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The European Union Vietnam Free Trade Agreement (EVFTA) is to cut or eliminate 99% of tariffs on goods traded between Vietnam and the EU bloc.
Already ratified by the EU, deputies in Vietnam’s National Assembly are reported to have voted by over 94.62% in favour of the EVFTA, to be effective in July and whose terms also include reducing regulatory barriers and overlapping red tape, ensuring protection of geographical indications, opening up services and public procurement markets, and making sure the agreed rules are enforceable. Vietnam is to have a transition period of up to ten years for some imports, such as cars. The deal does include Vietnam’s commitments on labour rights. The World Bank expects the EVFTA to Vietnam's gross domestic product (GDP) and exports to grow 2.4% and 12%, respectively, by 2030 and take thousands of people out of poverty.
"One of the issues that attracted the attention of the National Assembly deputies was that Vietnam had to change its mode of economic activity, and secure customers in the European market after the Covid-19 pandemic", read a statement in Vietnam’s National Assembly News. "Along with the benefits, the EVFTA also poses some challenges. The EVFTA creates competitive pressures on goods and services from the EU for Vietnamese businesses, goods and services", it said.
Once the agreement takes effect, 71% of exports from Vietnam to the EU are to become duty-free, as will 65% of EU shipments to Vietnam. The remaining tariffs up to 99% will be phased out by Hanoi over ten years and by Brussels over seven years. With a population of about 96 million people, Vietnam has the third-largest population among the ten-member Association of Southeast Asian Nations. In 2019, GDP per capita was estimated at around US$3,500 for 2019.
Sources: Bangkok Post/Asia Nikkei Review