Hopes, challenges of trade pact with Europe

09:51 | 18/07/2019 MUTRAP Corner

(VEN) - The EU-Vietnam Free Trade Agreement (EVFTA) is a new-generation trade agreement different from others in various contents and market opening commitments. Vietnam Economic News’ Nguyen Huong and Nguyen Hanh recorded the opinions of experts and businesses about the signing of the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA).

hopes challenges of trade pact with europe
Ousmane Dione, World Bank Country Director for Vietnam

Ousmane Dione, World Bank Country Director for Vietnam: Vietnam is a highly attractive market

First, I would like to congratulate the Vietnamese Government for this wonderful result. Following a long period of negotiations, EVFTA and EVIPA have been signed. This reflects the fact that Vietnam is a highly attractive market with a high level of trade openness, and Vietnam should bring these advantages into full play.

It’s possible to say that the signing of these agreements marked a historical milestone and its impact will go beyond the economic cooperation and trade relations between Vietnam and the EU. In the context of rising trade protectionism among countries, the event gave a positive signal, showing the two sides’ strong support for free trade.

There is no doubt that the EVFTA will bring Vietnam benefits, opportunities, challenges and even risks. Vietnam needs to enhance its standards in various fields to meet the requirements of the European market. However, once they meet the strict requirements of the European market, Vietnamese businesses will have opportunities to increase their global presence not only in European countries.

hopes challenges of trade pact with europe
Michele D’Ercole, Chairman of the Italian Chamber of Commerce (ICHAM) in Vietnam

Michele D’Ercole, Chairman of the Italian Chamber of Commerce (ICHAM) in Vietnam: Many Italian companies expected the EVFTA to be signed

Many Italian companies operating in Vietnam were waiting for the EVFTA to be signed and enforced. This agreement plays a significant role in boosting the cooperation between Vietnam and Italy. I believe that once it takes effect, the EVFTA will create a motive for the two governments to upgrade bilateral relations. However, to access the EU market, Vietnamese businesses need to improve their production lines to meet high standards. In fact, it remains difficult for businesses in many Vietnamese localities to meet these standards. Italy can help Vietnamese companies in the context of various kinds of Italian products present in the European market. ICHAM is willing to assist Vietnam in organizing workshops on access to the EU market. During the implementation process of the EVFTA, we will provide instructions for small and medium enterprises to access the EU and Italian markets.

hopes challenges of trade pact with europe
Nguyen Hoai Nam, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP)

Nguyen Hoai Nam, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP): More opportunities and advantages for seafood producers and exporters

Before the EVFTA was signed, Vietnam had no trade agreement with the EU. The EVFTA therefore will create opportunities for Vietnam to boost seafood exports to this market.

Domestic seafood businesses will benefit from tariff preferences under the agreement. While processed products are still subject to tax rates ranging from three to five percent, cuttle-fish, octopus, shrimp and Tra fish will be exported free-of-tax as soon as the EVFTA takes effect. The agreement will remove 50 percent of tax lines, except for canned tuna and fish balls. The remaining 50 percent will be cut according to a roadmap in three to five years. The existing 6.8 percent tax rate applied to pangasius will be reduced to zero in the third year of the agreement.

The EVFTA will also require Vietnamese businesses to cope with challenges, including rules of origin and trade defense measures. Therefore, businesses need to be aware of commitments made by Vietnam and its partners, as well as labor and environmental regulations and standards and issues related to sustainable development, so that they can create suitable export plans.

hopes challenges of trade pact with europe
Pham Hong Hai, CEO of HSBC Vietnam

Pham Hong Hai, CEO of HSBC Vietnam: The EVFTA will accelerate Vietnam’s reforms and global integration

We expect the agreement will increase Vietnam’s real GDP by an average of 0.1 percent (with a range of 0.0-0.3 percent) annually due purely to trade impacts. Upon complete effect, the high standards of the EVFTA will accelerate Vietnam’s pace of reforms and global integration.

According to HSBC analysts, Vietnamese industries like textiles and garments and footwear are expected to benefit the most from the agreement. Besides benefits, there are still many things to do so that we can fully gain from the agreement. We need to be well aware that Vietnam needs to build a strong domestic textile and garment industry with lower import components to be able to capture all the benefits. Strict requirements on certificate of origin could limit the benefits for Vietnam if a majority of raw materials is imported from other markets.

Putting aside economic benefits that the EVFTA is set to bring to the country, I welcome all sustainable development measures that the agreement covers, such as a commitment to implement the Paris climate agreement, a commitment to respect and implement the principles of the International Labor Organization (ILO) concerning fundamental workers’ rights. I believe Vietnam will take action to take advantage of the benefits while tackling challenges to further boost the development of the country in a sustainable way.

hopes challenges of trade pact with europe
Doctor Lynette Moey, Managing Director of Bayer Vietnam

Doctor Lynette Moey, Managing Director of Bayer Vietnam: The EVFTA will help create more jobs, develop expertise and promote innovative knowhow transfer

The EVFTA promises to bring Vietnam and Europe closer together. Once ratified, trade and investment will grow, yielding positive benefits for businesses and consumers on both sides.

The EVFTA will help enhance broad and expanding relationships in many key areas, resulting in the creation of jobs, development of expertise and innovative knowhow transfer, generation of tax revenues, and the introduction of cutting-edge goods and services to the benefit of consumers. As a global company with roots in Germany with key businesses in healthcare and agriculture and a presence in more than 90 countries, Bayer is ready to have further close cooperation and partnership with the Vietnamese Government and relevant stakeholders to achieve the national action plans in the respective areas to ensure effective implementation of the EVFTA.

Nguyen Huong