The EU-Vietnam Free Trade Agreement: A Game-Changer for the Southeast Asian Nation
The EU-Vietnam Free Trade Agreement (EVFTA) was officially signed on June 30, 2019, marking a significant milestone in the relationship between the European Union (EU) and Vietnam. The agreement has been in force since August 1, 2020, and it is expected to have a significant impact on Vietnam`s economy, as well as the trade relations between the EU and Vietnam.
In this article, we will discuss the key features of the EVFTA, its benefits for Vietnam and the European Union, and its potential impact on the Southeast Asian country`s economy.
Key Features of the EVFTA
The EVFTA is a comprehensive agreement that covers various areas, including trade in goods and services, investment, intellectual property rights (IPR), and sustainable development. The agreement aims to promote trade and investment between the EU and Vietnam by reducing or eliminating barriers and ensuring a level playing field for businesses from both sides.
Trade in Goods
The EVFTA aims to eliminate tariffs on almost all goods traded between the EU and Vietnam. Around 71% of EU exports to Vietnam and 65% of Vietnamese exports to the EU will be exempted from tariffs upon the agreement`s entry into force. The remaining tariffs will be phased out over the next 7 to 10 years. This will create new opportunities for EU and Vietnamese businesses to access each other`s markets and increase their competitiveness.
Services and Investment
The EVFTA also includes provisions for the liberalization of trade in services, facilitating access to markets and enhancing the protection of investments. The agreement will ensure that EU investors have access to the Vietnamese market, while Vietnamese investors will have greater access to the EU`s market. The agreement also includes provisions for protecting intellectual property rights, enhancing transparency, and providing an effective dispute settlement mechanism.
The EVFTA includes strong provisions on sustainable development, including commitments to implementing core labour standards, protecting the environment, and promoting sustainable trade and investment.
Benefits for Vietnam and the EU
The EVFTA is expected to bring significant benefits for both Vietnam and the EU. For Vietnam, the agreement will provide access to the EU`s market of over 500 million consumers, creating new opportunities for exporters, particularly in the textile, footwear, and agricultural sectors. The agreement will also help Vietnam to attract more foreign investment by providing a level playing field for businesses and enhancing the protection of investments.
For the EU, the agreement will provide new business opportunities in Vietnam, particularly in the areas of services and investments. The agreement will also help to protect EU businesses` intellectual property rights and promote sustainable development.
Potential Impact on Vietnam`s Economy
The EVFTA is expected to have a significant impact on Vietnam`s economy, with some estimates suggesting that it could increase Vietnam`s GDP by up to 4.6% and boost exports to the EU by up to 42.7% by 2025.
The agreement is expected to benefit Vietnam`s textile and garment industry, which is one of its key export sectors. The agreement will provide Vietnam`s textile and garment exporters with duty-free access to the EU`s market, enabling them to compete more effectively with other major textile and garment exporters such as China, India, and Bangladesh.
The agreement is also expected to benefit Vietnam`s agriculture sector, which is another key export sector. Vietnam`s rice, seafood, and fruit exports are expected to increase significantly as a result of the agreement. The removal of tariffs on these products will provide significant cost savings for Vietnamese exporters, making them more competitive in the EU`s market.
The EVFTA is a game-changer for Vietnam`s economy, providing access to the EU`s market and creating new business opportunities for businesses from both sides. The agreement will help to boost Vietnam`s exports, particularly in the textile, garment, and agriculture sectors, and attract more foreign investment to the country. The agreement includes strong provisions on sustainable development, protecting the environment, and promoting social and labour standards, ensuring that the benefits of trade are shared by all.