The deal, which slashes 99% of tariffs between the two sides, represents the first such agreement between the European Union (EU) and a developing nation in Southeast Asia.
After nine years of negotiations, the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) were signed in Hanoi on June 30, the Guardian reports. As the deals go into effect over the next ten years, tariffs and limits on 99% of goods, most significantly agricultural products, will be lifted, while new markets and services are expected to open, including those in the postal, banking and maritime sectors.
Minister of Industry and Trade Tran Tuan explained to VnExpress that the deals include "17 chapters, two protocols and several attached memorandums with main contents including trade in goods, services, investment, trade defense, competition, state enterprises, government procurement, intellectual property, trade and sustainable development, legal and institutional issues," and comply with World Trade Organization (WTO) regulations.
Officials expect the strengthened ties to usher in development, but the agreements also require elevated quality standards for Vietnamese industries. Ousmane Dione, World Bank Country Director for Vietnam, told the news source: "Every agreement comes with both opportunities and challenges, and the question here is how Vietnam can grasp these opportunities."
The EU is Vietnam's second-largest export market, behind the United States, with US$42.5 billion worth of goods and services being sent to the EU and US$13.8 billion worth coming the other way. The deals should boost the already increasing trade between the partners, with the trade minister anticipating that exports from Vietnam to the EU will increase by 20% next year and 70-80% percent from 2025-30.
The European Parliament must still approve the deal, however, which is not a foregone conclusion, as lawmakers there have concerns about Vietnam's human rights record.
While global trends indicate some nations are becoming increasingly protectionist, the deal signals Vietnam's move in the opposite direction towards closer economic partnerships in various regions. Earlier this year the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 11 member nations such as Canada, Japan, Mexico, Singapore and Vietnam, went into effect.
[Photo via Vietnam News]
