10:23 | 25/09/2020 Cooperation
(VEN) - At a September 9 virtual forum, jointly held by the Vietnamese Ministry of Industry and Trade (MoIT), and the Confederation of Netherlands Industry and Employers (VNO-NCW), Deputy Minister of Industry and Trade Hoang Quoc Vuong highlighted the strong Vietnam-Netherlands trade and investment ties and proposed ways to bolster them by optimizing advantages of the EU-Vietnam Free Trade Agreement (EVFTA).
According to the MoIT, the Netherlands has become one of Vietnam’s two biggest EU trade partners. Trade between the two countries reached US$7.56 billion last year, with Vietnam’s exports hitting US$6.9 billion and its imports, US$661 million. In the first seven months of this year, Vietnam exported more than US$3.83 billion worth of goods to the Netherlands, up 0.46 percent year-on-year, even as Vietnam’s total export value to the EU dropped 5.96 percent.
The Netherlands remains the largest EU investor in Vietnam with 316 projects worth US$10.3 billion. Dutch enterprises in Vietnam include FrieslandCampina, De Heus, Unilever, Philips, AkzoNobel, Shell, and Damen. They operate throughout Vietnam and work well with Vietnamese partners.
The EVFTA is the EU’s first new generation free trade agreement (FTA) with a developing country. Under the agreement that went into effect on August 1, the EU will eliminate about 85.6 percent of import tariffs on Vietnamese goods, equivalent to 70.3 percent of Vietnam’s revenue from exports to the EU.
Within seven years of the deal taking effect, the EU will remove 99.2 percent of tariffs, equivalent to 99.7 percent of Vietnam’s revenue from exports to the EU.
Regarding the remaining 0.3 percent of Vietnam’s export revenue, the EU pledged to provide Vietnam with tariff-rate quota, with the import tax rate set at zero percent within the quota.
For EU exports, Vietnam committed to truncate 48.5 percent of tariff lines immediately once the agreement comes into force (accounting for 64.5 percent of import revenue). After seven years, Vietnam will remove 91.8 percent of the tariff lines, equivalent to 97.1 percent of EU export revenue. After 10 years, about 98.3 percent of the tariff lines (accounting for 99.8 percent of import turnover) will be cut. For the remaining 1.7 percent of the tariff lines, Vietnam will apply tariff-rate quota under WTO (World Trade Organization) commitments or a special roadmap to remove tariffs.
World trade challenges
Apart from providing opportunities for businesses to increase exports to the EU in general and the Netherlands in particular, EVFTA will help Vietnam become an attractive destination for EU and Dutch investors. Other factors promoting Vietnam’s attractiveness to foreign investors include the country’s efficient control of the Covid-19 pandemic, and the World Bank’s assessment of Vietnam as one of the few countries maintaining economic growth in the context of Covid-19. EVFTA implementation looks set to encourage firms from the Netherlands to invest new capital in Vietnam or increase capital by expanding their production capacity.
The trade deal will not only capture the attention of local businesses but also many firms based in the EU, with plenty of enterprises expected to strive to promote their investment operations and bilateral trade with Vietnam.
Assessing the impact of the EVFTA on trade and investment between the two countries within the framework of the Vietnam-Netherlands online sportswear-trading forum 2020, Iwan Rutjens, first secretary of the business division at the Dutch Embassy in Hanoi, said EVFTA would encourage many Dutch firms to enter the Vietnamese market. In addition, it will also promote better access to the Dutch market for many Vietnamese enterprises.
According to data released by the European-American Market Department under the Ministry of Industry and Trade, among the 28 EU member states with investment in Vietnam, the Netherlands leads the way in terms of registered capital.
However, Vietnam and the Netherlands are facing challenges caused by world trade conflicts that are affecting global trade development. The increasing trend of protectionism in some countries and the impacts of the Covid-19 pandemic are interrupting supply chains and creating an economic crisis. This, in turn, is resulting in investment shifts, partner diversification, and changes in the environment and business mode and values.
Deputy Minister of Industry and Trade Hoang Quoc Vuong said the MoIT wishes to continue developing cooperation with Dutch partners in agriculture, circular economy, clean and renewable energy, high technology, and areas where the two sides can take advantage of EVFTA to promote exports, such as support industries and food processing.
|The EVFTA will create favorable conditions for Vietnamese and Dutch enterprises to promote cooperation in economic development and Covid-19 control.|