Th e EU and Vietnam have reached an agreement in principle for a free trade agreement (FTA), after two and a half years of intense negotiations.
Following a conversation between EU Trade Commissioner Cecilia Malmström and Vietnamese Minister of Industry and Trade Vu Huy Hoang, all issues of substance have been agreed, and both sides have reached a mutually benefi cial and balanced package.
In 2014, EU-Vietnam trade in goods was worth over €28.2 billion, with €22.1 billion of imports from Vietnam into the EU and €6.2 billion of exports from the EU to Vietnam.
Th is agreement will remove nearly all tariff s on goods traded between the two economies. “We have a deal,” Malmström said. “This finely balanced agreement will boost trade with one of Asia’s most dynamic economies. It sets a new, better and modern model for Free Trade Agreements between the EU and developing countries and establishes a good standard for the trade relationship between the EU and Southeast Asia as a whole” Malmström said.
“Vietnam is a growing economy and once this agreement is up and running, it will provide signifi cant new opportunities for companies on both sides, by increasing market access for goods and services. Over 31 million jobs in Europe depend on exports, so having easier access to a growing and fast developing market like Vietnam, with its 90 million consumers, is great news.
“And Vietnam’s exporters will now get much easier access to the EU for their products, giving an important boost to the Vietnamese economy. Both sides have worked extremely hard in the past few months to achieve this breakthrough,” she said.
On the basis of this agreement, the negotiating teams will now continue the process, settle some remaining technical issues and fi nalise the legal text. Once fi nalised, the agreement will then need to be approved by the Council and the European Parliament.
“Our deal will also make sure that trade does not happen at the cost of the environment or of people’s rights. Th e EU and Vietnam have committed to ensure the respect of workers’ rights and to support a sustainable management of natural resources,” Malmström added.
This agreement is the first of its kind that the EU has concluded with a developing country. As such, the ambitious and symmetrical liberalisation agreed upon – with a transition period to allow Vietnam to adapt – breaks new ground compared to other EU agreements with developing countries.
Besides eliminating tariff s, Vietnam will also remove almost all of its export duties. Th e agreement will also create new market access opportunities in services and investment. Vietnam has agreed to liberalise trade in fi nancial services, telecommunications, transport, and postal and courier services. On investment, Vietnam will open its market to the EU, for instance by removing or easing limitations on the manufacturing of food products and beverages, as well as in the non-food sectors.
After the conclusion of the Singapore FTA in 2014, this will be the second FTA between the European Union and a country of the Association of South East Asian Nations (ASEAN). As such, it is a building block towards the EU’s ultimate objective of an ambitious and comprehensive region-to-region FTA with ASEAN as a whole.
In 2014, the EU was the second largest trading partner for Vietnam after China (not including trade within ASEAN), representing 10 per cent of total Vietnamese trade. The EU was Vietnam’s second export destination (after the US), with the EU purchasing as much as 18 per cent of Vietnam’s global exports.
Total bilateral trade in services amounted in 2013 to €2.9 billion, with a slight surplus for the EU. Vietnam’s key export items to the EU include telephone sets, electronic products, footwear, textiles and clothing, coff ee, rice, seafood, and furniture. EU exports to Vietnam, meanwhile, are dominated by high-tech products including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products.
Th e EU is one of the largest foreign investors in Vietnam with EU investors committing a total of more than €500 million in Foreign Direct Investment in 2013 making the EU Vietnam’s sixth largest foreign investor partner.
Since 2013, Vietnam has been the EU’s fourth most important trading partner among the ten ASEAN Member States, surpassing the EU’s bilateral trade with Indonesia.
