In a historic move, Vietnam ratified its free trade agreement with the European Union on Monday. The European Union Vietnam Free Trade Agreement (EVFTA) will eliminate or reduce 99% of tariffs on goods that are traded between the European Union and Vietnam.
The EVFTA will begin to take effect in July and is seen as a positive development for both the EU and Vietnam in a trading world that has been disrupted by the global Covid-19 pandemic. The EVFTA is the second agreement that the European Union has entered into with a member of the Association of Southeast Asian nations (ASEAN) after an agreement was entered into with Singapore in November 2019.
The new agreement, will open up Vietnam’s services, align some standards between the EU and Vietnam and will protect EU food and drinks from imitations in Vietnam. The agreement provides Vietnam a transition period of up to 10 years for some imports.
There are some critics of the agreement in the European Union who have taken issue with Vietnam’s record on human and labor rights, but those involved in negotiating the deal have noted that it includes commitments from Vietnam to make improvements in these areas.
IN a report by The World Bank in May stated that the EVFTA could Vietnam’s gross domestic product could increase by 2.4% by 2030, with exports increasing by 12% by 2030. The World Bank says that these increase in both GDP and exports have the potential to hundreds of thousands of Vietnamese out of poverty.
Welcoming the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and Investment Protection Agreement (EVIPA), Nicolas Audier, Chairman of the European Chamber of Commerce in Vietnam said:
“EuroCham welcomes the positive vote on the EVFTA and EVIPA in the National Assembly. The EVFTA will enter into force soon, while the EVIPA will be implemented later, following ratification in each individual EU member state. This historic milestone signals the start of a new relationship with the European Union. This agreement represents a vote of confidence in Vietnam, as it is just the second ASEAN nation to sign an FTA with the EU. It will usher in an era of increased trade and investment, and begin the process of phasing out almost 99% of tariff lines and barriers to trade over the next decade. It will also open up new markets to European investment and innovation, and promote sustainable development in Vietnam.
“The EVFTA is now more important than ever, as trade wars and a global pandemic disrupt normal business operations on an unprecedented scale. Free, fair and rules-based trade is the best roadmap to economic growth, and Vietnam now has privileged access to an EU consumer market of around 500 million people who will be keen to do business with and invest in a strong, secure, and prosperous nation at the heart of Asia.
“Ever since negotiations for the EVFTA first began, EuroCham has been one of its strongest advocates. This agreement represents a true ‘win-win’ not just for European and Vietnamese enterprises; but also for citizens on both sides. Now, the next step is to ensure a smooth and effective implementation. EuroCham, its 17 Sector Committees and one thousand members look forward to working hand-in-hand with Vietnam to ensure that all sides can unlock the full potential of the EVFTA now and in the future.”