The European Union Vietnam Free Trade Agreement (EVFTA) took effect on August 1 paving the way for increased trade between the EU and Vietnam.
The EVFTA is an ambitious pact providing almost 99 percent of the elimination of custom duties between the EU and Vietnam. As per the Ministry of Planning and Investment (MPI), the FTA is expected to help increase Vietnam’s GDP by 4.6 percent and its exports to the EU by 42.7 percent by 2025. While the European Commission has forecast the EU’s GDP to increase by US$29.5 billion by 2035.
Vietnam’s National Assembly on June 8 ratified the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA) following almost 10 years of negotiations.
Analysts hope the trade deal will give a much-needed boost to Vietnam’s industries, such as manufacturing, as it looks to recover from the COVID-19 pandemic.
65 percent of duties on EU exports to Vietnam will be eliminated while the remaining will be gradually phased out over a period of 10 years. 71 percent of duties will be eliminated on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years.
The EVFTA is considered a new generation bilateral agreement – it contains important provisions for intellectual property (IP) rights, investment liberalization, and sustainable development. This includes a commitment to implement the International Labor Organization (ILO) standards and the UN Convention on Climate Change.
Key highlights of the EVFTA
Remanufactured goods
Previously, remanufactured goods were considered ‘used’ by Vietnam and typically not allowed for import. However, the text of the agreement allows remanufactured goods to be imported and will open up trade for high-value products such as medical devices and car parts to serve the after-sales market. Vietnam can still continue to restrict specific used goods under the most favored nation (MFN) conditions.
Repaired goods
The temporary import and export of repaired goods will be duty-free. This will ensure fair and competition conditions particularly for specialized maintenance services such as aircraft.
Made in EU
Vietnam will accept ‘Made in EU’ products for non-agricultural items for the first time reflecting the integration of the EU market. With the exception of pharmaceuticals which are subject to national approvals, this will allow manufacturers to use the EU’s broader internal market.
Fees and formalities
Consular transactions are no longer needed under the FTA while consular authentication will not be required three years the FTA is in effect.
Source: Vietnam-briefing.com