EVFTA provides new driving forces for Vietnam-EU partnership

09:15 | 04/02/2020 MUTRAP Corner

(VEN) - The signing of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) after years of negotiations marked an important milestone in bilateral commercial, economic and investment links between Vietnam and the European Union. The agreements will help promote the current strong partnership to a new unprecedented height for the benefits of the peoples and economies of Vietnam and the EU once it is fully implemented. Vietnam Economic News’ Nguyen Huong talked with EU Ambassador to Vietnam Giorgio Aliberti on the occasion of the 2020 Lunar New Year. 

evfta provides new driving forces for vietnam eu partnership
EU Ambassador to Vietnam Giorgio Aliberti

In your recent meetings with the local media, you mentioned two priorities during your tenure: promoting green economy and digital economy. Could you elaborate on these?

The EU’s aim is to be a carbon-neutral economy by 2050. We are ambitious about green economy not just in Europe but also in our international work.

For this reason, the EU is supporting the implementation of projects related to sustainable consumption and production, which aim at enhanced resource efficiency. One such project is the Sustainable and Equitable Shrimp Production and Value Chain Development in Vietnam (Mekong Delta River) that aims to develop shrimp value chains through the application of sustainable standards, improved production efficiencies (water saving, waste reduction, and efficient use of energy and feeding).

A second example is the Scaling up of Ethical BioTrade initiatives within phyto-pharmaceutical sector in Vietnam which aims to upscale the sustainable Ethical BioTrade business model to the Natural Ingredient (NI) sector of Vietnam while improving processing at the source, increasing the energy efficiency of value chains.

Other than the achievements and resuls of these two projects individually, the intention is to demonstrate that a more resource-efficient and environmentally sustainable approach can be a real win-win. Beyond these projects, we also support the government of Vietnam (Ministry of Industry and Trade) in development of a new National Action Plan on Sustainable Consumption and Production (2021-2030) so that a national framework can be put in place for such initiatives in the future. Do you think the EVFTA and EVIPA can be ratified in February? What do you expect from bilateral trade relations after the two agreements are ratified and enter into force?

After 14 rounds of negotiation in nearly three years and the legal scrubbing, the trade and investment agreements were signed in Hanoi on 30 June 2019. This marks an important milestone for the bilateral commercial, economic and investment links between Vietnam and the European Union. At this stage, the EVFTA and EVIPA are under consideration by the European Parliament (EP) and Vietnamese National Assembly. I understand that on the Vietnamese side, the two agreements are to be submitted for discussion and endorsement by the National Assembly in the next parliamentary session in May 2020. The agreements are to be considered by some committees of the EP and at the EP plenary in Spring 2020. This will be the first FTA and IPA that are voted by the new EP, therefore these agreements will draw a lot of attention. As an executive branch of the EU institutions, we are quite hopeful about the ratification but of course it is up to our Parliamentarians to decide their votes.

The agreement represents a unique opportunity for European and Vietnamese businesses. It will put EU exporters at least on a par with those from other countries and regions with whom Vietnam has already concluded FTAs, like ASEAN, Australia, New Zealand, Chile, China, India, Japan, and the Republic of Korea. This will offer new business opportunities for agricultural, industrial and service exporters from the EU that have so far been curtailed by existing trade barriers. Vietnam will in turn enjoy privileged access to the EU market (on similar footing to the Republic of Korea and Singapore). Consumers and firms in the EU and Vietnam will stand to gain from the increased availability of products and inputs.

Will the extension of the EU’s yellow card affect the ratification process? What are the EU’s comments on Vietnam’s efforts to remove the card?

The EU attaches great importance to the fight against Illegal, Unregulated and Unreported Fishing (IUU). By all means Vietnam’s full cooperation on this matter wields important impacts on positive considerations by the EP during the ratification process of the trade and investment agreements. It is good that the two sides have maintained dialogues about this issue. The Directorate General of Maritime Affairs and Fisheries (DG MARE) have been working closely with the Vietnamese Ministry of Agriculture and Rural Development on IUU. The assessment is done by our colleagues at headquarters. What I would like to underline is that the progress in revising legal framework, albeit necessary and positive so far, should be accompanied by concrete actions that are implemented fully in reality.

Can we expect stronger investment flows from the EU to Vietnam, especially in the field of advanced technology?

The EU has been the fifth largest FDI partner of Vietnam for many years. By the end of November 2019, the EU has had a total FDI stock of around US$24 billion in more than 2,400 projects. This is quite significant and meaningful given that Vietnam is in need of capital and advanced technology and the EU is quite abundant in these two aspects; nonetheless potentials do not seem to be fully tapped. Considering the complementarity of EU and Vietnam comparative advantage profiles, Vietnam’s strategic location in Asia, and its efforts towards greater integration with other ASEAN and Asian markets, the trade and investment agreements can also be expected to promote production sharing between the EU and Asia as EU firms choose to set up production and exporting hubs in Vietnam. The reforms that Vietnam agreed to implement to improve the business environment, including greater transparency in public procurement markets, will also contribute to making Vietnam a privileged destination for investment from the EU.

Nguyen Huong