The EU and Vietnam signed in Hanoi the EU-Vietnam trade deal and investment protection agreements Sunday, the most ambitious free trade deal between the EU and an emerging economy to date.
The Free Trade Agreement (FTA) between the EU and Vietnam is the most ambitious free trade deal ever concluded with a developing country. It provides for the almost complete (99%) elimination of customs duties between the two blocks. 65% of duties on EU exports to Vietnam will disappear as soon as the FTA enters into force, while the remainder will be phased out gradually over a period of up to 10 years. As regards Vietnamese exports to the EU, 71% of duties will disappear upon entry into force, the remainder being phased out over a period of up to 7 years.
Once in force, the agreements will provide opportunities to increase trade and support jobs and growth on both sides, through
Eliminating 99% of all tariffs
Reducing regulatory barriers and overlapping red tape
Ensuring protection of geographical indications
Opening up services and public procurement markets
Making sure the agreed rules are enforceable
The FTA will also reduce many of the existing non-tariff barriers to trade with Vietnam and open up Vietnamese services and public procurement markets to EU companies, while the IPA will strengthen protection of EU investments in the country.
As one of the ‘new generation’ bilateral agreements, the EU-Vietnam trade deal also contains important provisions on intellectual property protection, investment liberalisation and sustainable development. On this last aspect, the FTA includes commitments to implement International Labour Organisation core standards (for instance on the freedom to join independent trade unions and on banning child labour) and UN conventions relating for example to the fight against climate change or the protection of biodiversity.
Negotiations between the EU and Vietnam started in June 2012 and were concluded on 2 December 2015. However, the formal conclusion of the agreement was delayed by a pending opinion of the European Court of Justice on the division of competencies between the EU and its member states relating to the conclusion of the EU-Singapore FTA.
Following the opinion of the Court delivered in May 2017, the Commission decided to propose two separate agreements:
a free trade agreement, which contains areas of exclusive EU competence and thus only requires the Council’s approval and the European Parliament’s consent before it can enter into force.
an investment protection agreement which, due to its shared competence nature, will also have to go through the relevant national ratification procedures in all member states before it can enter into force. The time horizon for the implementation of this act is therefore expected to be much longer.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth almost €50 billion a year and almost €4 billion when it comes to services. While EU investment stocks in Vietnam remain modest, standing at €8.3 billion in 2016, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and agricultural products.
Following the signature, the agreements will now be presented on the Vietnamese side to the National Assembly and, on the EU side, to the European Parliament, for their consent. as well as to the respective national parliaments of EU Member States in the case of the Investment Protection Agreement.