EVFTA to create turning point in Vietnam – EU relations18/02/2019
The EVFTA will be the first trade deal signed between EU and a developing country in Asia. In addition to the deal, the EU currently has two FTAs with Singapore – subject to approval, and Japan, which has come into force in early February.
According to Audier, 2018 marked the first year EuroCham Vietnam’s members exceeded 1,000, making EuroCham Vietnam one of the largest European business organizations in the world.
This showed Vietnam has become an attractive investment destination for European companies, mainly thanks to rapid economic growth, extensive global integration and strong reform efforts, Audier said.
In preparation for the EVFTA coming into force, many European companies have established representative offices or searched for local partners in Vietnam, with a view to enjoying advantages from the deal.
Moreover, Vietnam’s government is addressing some pending issues that may pose as restriction for European companies doing business in Vietnam, including the revision of the Labor Code, legal framework in the automobile industry, and special consumption taxes for wine and beer products.
In a survey conducted by EuroCham in 2018, around 80% of its members expected the EVFTA to have major impacts on their respective mid- and long-term business plans.
Audier said the EVFTA would transform Vietnam into a focal investment point as it paves the way for European companies to access a fast-growing market, while Vietnam’s middle-class consumers are magnet to European investors.
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.
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).
Moreover, the EU market is highly complementary with Vietnam’s market in the sense that both could export products that would not face direct competition in their respective markets.