09:47 | 26/08/2015 Cooperation
(VEN) - The EU-Vietnam Free Trade Agreement (EVFTA) is opening big opportunities for trade and investment flows between the two sides. Minister Counselor Jean-Jacques Bouflet, Head of the Trade and Economic Section of the EU Delegation to Vietnam, spoke to the press about preferences that the FTA can bring to Vietnamese and EU businesses.
Vietnam and the EU are completing the final procedures for the EVFTA to be signed later this year. Could you explain why there is a gap in terms of the tax reduction roadmap between the two sides? Which Vietnamese goods will benefit greatly from these preferences?
Under the EVFTA, the two sides agreed to eliminate 99 percent of tariff lines. Vietnam and the EU will see respective exemptions from 71 percent and 65 percent of these tariff lines as soon as the agreement takes effect. It will take Vietnam 10 years and the EU seven years to fully open their markets to each other’s goods. This gap is attributed to the differences in development levels between the two sides. Vietnamese businesses need more time to adapt to the tax reductions.
The EU will eliminate all import taxes applied to textiles, garments, footwear, and processed coffee within seven years once the agreements takes effect.
The EU will also apply a zero-percent tax rate to rice imports from Vietnam but based on specific quotas for fragrant rice: 30,000 tonnes, husked rice: 25,000 tonnes, and milk rice 30,000 tonnes per year.
The EU is applying the Generalized System of Preferences (GSP) to Vietnamese goods. The application of these preferences will continue when the EVFTA takes effect.
For example, the EU currently imposes a 12-percent tax rate on textile and garment imports from World Trade Organization (WTO) member countries according to the Most-Favored-Nation (MFN) status, but under the GSP, we have applied a lower average tax rate, nine percent, to Vietnamese textiles and garments. If the EVFTA offers Vietnam a lower tax rate, we will follow it when the agreement takes effect.
What preferences will be offered to exports from the EU to Vietnam?
Taxes applied to textile, garment and footwear exports from the EU to Vietnam will be eliminated as soon as the EVFTA takes effect. Regarding frozen food, taxes imposed on pork will be reduced to zero percent within seven years, beef three years, chicken 10 years; other products such as milk five years, and alcoholic beverages seven years.
The roadmap for eliminating taxes applied to motorcycle exports with a cylinder capacity of more than 150cc from the EU to Vietnam is seven years, automobiles 10 years, and high-powered automobiles nine years.
Many Vietnamese businesses are still concerned about non-tariff barriers when exporting to the EU. Do you have any advice for these businesses?
Actually, these barriers represent technical standards that are internationally recognized and transparently set to ensure the equality between the two sides. EU businesses also have to follow these standards. In the EVFTA, however, these technical barriers will be adjusted so that Vietnamese businesses can gradually adapt themselves to international standards. If they overcome this challenge, Vietnamese businesses will benefit from the EU market with 560 million consumers with an average income of US$24,000 per year.
The EU has programs to help Vietnamese businesses improve their competitiveness. The public sector continues to be our priority.
There’s plenty of time for Vietnam to prepare for opening its market. It’s time for Vietnamese businesses to upgrade their brands and think of exporting higher-value products to make better profits.