Days after concluding Trans-Pacific Partnership negotiations, Vietnam and the EU have signed off on a sweeping free trade agreement that has been two and a half years in the making.
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The deal, expected to take effect in 2017 or 2018, will remove almost all tariffs on the US$30 billion worth of goods traded between EU countries and Vietnam each year, reports the BBC.
Last year, a senior EU official said that Vietnam’s annual GDP could see a 15% boost if it reached a free trade agreement with the EU by the end of the year.
According to the European Commission, Vietnam's chief exports to the EU include telephones, electronic goods, footwear, clothing, coffee, rice, seafood and furniture, while EU exports to Vietnam are dominated by electrical machinery, aircraft, vehicles and pharmaceuticals.
Vietnam’s transition toward market liberalization "breaks new ground compared to other EU agreements with developing countries," the Commission added.
The BBC explains how duties will be eliminated:
Vietnam agreed to liberalise 65% of import duties on EU exports from the day the deal takes effect, and gradually eliminate the rest over a 10-year period.
EU duties will be eliminated over a seven-year period. Some EU foods and beverages will only enter the Vietnamese market tariff-free after seven years.
The deal also includes clauses meant to protect workers’ rights and natural resource protection, said EU Trade Commissioner Cecilia Malmstroem.
"Over 31 million jobs in Europe depend on exports, so having easier access to a growing and fast developing market like Vietnam, with its 90 million consumers, is great news,” said Malmstroem, adding that, "Vietnam's exporters will now get much easier access to the EU for their products, giving an important boost to the Vietnamese economy."
Singapore is the only SE Asian nation that currently enjoys such a free trade agreement with the EU.
[Photo via Sputnik News]
