The EU – Vietnam Free Trade Agreement (EVFTA) is scheduled to be signed on June 30 in Hanoi, according to Prime Minister Nguyen Xuan Phuc.
Prime Minister Nguyen Xuan Phuc. Source: VGP.
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According to Phuc, the EVFTA would prove significant for Vietnam, and lays a strong foundation for the country to further integrate into the global market.
The European Commission has described the EVFTA as the most “ambitious” free trade deal and also the first of its kind the bloc ever concluded with a developing country.
In addition to the deal, the EU currently has two FTAs with Singapore – subject to approval, and Japan, which came into force in early February.
The EVFTA not only includes the almost full elimination of bilateral tariffs, but also a substantial reduction of non-tariff barriers. Moreover, it includes provisions to protect intellectual property, labor, environmental standards, and fair competition, while promoting regulatory coherence.
Under the country’s EVFTA commitment, Vietnam would remove 65% of import tariffs for European goods right after the deal becomes effective. The remaining would be gradually removed in the next 10 years.
In return, the EU is committed to removing 71% of import tariffs for Vietnamese items, and the remaining in the next seven years.
It is estimated that the EVFTA will add 0.1 percentage point (ppt) on average to Vietnam’s real GDP growth each year based solely on its trade impacts, according to HSBC’s report.
The European Commission estimates that Vietnam’s exports to the EU would grow by around 18% as a result of the agreement, while the EU’s exports to Vietnam are slated to increase by around 29%.
Over the past ten years, trade turnover between the EU and Vietnam has increased 10-fold to US$53 billion in 2018. The EU is currently Vietnam’s third largest trading partner, while Vietnam is the bloc's 19th largest partner in the world, and the second largest in Southeast Asia, behind Singapore, according to the Vietnam Chamber of Commerce and Industry (VCCI).
