EU - Vietnam Free Trade Agreement: Impacts and expectations

Former Minister of Industry and Trade Truong Dinh Tuyen, key expert of the EU - MUTRAP Project speaks at the workshop - Photo: mutrap.org.vn

In the context of preparation for the signing and implementation of the Agreement, Central Institute for Economic Management (CIEM), in cooperation with the EU - MUTRAP, organized the workshop entitled "Consultation on potentials impacts of the EU - Vietnam Free Trade Agreement on Vietnam's economy". The workshop was held on November 2nd in Hanoi and on November 28^th, 2017 in Ho Chi Minh City.

The workshop created a platform for discussion and exchange of opinions and updates on the impacts of the EVFTA on different sectors and on the economy of Vietnam as a whole.

Besides, the workshop identified opportunities, directions for actions as well as solutions to deal with challenges to take full advantage of the EVFTA.

Opening the workshop, Mr. Phan Duc Hieu, Vice President, Central Institute for Economic Management (CIEM) said "As a comprehensive Agreement of high quality, wide range of commitments, the EVFTA will have considerable impacts on the economy of Vietnam. Once signed, the Agreement will boost Vietnam's export to the EU by 30 - 40% and the EU's export to Vietnam by 20 - 25%. At the same time, the Agreement will become a motivation for Vietnam to promote its institutional reforms and improvement of business environment.

According to Mr. Truong Dinh Tuyen - Former Minister of Trade, key expert of the EU - MUTRAP Project, there are three factors to be considered in assessing impacts of the Agreement on the economy of Vietnam, namely the partner's position, impacts on the formulation of a modern market institution and international integration and impacts on growth through attracting investment and promoting exports. The assessment of the EVFTA based on all these criteria reveals that the EVFTA has positive impacts on Vietnam. The trade and investment relation between Vietnam and the EU is characterized by the supplementation of two economies for there is only a few industries where competition exists.

Mr. Claudio Dordi, Technical Assistance Team Leader of the EU - MUTRAP affirmed that the positive progress made in the bilateral trade - investment relation in the past two decades has brought the EU to the position of one of the most important Vietnam's trade partners and also one of the biggest most FDI investors in Vietnam. This is considered a solid background for future development of trade, investment and cooperation between two parties after the EVFTA is signed.

At the workshop, the experts discussed some implications of the EVFTA in the context of comprehensive integration. In particular, the EVFTA will significantly reduce tariff in bilateral trade in goods, up to 99% tariff lines. For only a few tariff lines left, two parties agreed to apply tariff quota or partial tariff reduction. This could be considered the highest level of commitment that Vietnam has achieved in free trade agreements that have been signed so far. The strong commitment to open the market is seen as the successful breakthrough of the EVFTA, contributing to the promotion of trade between Vietnam and the EU. As a result, the market will be expanded for export goods, especially two parties' goods of competitive advantages namely textiles and apparel, leather and footwear, agro - fishery products, wooden products, machineries, equipment, automobiles and some agricultural products of the EU, etc.

In addition to tariff elimination, Vietnam will also remove almost export taxes. The EVFTA will create new market access opportunities in the area of services and investment. Vietnam has agreed to liberalize trade in financial services, telecommunications, postal services and express delivery. Vietnam will open its market for access from the EU by removing or reducing restrictions on the production of food or beverages, as well as on non - food sector.

The experts in the workshop reaffirmed the view that EU are important trade and investment partner of Vietnam. In terms of overall impact, the EVFTA will bring significant benefits to Vietnam.