The European Union Vietnam Free Trade Agreement (EVFTA) was approved on August 1 paving the way for increased trade between the EU and Vietnam. As per the Ministry of Planning and Investment (MPI), the EVFTA is expected to help increase Vietnam’s GDP 4.6 per cent and exports to the EU 42.7 per cent by 2025. Analysts expect the trade deal to give a much-needed boost to Vietnam’s industries, such as manufacturing, as it looks to recover from the COVID-19 pandemic.
The agreement will eliminate 65 per cent duties on EU exports to Vietnam while the remaining will be gradually phased out over a period of 10 years. The agreement will also eliminate 71 per cent duties on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years. The EVFTA also contains important provisions for intellectual property (IP) rights, investment liberalization, and sustainable development. This includes a commitment to implement the International Labor Organization (ILO) standards and the UN Convention on Climate Change.
The EVFTA aims to liberalize both tariff and non-tariff barriers for key imports on both sides over a period of 10 years. For Vietnam, tariff elimination will benefit key export industries, including the manufacturing of smartphones and electronic products, textiles, footwear and agricultural products, such as coffee. These industries are also very labor-intensive. Increasing Vietnam’s export volume to the EU, the FTA will facilitate the expansion of these industries, both in terms of capital and increasing employment.