Taking EU-Viet Nam trade to a new level
With a trade volume of more than 50 billion euros, Viet Nam is currently the EU’s second most important trade partner in South East Asia. The EU is Viet Nam’s fourth-largest trade partner. Between 2014 and 2018, bilateral trade in goods already grew at an annual rate of 15%. To tap the full potential of mutual economic relations, the EU and Viet Nam have agreed on a comprehensive free trade agreement (EU-Vietnam Free Trade Agreement, EVFTA), which was initially approved by the European Parliament and has now also received approval from the Council of the European Union. Once the EVFTA has been ratified by Viet Nam’s National Assembly, it could enter into force in the early summer of 2020.
Trade facilitations, employee rights, sustainability, fair competition
With entry into force of the EVFTA, both parties’ current tariffs on industrial products will be completely eliminated. In some spheres, for example in the automotive industry, there will be a transitional period of up to 10 years. Nearly all tariffs on agricultural products will also be eliminated. 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 the 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.
A model for rules-based globalisation
Entry into force of the EVFTA will not only bring an increase in prosperity for both sides, but will also strengthen the international trade system as a whole, by extending common rules and standards to another dynamic economy.
The EVFTA is therefore a key contribution by the EU with respect to injecting impetus into the economic recovery from the impacts of the COVID-19 pandemic, and also for safeguarding supply chains against future crises. At the same time, the agreement clearly shows that opening up the economy, building growth and adhering to social and sustainability standards are not a contradiction, but complement each other effectively.
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. 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 per capita national income of 2400 US dollars, Viet Nam has been denoted a “middle income country” since 2018.