Viet Nam has undergone a remarkable economic upturn since the early 1980s, reaching high growth rates of up to 9.5% (1995). At 6.5%, the current economic growth rate in Viet Nam is higher than that in China. As a result of this upswing, Viet Nam has managed to cut the poverty rate from over 50% (1996) to less than 10% today. With gross national income of US$2400 per capita, Viet Nam has been denoted a “middle income country” since 2018.
Enhancing economic potential between the EU and Viet Nam
In light of its dynamic economic development and with a population of 95 million, Viet Nam is an important economic partner for the EU in South-East Asia. In order to enhance the full potential of mutual economic relations, the EU and Viet Nam agreed on a comprehensive free trade agreement (EU-Vietnam Free Trade Agreement/EVFTA), which the European Parliament has today approved by a large majority. Once a decision comes from the Council of the European Union, the EVFTA could even enter into force in the first half of 2020.
Trade facilitations, employee rights, sustainability, fair competition: the EVFTA in detail
When the EVFTA enters into force, the existing duties on industrial products on both sides would be removed; for some sectors, e.g. the automotive industry, transitional periods of up to 10 years will apply. Duties on agricultural products are also largely to be removed. So‑called non‑tariff barriers like technical specifications and licensing conditions will be reduced, with both sides undertaking to recognise common international standards.
At the same time, EVFTA lays down strict rules on employee rights and sustainability. Through EVFTA, Viet Nam undertakes to respect the fundamental principles of the International Labour Organization (ILO), including freedom of association and the ban on child and forced labour, and to push on with ratifying all fundamental ILO conventions. The EVFTA also includes binding provisions on the implementation of multilateral environmental accords such as the Paris Climate Agreement; civil-society groups will be involved in monitoring the steps towards implementation on both sides.
Model for rules-based globalisation
It can be expected that the EVFTA will bring a tangible increase in prosperity for both sides. It will also strengthen the international trade system as a whole, by extending common rules and standards to another dynamic economy.
The EVFTA is thus a key contribution by the EU towards shaping globalisation through agreed rules. At the same time, it clearly shows that there is no contradiction between opening up the economy, building growth and adhering to welfare and sustainability standards; rather they can complement each other effectively.