Trade, the backbone of EU-Vietnam cooperation

15:34 | 28/12/2015 Cooperation

(VEN) - Throughout the last decade, Vietnam has recorded a continuous trade surplus with the EU, in both volume and value.

Trade, the backbone of EU-Vietnam cooperation

Over more than the last decade, the EU has been a major trading partner and an important export market for Vietnam, with trade becoming the backbone of bilateral relations. Trade between the two sides reached US$4.5 billion in 2001 and increased to US$36.8 billion in 2014, with Vietnamese exports to the EU accounting for US$27.9 billion, a more than eightfold increase compared with 2001, while imports from the EU reaching US$8.9 billion, up 5.9 times. Last year, the EU became Vietnam’s second largest export market behind the US.

This year, while Europe and EU member countries in particular still have to cope with consequences of the global economic recession as well as political instability, trade between Vietnam and the EU continues to grow. In the first nine months, bilateral trade reached nearly US$31 billion - including US$22.69 billion worth of Vietnamese exports to the EU, up 12 percent compared with the same period in 2014, and over US$8.2 billion worth of imports from the EU, up 24 percent. Vietnam saw increases in the export value of most key products such as telephones and components (US$7.6 billion, up 21 percent), computers and electronic products US$2.26 billion, up 56 percent, footwear US$2.9 billion, up 12.9 percent, textiles and garments US$2.8 billion, up three percent. Vietnam exports to the EU mostly consumer goods, while importing from the EU high-tech products, machinery and equipment, pharmaceuticals, chemicals, automobiles, and motorcycles.

Vietnam has recorded a continuous surplus in its trade with the EU throughout the last decade. The trade surplus was approximately US$3.7 billion in 2005 and increased to US$4.9 billion in 2010, US$7.8 billion in 2011, US$13.25 billion in 2012, US$19 billion in 2013, and US$15.9 billion in 2014. In the first nine months of this year, the trade surplus reached over US$14.4 billion. Imports and exports between Vietnam and the EU are largely complementary, which promises further growth in bilateral trade.

Therefore, both Vietnam and the EU are looking towards the goal of creating new breakthroughs in terms of growth, and narrowing the gap in bilateral trade balance through efforts to accelerate trade liberalization and increase access to each other’s markets.

It’s not by chance that the EU-Vietnam Free Trade Agreement (EVFTA) consists of a specific chapter referring to strong commitments in terms of trade and sustainable development, covering labor and environmental issues that are directly related to trade relations. The chapter indicates that trade plays an important role in sustainable economic growth and generates employment opportunities. The chapter also refers to commitments to assist the sustainable conservation of natural resources such as wild animals, forests, and seafood. It attaches great importance to corporate social responsibility as well as trade morality, equality and healthiness (the EVFTA will propose specific measures to ensure proper implementation of commitments, including mechanisms that ensure the participation of economic sectors and societies of both Vietnam and the EU).

The EVFTA is the EU’s first FTA with a developing country in Southeast Asia. The agreement will eliminate almost all tariffs in trade between the two sides. Specifically, when the FTA takes effect, 90 percent of Vietnamese exports to the EU will enjoy a tax rate of zero percent. Textiles and garments, footwear, agricultural products, and processed food will benefit the most from the FTA. Notably, non-tariff barriers to products such as instant noodles, cakes, and preserved fruit and vegetables will be reduced. At the same time, Vietnam will eliminate most export taxes.

The EVFTA will also create new market access opportunities for service and investment businesses. Vietnam accepts the liberalization of trade in finance, post and telecommunications, logistics, and transport services. In terms of investment, Vietnam will open its market to EU investors, and remove or reduce limitations in certain fields. In terms of government procurement, Vietnam and the EU reached a consensus on principles that are in accordance with stipulations of the World Trade Organization’s Agreement on Government Procurement, and achieved an equivalent transparency level to the FTAs that the EU had signed with developed and other developing countries.

The EVFTA attaches special importance to the protection of geographical indications (GIs) that represent unique EU products such as champagne, Parmigiano-Reggiano or Roquefort cheese, Rioja wine or Scotch whisky. Similarly, Vietnamese GIs such as Buon Ma Thuot coffee, Moc Chau tea, and some other typical products will be recognized in the EU.

Through the signing of an agreement on the conclusion of negotiations on the EVFTA, Vietnam and the EU once again underlined that trade continued to be the backbone of the two economies. Negotiators as well as the leading economists from both sides predicted Vietnamese exports to the EU would grow 35-40 percent, and the EU’s exports to Vietnam would grow 25-30 percent compared with present. These are impressive predictions for both sides. To make this a reality, Vietnamese businesses as well as those from 28 EU member countries need to get ready to make the most from the EVFTA after it is signed.

 

Bui Duc Khiem

 

Theo ven.vn