’s key exports to the EU are footwear, apparels, coffee, furniture and seafood. The EU is also the largest investor in Vietnam. As of end-June 2015, 23 out of 28 EU member nations registered to invest over US$38.4 billion in over 2,100 valid projects in Vietnam. EU investors are active in most key economic sectors of Vietnam, mainly focusing on industry, construction and some services.
Huong Ly
Vietnamese
