Great Opportunity for Vietnamese, European Businesses
Mr. Tran Tuan Anh, Minister of Industry and Trade, said, EVFTA is expected to positively boost export growth and diversify the market and export commodities for Vietnam. As soon as EVFTA comes into effect, 85.6% of commodities, equivalent to 70.3% of Vietnam's export value to the European Union (EU), will be given zero tax. After seven years, 99.2% of products or 99.7% of Vietnam's export value will enjoy this treatment (remaining items are subject to tariff quota, with zero tax imposed within quota).
Mr. Nguyen Chi Dung, Minister of Planning and Investment, affirmed that the signing of EVFTA and IPA will help speed up Vietnam’s reforms and economic integration, not only in the traditional trade field but also in institutional and administrative reforms, investment, business, intellectual property, government procurement and labor.
The Ministry of Planning and Investment assessed that the current import and export structure is complementary rather than competitive between Vietnam and the EU. EVFTA produces positive impacts on Vietnam's goods and service exports to the EU. By effectively utilizing tariff and nontariff reductions as well as geopolitical and economic advantages, Vietnam's exports will grow, averaging from 5.21-8.17% in 2019-2023, 11.12-15.27% in 2024-2028 and 17.98-21.95% in 2029-2033. As Vietnam’s exports to the EU outpace its imports from the EU, EVFTA will basically further increase Vietnam's trade surplus with the EU.
Expected well performing exports include agricultural products, sugar, pork, forest products, cattle and poultry meat, drink, cigarette, apparel and footwear.
Beneficiary services consist of transportation, finance, insurance and other business services.
In the medium and long terms, FDI inflows to Vietnam will boost the country’s export growth, followed by impacts of tariff cuts, nontariff barriers, and improved productivity.
However, with new-generation free trade agreements where the scope of commitments is not defined to only commodity markets, EVFTA regulates many other issues such as service opening, public investment and procurement, ecommerce, intellectual property rights, State-owned enterprises, and sustainable development.
EU businesses are excited about EVFTA
On the EU side, according to research by the European Commission (EC), EVFTA will increase the EU’s gross domestic product (GDP) in the long term with an increase of up to EUR29.5 billion. In addition, EU exports to Vietnam may increase by an average of 29%.
Mr. Nicolas Audier, Chairman of the European Chamber of Commerce in Vietnam (EuroCham), said, one of EVFTA's strongest points is to increase business participation. Before signing EVFTA, the EC had implemented several European SME support projects in Vietnam, including many from Poland, Hungary, Spain and Portugal.
He believed that, with the official signing of EVFTA and IPA, more European businesses will certainly come to Vietnam because they understand that there is a solid legal tool to support them when doing business here. EuroCham will try to simplify procedures to support businesses, especially to attract European SMEs to invest in Vietnam.
Ms. Cecilia Malmstrom, EU Trade Commissioner, said that the signing of EVFTA and IPA is a right step for many people to get out of poverty, promote investment and bring jobs to many generations.
She rated EVFTA and IPA as truly high-quality comprehensive agreements that balance benefits for both Vietnam and the EU. The two agreements “will help create a solid basis for strengthening and developing bilateral trade relations between Vietnam and the European Union to new highs, bring practical and tremendous benefits to businesses and the people of both sides,” said Ms. Cecilia Malmstrom.
Source: VCCI News