Overall, ASEAN is the EU`s third largest trading partner outside Europe (after the US and China). Ensuring better access for EU exporters to the dynamic ASEAN market is a priority for the EU. Negotiations on a TRADE and Investment Agreement between the REGIONS between the EU and ASEAN started in 2007 and were interrupted by mutual agreement in 2009 to make way for a bilateral negotiating format. These bilateral trade and investment agreements were conceived as building blocks of a future region-to-region agreement. Analysts hope the trade deal will give Vietnamese industries, such as manufacturing, a much-needed boost as it seeks to recover from the COVID-19 pandemic. The European Parliament today approved the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). In a historic vote in Strasbourg, MEPs voted in favour of these agreements. The EU-Vietnam Free Trade Agreement (EVFTA) is a free trade agreement between the European Union (EU) and the Socialist Republic of Vietnam. The EU-Vietnam Investment Protection Agreement (EVIPA) was also concluded, which is a bilateral investment agreement. [1] Vietnam currently benefits from trade preferences with the EU under the Generalised System of Preferences.
The official entry date of the EVFTA is not yet clear. If the EVFTA is presented to the Vietnamese National Assembly in May, the EVFTA could enter into force as early as July this year (and immediately eliminate 65% and 70% of tariff lines, respectively). With a foreign trade volume of around $41.3 billion, the EU is currently one of Vietnam`s largest trading partners: according to the European Commission, Vietnam is the EU`s 16th largest trading partner and the EU`s second largest trading partner within the Association of Southeast Asian Nations (ASEAN). Together, ASEAN is the EU`s third largest trading partner outside Europe (after the US and China). Get inspired by some of the small businesses looking forward to the EU-Vietnam trade deal The ratification of the EVFTA comes at a time when the Vietnamese economy is growing significantly. With GDP growth rates of > 7% in 2018 and 2019, Vietnam is one of the fastest growing countries in Southeast Asia. In a 2017 report, accounting firm PwC even concluded that Vietnam is de facto the fastest growing (and most promising) economy in the world. This is particularly impressive in the context of an ongoing trade dispute between the United States and China, which has affected the global supply chain and forced many countries to adjust their economic outlook. The agreement contains separate chapters on trade in goods, rules of origin, customs and trade facilitation, sanitary and phytosanitary measures and technical barriers to trade, trade in services, investment, aid for trade, competition, state-owned enterprises, government procurement, intellectual property, sustainable development, cooperation and capacity building, legal and institutional issues. The EVFTA is considered a new generation bilateral agreement – it contains important provisions on intellectual property rights, investment liberalization and sustainable development. This includes the obligation to implement international labour organization (ILO) and United Nations Climate Change Convention standards.
In addition, EU companies can benefit from the non-economic provisions of the EVFTA; The agreement also aims to uphold much-criticized environmental and human rights standards in Vietnam and, for example, to ban forced labor. In addition, workers in Vietnam should be allowed to form a union that has nothing to do with the Communist Confederation of Trade Unions. The free trade agreement aims to promote Western (democratic) values in Vietnam and thus make the country more attractive to EU investors. The Trade and Investment Agreements develop the trade dimension of bilateral relations between the EU and Vietnam, which are based on the EU-Vietnam Framework Agreement (PCA), which entered into force in October 2016. However, the impact of Brexit on EU trade and investment is another story. While the Brexit turmoil is exacerbating an existential crisis that has been manifesting in Europe for some time, there is strong reason to believe that Vietnam will continue to reap the benefits of European trade in the years to come. With its liberalisation of customs duties and the deepening of trade and trade relations, EVFTA represents a great opportunity for EU companies. .