The European Union-Vietnam Free Trade Agreement (EVFTA) took effect on August 1 last year. It’s the first high-standard, new-generation free trade deal the 27-member EU has signed with a developing country in the Asia-Pacific region.
The EU is the second largest importer of Vietnamese goods and Vietnam’s fourth largest trading partner overall.
When the EVFTA comes into effect, it is expected to give a boost to the bilateral trade and investment relationship.
Despite the COVID-19 pandemic, trade between Vietnam and the EU has grown more than 18% in the year since the agreement took effect.
Vietnam enjoys a trade surplus of more than 11 billion USD with the EU. Vietnam’s key exports to the EU are phones and components, computers, electronic products and components, footwear, textiles, vegetables, seafood, rice, and coffee. Vietnam imports from the EU chemicals, pharmaceuticals, cars, and car accessories.
Addressing the first meeting of the EVFTA's Trade Committee, Valdis Dombrovskis, European Commission Vice President and EU trade commissioner, said the EVFTA is clear evidence of the strength of the EU-Vietnam relationship and the most expected deal. It has improved the businesses outlook of both and helped them attract mutual investment, said Minister of Industry and Trade Nguyen Hong Dien.
He added, “Thanks to commitments set by the EVFTA on transparent governance and on creating an open and favorable trade and investment environment for businesses and investors of the two sides, Vietnam has gained quality investment sources and learned advanced technologies from the EU that will benefit both.”
In the first year, Vietnamese ministries, agencies, and localities streamlined administrative procedures to help businesses access the EU market, and more investment was made in corporate governance, access to technology, and compliance with international standards to ensure sustainable development.
Despite efforts by Vietnam and the EU to make the most of the EVFTA, the coronavirus pandemic has created obstacles, so it may take many more months to accurately assess the trade deal’s advantages and disadvantages.
Luong Hoang Thai, Director of the Multilateral Trade Policy Department of the Ministry of Industry and Trade, said, “The biggest issue amid the COVID-19 epidemic is how to handle the flow of goods, especially vaccines, medicines, and medical products. Vietnam’s Ministry of Health and Ministry of Industry and Trade have promised to deal with the challenge, and the EU has praised the Vietnamese efforts so far."
Seafood is one sector that has taken advantage of the EVFTA’s opportunities but it hasn’t yet solved all the long-term problems, one of which is the EU’s imposition of a "yellow card" on the import of Vietnam’s aquaculture products, said Minister of Agriculture Le Minh Hoan.
According to Hoan, “We need to find a way to remove the EU yellow card and establish a transparent and responsible fishery sector. This is Vietnam’s biggest headache at the moment and the biggest risk in international trade.”
After implementing the agreement for a full year, the Ministry of Industry and Trade will summarize all the problems and submit to the Prime Minister to improve the Government's joint action plan for EVFTA implementation.
Seafood is one sector that has taken advantage of the EVFTA’s opportunities but it hasn’t yet solved all the long-term problems, one of which is the EU’s imposition of a "yellow card" on the import of Vietnam’s aquaculture products, said Minister of Agriculture Le Minh Hoan.
According to Hoan, “We need to find a way to remove the EU yellow card and establish a transparent and responsible fishery sector. This is Vietnam’s biggest headache at the moment and the biggest risk in international trade.”
After implementing the agreement for a full year, the Ministry of Industry and Trade will summarize all the problems and submit to the Prime Minister to improve the Government's joint action plan for EVFTA implementation.
MAIN POINTS
After one year of implementation, the EU-Vietnam Free Trade Agreement (EVFTA) has brought about fruitful results to many export industries of Vietnam and it is also a free trade pact best utilised by Vietnamese enterprises.
According to the Ministry of Industry and Trade, the proportion of exports with the EUR.1 certificate of origin reached 29.09% in the first six months of 2021.
In the first six months of 2021, Vietnamese exports to the EU reached US$19.4 billion, up 18.3% and imports from the EU into Vietnam reached US$8.2 billion, up 19.1% over the same period in 2020.
INVESTMENT
As of June 2021, 2,221 projects (an increase of 142 projects over the same period in 2020) from 26 out of 27 EU countries are valid in Vietnam, with total registered capital of US$22.21 billion, up US$449 million over the same period in 2020, accounting for 5.58% of the total registered investment capital of countries and territories into Vietnam and accounting for 6.57% of total number of projects.
