New prospects for Vietnam-EU trade

The EU saw an overall decline in their foreign trade activities last year, while the 28 inpidual member countries saw differences in changes (rises or falls) in their trade surplus. What about trade between the EU and Vietnam?

According to the General Department of Vietnam Customs, in the first 11 months of 2014 trade between Vietnam and the EU reached US$25.5 billion, and this included US$23.7 billion worth of Vietnamese exports to the EU. In 2013, trade between Vietnam and the EU reached US$26.6 billion, including US$21.3 billion worth of Vietnamese exports to the EU, and US$5.3 billion worth of Vietnamese imports from the EU. Clearly, trade between Vietnam and the EU decreased only marginally in 2014 compared with 2013. I will use data from Eurostat, the EU’s statistical office, to analyze the trade situation between Vietnam and the EU in 2014.

According to Eurostat, in the first eight months of 2014, trade between Vietnam and the EU reached nearly EUR18.13 billion, down 0.8 percent compared with the same period in 2013, and this included nearly EUR14.3 billion worth of Vietnamese exports to the EU, down 0.6 percent, and over EUR3.7 billion worth of Vietnamese imports from the EU, down 1.6 percent. So, Vietnam recorded a trade surplus of nearly EUR10.6 billion in trade with the EU.

Compared with the same period in 2013, Vietnamese exports to the EU in the first eight months of 2014 decreased insignificantly. This was an encouraging result in the geopolitical context of the EU in 2014. The export value of some Vietnamese products decreased, for example electronic products and components down 18.2 percent, and coffee down eight percent, while the export value of key products strongly increased, for example footwear up 19.9 percent, textiles and garments up 23.3 percent, suitcases and handbags up 24.8 percent, light industry-related products (household utensils) and handicrafts up 10 percent, seafood up 6.1 percent, timber, wood products, and furniture up 12.3 percent.

Vietnamese imports from the EU in the first eight months of 2014 also showed different changes compared with the same period in 2013. While the import value of key products strongly increased, for example wood and furniture up 77 percent, industrial machinery and equipment up 10.4 percent, food, milk, confectionery and beverages up 15 percent, the import value of some products decreased, for example iron, steel, and other metals down 23 percent, and fertilizer down 5.6 percent.

First of all I would like to speak about the EU-Vietnam Free Trade Agreement (EVFTA) which has entered the final stages of negotiation. I believe the agreement will be signed this year because at the 10th round of negotiations in Brussels, Belgium last October, the two sides achieved satisfactory results in many fields. Notably, during his official visit to Belgium in the same month, Vietnamese Prime Minister Nguyen Tan Dung and European Commission President Manual Barroso signed a joint statement between Vietnam and the EU on the orientation for ending EVFTA negotiations in the next several months. The two leaders agreed on the necessity of achieving balanced, ambitious results in all fields related to market access (trade in goods, trade in services, investment flows, and government purchases), as well as regulations and laws on intellectual property rights, geographical indications, state-owned enterprises, internal laws, investment protection, export taxes, export restrictions, and many other areas. The two leaders also reaffirmed the significance of concluding EVFTA negotiations as soon as possible because the agreement would be a key tool helping to deepen comprehensive bilateral relations and increase trade and investment between Vietnam and the EU for their mutual benefit.

The 12th round of EVFTA negotiations took place in Hanoi on March 24, creating an important driving force for Vietnam and the EU to pursue new goals in economic cooperation and trade in 2015 and the ensuing years.

However, the slow recovery of the EU economy in late 2014 and unresolved issues are big challenges facing this region, although the European Central Bank is determined to untie difficulties and promote economic growth through historical stimulus packages that are forecast to have clearer effects on the European economy in 2015.

Vietnamese exports to the EU are due to face difficulties in 2015 due to indirect impacts of the political tension between the EU and Russia, related to the situation in the Ukraine. Russia continues to refuse to import fruit and vegetables from the EU. Vietnam will also meet difficulties in exporting food products to Russia. Moreover, strong decreases in the VND-EUR exchange rate due to the impact of recent economic stimulus packages in the EU will affect the export revenue of Vietnamese businesses. 

Many high-ranking meetings between Vietnam and the EU took place in 2014, opening new cooperation opportunities

Do you have any proposals to state authorities and the domestic business community for Vietnam to make the most of opportunities and maintain the growth of exports to the EU?

The Vietnam Trade Office in Belgium said that it was necessary to accelerate the completion of EVFTA negotiations because in the context of difficulties continuing to face the EU economy, only tax cuts can create competitive advantages for Vietnamese exports to the EU.

As soon as EVFTA negotiations end, it is necessary to intensify political lobbying and diplomatic activities so that the European Parliament can ratify the EVFTA soon.

Trade promotion activities in the EU market should be intensified. Domestic businesses need to increase advertising and participate in trade fairs in the EU’s 28 member countries.

In addition, it is necessary to improve the quality of seafood and other kinds of agricultural and forestry products and to ensure their safety. In recent times, the EU has applied strict controls on these kinds of Vietnamese exports through food safety regulations.

In the context of the euro getting weaker compared with the US dollar, Vietnamese businesses should use USD when signing export contracts and EUR when importing.