EVFTA to represent new value chains for Vietnam
The European Union – Vietnam Free Trade Agreement, poised to be signed on 30 June, would leverage Vietnam to build new value chains with the EU, one of the world’s leading economic powers, Minister of Industry and Trade Tran Tuan Anh has stated.
Both the European Union – Vietnam Free Trade Agreement (EVFTA) and the EU – Vietnam Investment Protection Agreement (EVIPA) are slated to be signed in Hanoi on 30 June, the European Council (EC) said on 25 June.
The minister, following the EC statement, told local media that cooperation bonds between Vietnam and the EU will become extremely significant to the development strategy of both sides.
The EVFTA would help Vietnam not only boost its exports to the block but also improve its overall competitiveness.
The trade official added the EVFTA puts forth stringent requirements relating to market openness for both sides. Vietnamese goods will benefit from the EU’s tariff cuts, reaching up to nearly 100% of tariff lines within seven years since the agreement takes effect.
The EVFTA represents a comprehensive trade pact that covers various fields, including trade, services, investment, incentives, and intellectual property, along with issues related to small and medium – sized enterprises (SMEs).
The signing of both EVFTA and EVIPA would help Vietnam raise its international profile and allow the country to become a more significant contributor to the process of global integration, trade liberation, and facilitation.
Once the two pacts are ratified, the local investment and business climate for European firms operating in Vietnam will improve significantly. A string of major issues regarding investment protection and arbitration will be settled on a par with international law as well as legal regulations of both sides.
A score of mechanisms and rules will be put forward in order to protect the legitimate interests of EU investors while the local investment climate will improve dramatically thanks to concerted efforts made by the Government to accelerate legal and administrative reforms.
As such, European investors would definitely enjoy advantages from pumping their additional investment into the country, especially in industries which have great potential to develop further.
More importantly, the country has joined many regional trade pacts such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the ASEAN Trade in Goods Agreement (ATIGA) which aids European investors in approaching not only the Vietnamese market with a population of 100 million, but also the wider Southeast Asian market with a combined population of 660 million people and other trading partners, the minister noted.
However, he raised concerns about the fierce competition facing the Vietnamese economy, its sectors, and business communities amidst the country’s joining trade pacts such as the EVFTA.
Drastic competition persists for domestic goods as the country broadly opens its market to imported goods and services. Local firms, especially SMEs, reportedly suffer a number of limitations in terms of business scale, workforce, and technology application.
Vu Anh Quang, Vietnamese Ambassador to Belgium and head of the Vietnamese Mission to the EU, said the EVFTA and EVIPA are the first new generation trade – investment deals which the EU has signed with a middle-income country such as Vietnam.
Both sides are expected to reap great benefits when the two pacts are signed and approved as the structure of the goods and economy of the two sides is supplementary.
The deals make it more favorable for Vietnamese businesses to make a deeper penetration into the EU market which has a combined population of over 500 million people and the total GDP reaching USD18.8 trillion, or 22% of global GDP, the diplomat added.
He said that the Vietnam Embassy and Vietnam Mission to the EU expect the European Parliament (EP) to refine its apparatus and personnel soon after its election, so that the EP could review the two pacts in September or October for ratification by late 2019 or early 2020.