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According to the agreement, the EU and Vietnam has committed to further market access and the removal of over 99% of tariffs on industrial and agricultural products, in addition to zero-duty Tariff Rate Quotas on a number of goods including clothing, footwear, seafood, tropical agricultural products, furniture and others which will come from Vietnam and automobiles, machinery, equipment, beverages, medicine, and temperate agricultural products and others which will come from the EU.
In addition, the two sides' commitments on services sectors go largely beyond both WTO commitments and any other FTA that Vietnam has concluded. Therefore, EU companies will have more benefits when investing and doing business in the Vietnamese market, particularly in the sectors of their strength which include finance, banking, insurance and maritime transport.
Vietnam's commitments to ensure an open and transparent investment and business environment will help to boost high quality investment from the EU into Vietnam.
With anticipated benefits from the agreement along with the establishment of the ASEAN Economic Community in late 2015, Vietnam will have an opportunity to become a hub of trade and investment between the EU and ASEAN countries.
Furthermore, Vietnam has made commitments in regards to new areas which include government procurement, a high level of protection on intellectual property rights, and competition policy which are expected to open up opportunities for both sides. These opportunities will help gain further market access and equal benefits while requiring Vietnam to adjust some related domestic provisions.
During the EVFTA negotiations, Vietnam and the EU also agreed on a framework of cooperation and capacity enhancement programmes in areas of mutual interest. The framework will help Vietnam to continue to build the legal system and support the implementation of Vietnam's commitments towards the goal of strengthening bilateral trade and investment activities on the basis of mutual benefits.
The EU, which occupies 25% of the total volume of goods and services traded worldwide and is the largest investor in ASEAN, is both a traditional and potential partner for Vietnam.
The EU is considered to be a large and potential market with more than 500 million people, who prefer items that Vietnam has the ability to export which include textiles, footwear, seafood, and coffee. Meanwhile, the EU's modern and advanced industry will be a reliable supply of machinery and technologies for Vietnam's imports.
The EU is currently the largest investor in several markets such as the US, China, India and some ASEAN countries, but is not the largest investor in Vietnam. The EVFTA, representing the most ambitious and modern FTA negotiations thus far with a developing country, is expected to attract high quality investment flow from the EU to Vietnam.
Besides more opportunities for market expansion, technology approach and access to advanced management skills, Vietnamese enterprises also face fierce competition, requiring self-renewal and self-improvement. Thereby, the agreement will create more motivation for Vietnam to accelerate reforms and perfect the legal framework in order to meet development requirements of the domestic and world economy.
Minister of Industry and Trade Tran Tuan Anh commented that in the context of Vietnam's deep integration into international economies, the EVFTA and signed FTAs will create tremendous impacts on Vietnam’s economic development and the renewal process of Vietnamese businesses while boosting the expansion of foreign and Vietnamese businesses in FTA markets.
The trading of goods is expected to be the most promising sector for both Vietnam and the EU due to the elimination of nearly all tariffs, resulting in the advances concerning import and export of goods.
EU enterprises will also benefit from the agreement after it takes effect when they invest in some services sectors such as finance - banking, distribution and transport. Vietnam will also benefit from high quality the EU’s investment flow.
Other contents of the agreement such as transparency, competition, and sustainable development will also help to boost a favourable business environment, institutional reform, and the perfection of policies and other related regulations, contributing to forming a solid foundation for enterprises of both sides to reap benefits from the agreement.
According to the European Commission (EC) statistics, Vietnam was the EU's second largest trading partner in ASEAN, after Singapore in 2015, accounting for 19.1% of the total trade revenue between the EU and ASEAN.
The General Department of Vietnam Customs reported that Vietnam and the EU posted a two-way trade revenue of US$45.07 billion in 2016, up 8.93% from 2015. The realisation of commitments on market access is hoping to raise the two-way trade revenue to US$100 billion per year in the future.
When the EVFTA comes into effect in 2018, Vietnam will be able to become the EU's largest trading partner in ASEAN and the most promising business destination for European businesses in ASEAN. With such great potential, Vietnam is expected to be a bridge between the EU and ASEAN.
As a result, the position of Vietnam will be heightened in international trade relations as well as in the relations with the EU, contributing to meeting the legitimate demands of both domestic and European businesses.
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