Vietnam – Europe Free Trade Agreement (EVFTA) explained
What does the EVFTA mean?
Almost all import duties on both sides will disappear. In short the Trade Agreement means Vietnam will eliminate 99 percent of its import duties over 10 years and the E.U. will do the same over 7 years.
As from August 1st 2020, the E.U. has immediately eliminated import duties on some 85.6 percent of tariff lines, accounting for 70.3 percent of Vietnam’s exports to the European Union.
The E.U. will gradually eliminate 99.2 percent of tariff lines, accounting for 99.7 percent of Vietnam’s exports, over the next seven years. As for the remaining 0.3 percent, it will give Vietnam tariff quotas with import duties of zero percent.
As from August 1st 2020 Vietnam has eliminated import duties on 48.5% of tariff lines, equivalent to 64.5% of EU exports.
After 7 years, import taxes on 91.8% of tariff lines (equivalent to 97.1% of EU exports) will be removed from Vietnam. After 10 years, the abolition rate will be 98.3% of the total tariff lines, equal to 99.8% of the EU’s exports respectively.
Strength of the EVFTA
The important event was the signing, approval, and entry into force of the EVFTA on August 1, 2020, which has a wide range of commitments, creating many new breakthroughs and prospects for the relationship between Europe and Vietnam.
Only five months after the agreement taking effect, both sides’ two-way trade flourished, with many Vietnamese exports strongly increasing in the EU market such as aquatic products, rice, garments and textiles, and footwear. The EU is now the fifth-largest trade partner, the third-largest export market, and a big foreign investor of Vietnam. It is also a leading non-refundable aid donor for the country.
Next to the import duties, it will open up Vietnam’s services, including post, banking and shipping and public procurement markets, align some standards and protect EU food and drinks, such as French champagne or Greek feta cheese, from imitations in Vietnam.
South-East Asia – Only 2 Countries
South East Asia consists of 11 countries, Vietnam, Singapore, Indonesia, Thailand, Philippines, Malaysia, Cambodia, Myanmar, Laos, Brunei and Timor-Leste. Only 2 countries have a Trade Agreement with Europe which are Vietnam and Singapore. Other countries are even not near to an agreement due to various reasons.
Sources: Vietnam Investment Review – 15/01/2021 – Door Swings open for further EU-Vietnam development Nikkei Asia – 25/09/2020 – Vietnam’s EU trade fails to inspire COVID-hit neightbors Business Korea – 18/08/2020 – Effectuation of Vietnam-EU FTA to benefit Korean Firms based in Vietnam Mondaq – 12/06=2020 – EU-Vietnam Trade comes into force on 1 August 2020. VNExpress – 08/06/2020 – Vietnam ratifies EU free trade agreement Reuters – 08/06/2020 – Vietnam Ratifies free trade deal with EU