By H.E. Ngo Thi Hoa, Ambassador of Viet Nam to the Netherlands.
On 12/2/2020, at the Plenary Session in Strasbourg, France, the European Parliament (EP) ratified with a majority the Free Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA) between the European Union (EU) and Viet Nam. These are the most ambitious deals ever between the EU and a developing country, which not only eliminate over
99% of customs duties on goods, but also also open up Vietnamese services markets to EU companies and strengthen protection of EU investments in the country.
The ratification of EVFTA and EVIPA is an important milestone in the
30th anniversary of the establishment of Viet Nam-EU diplomatic relations, bringing the EU-Viet Nam partnership to a new level. EVFTA and EVIPA have marked an important transformation in Viet Nam-EUcomprehensive partnership and cooperation while affirming the two sides’ mutual benefits and commitment to facilitating international economic connectivity, free trade and equal and transparent investment.
EVFTA and EVIPA create benefits for both sides
As an agreement with a deep and comprehensive level of commitment covering economic, trade, investment and sustainable development issues, EVFTA and EVIPA will open up great opportunities for both sides, maximizing the potential and complementarity, thereby contributing to deepening and creating long-term benefits between the two sides.
The EVFTA will unlock a market with huge potential for EU firms. Viet Nam is a fast-growing economy of more than 100 million consumers with a growing middle class and a young and dynamic workforce. Its market offers numerous opportunities for the EU’s agricultural, industrial and services exports. Viet Nam market also serves as a gateway for deeper access to ASEAN and regional markets. The European Commission has projected the EU’s GDP to increase by USD 29.5 billion and its exports to Viet Nam by 29 percent by 2035.
For Viet Nam, the agreement is opening a great opportunity for Viet Nam ese businesses to access to a potential market with 508 million people and a gross domestic product (GDP) of roughly US$18 trillion. (accounting for 22% of global GDP). A research by the Ministry of Planning and Investment of Viet Nam shows that Viet Nam ’s export turnover to the EU will increase by about 20% in 2020, 42.7% in 2025 and 44.37% in 2030, compared to the non-EVFTA scenario.
Golden oppoturnities for EU businesses
Viet Nam is a fast-growing and competitive economy whose bilateral trade with the EU has increased fivefold over the past 10 years. At the regional level, Viet Nam is now the EU’s second largest trade partner in ASEAN, accounting for 20.7% merchandise goods.The growing trade between the EU and Viet Nam also helps to solidify ASEAN’s position as the EU’s third-largest trading partner in the worlds.
2019 marks a new phase of Viet Nam ’s international economic integration as Viet Nam participate in new-generation FTAs, particularly the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EVFTA. The newly approved EVFTA and EVIPA will bolster Viet Nam ’s importance as a trading hub between Southeast Asia and Europe.
With the ratified EVFTA and EVIPA, many European businesses will benefit, especially those doing in the field of machinery and appliances, automobile, pharmaceuticals, chemical, wine and spirits, IT, sevices operators… Given many challenges and uncertainties due to protectionism, trade tensions, and the looming effects of Brexit, it is now the golden oppoturnity for EU companies to accelerate and expand their business activities in Viet Nam.