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EVFTA - A MAJOR PUSH FOR VIETNAM’S EXPORTS TO EUROPEAN MARKET
On February 12, 2020, the European Parliament (EP) officially ratified the EU - Vietnam Free Trade Agreement (EVFTA) with 63.33% of ayes.
At a press conference hosted by the Ministry of Industry and Trade right after the EP’s adoption of the EVFTA, Minister Tran Tuan Anh said that the official EVFTA ratification is a good, very meaningful result for Vietnam and the European Union (EU). The fruit comes from the two sides’ endless efforts in the past eight years.
“The high consent reflects the support and positive views of EU congressmen on Vietnam's economy,” said Minister Tuan Anh.
The EP’s EVFTA adoption marks an important milestone in the 30 years of the Vietnam-EU comprehensive partnership and cooperation. The negotiation, signing and ratification of the EVFTA in the context of complicated international developments demonstrates the strong resolve of both parties to promote bilateral relations and upgrade more extensive and substantive relations. Vietnam will soon complete its legal procedures and submit the pact to the National Assembly for approval in the coming time.
With the EVFTA, Vietnam is the first developing country in the Asia-Pacific region to have a free trade deal with the EU, confirming its important role and geopolitics position in the region, he said. For the first time, Vietnam, from a latecomer in international economic integration, has become a leading country.
The EVFTA opens a great opportunity for Vietnamese companies to make inroads into a potential market of US$18 trillion. This pact eliminates nearly all tariff lines, up to 99%. The level of EVFTA commitments can be considered the highest that Vietnam has ever achieved in the FTAs that it has signed. This means that just over 42% of Vietnam's exports to the EU currently enjoy zero tax under the Generalized System of Preferences (GSP).
According to a study by the Ministry of Planning and Investment, the EVFTA will help increase Vietnam's export value to the EU by 20% by 2020, 42.7% in 2025 and 44.37% in 2030 as compared to those without the agreement.
Currently, the EU is one of Vietnam's largest export markets. Vietnam earned over US$41.4 billion from this market in 2019 and spent nearly US$15 billion on imports from this region. Therefore, the deal will help Vietnam facilitate export, diversify markets and gain higher added value by establishing new supply chains. In particular, in the context of rapidly changing regional and international political and security situations, the EVFTA will help Vietnam improve its internal resources to cope with them on the one hand and help it strengthen its position to realize its foreign policy of independence, autonomy, multilateralization and diversification along with consolidating and strengthening national defense and security.
Under EU regulations, the EVFTA will need to be approved by the European Council in order to come into force. The agreement shall come into effect on the first day of the second month after the two sides notify each other of the completion of domestic procedures or at another time agreed by the two parties.
In addition to completing ratification procedures, Vietnam will also prepare for the enforcement of the pact. The Ministry of Industry and Trade drafted and submitted the Action Plan for implementation of the EVFTA to the Government. This action plan clearly defines objectives, tasks and relevant bodies engaged in carrying out detailed roadmaps. In particular, main tasks include five main groups: Information on EVFTA and EU member markets; law and institutional building; competitiveness improvement and human resource development; trade union and employee association policies in companies; and social security, environmental protection and sustainable development policies.
Furthermore, to help people and businesses better understand the EVFTA so as to make the most of opportunities from it, the Ministry of Industry and Trade has published the whole text of the pact, its summary and explanations of commitments in important areas on its website evfta.moit.gov.vn to update information about EVFTA ratification, EU market, action plans of authorities and legal documents to be issued to enforce the agreement.
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