On June 8, the National Assembly voted to ratify the Vietnam-EU Free Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA), opening a new journey in the partnership. sweeping between one of Asias fastest growing economies and the worlds largest trade bloc.
Attend the meeting and witness the voting of the National Assembly with the EVFTA with the Delegation of the European Union to Vietnam. As a result, with EVFTA, all 457 delegates voted to press the button, while with EVIPA, all 462 participants voted.
Presenting a report on the acceptance and ratification of the Vietnam-EU Free Trade Agreement (EVFTA), Mr. Nguyen Van Giau - Chairman of the National Assemblys Foreign Affairs Committee - said that the ratification of the agreement is appropriate. with foreign policy, towards the largest potential market with 27 member countries of the European Union, many leading countries in investment and trade.
According to experts analysis, in the post-epidemic period of Covid-19, when EVFTA Agreement is put into effect, Vietnamese enterprises will have great advantages from reducing or eliminating tariff barriers for goods into the EU market to exploit this US $ 18 trillion market.
Start a new journey
“EVFTA is the most important agreement for Vietnamese businesses, helping businesses open their doors to the worlds second largest purchasing power market,” said Dau Anh Tuan, Head of Legal Department of Vietnam Chamber of Commerce and Industry. (VCCI) confirmed. VCCI has asked the National Assembly of Vietnam to issue resolutions earlier, so that domestic enterprises can increase the preferential export to the EU soon. But it was not until the official session that the National Assembly passed.
The National Assembly of Viet Nam suggested that the Government should continue researching and perfecting the legal system, including the law on public services to proactively exploit the advantages, opportunities and respond to challenges brought by the Agreement. again. The National Assembly Standing Committee proposed that the Prime Minister assign the Ministry of Justice to continue reviewing and finalizing documents to implement the agreement effectively.
EVFTA is expected to increase Vietnams GDP by 2.18 to 3.25% (for the first 5-year implementation period), 4.57-5.30% (for the next 5-year period) and 7 , 07-7.72% (for the next 5-year period).
Expected import from the EU will increase by 33.06% in 2025 and 36.7% in 2030, focusing on a number of items such as vehicles and transport equipment, machinery, equipment and spare parts, phones. and electronic components, pharmaceuticals. EVFTA helps to diversify our countrys market so that it does not depend on a limited number of markets, and at the same time acts as a lever to stimulate other partners to strengthen trade and investment relations with Vietnam. .
However, when EVFTA takes effect, the tariff barriers will be greatly reduced and eventually removed. But it does not mean that Vietnamese goods freely enter Europe but are subject to very strict testing of origin and quality.
Up to now, Vietnam has attracted foreign investment capital of about 32,000 projects with a total registered capital of over 370 billion dollars, but the European region only has about 2,500 projects with a registered capital of 27.5 billion dollars. . The ratification of the EVFTA Agreement is expected to help attract investment, access to modern industry, new technology and clean technology from European countries.
|Vietnam and the EU have officially opened their markets to each other since August 1, 2020, after many years of EVFTA negotiation. In the photo is the signing ceremony of EVFTA agreement taking place in June 2019.
Perspectives on opportunities and challenges
According to Tim Evans, CEO of HSBC Vietnam, the assessment of the benefits that EVFTA brings to Vietnams economic growth is enormous. Accordingly, HSBC experts expect this agreement to contribute an average of 0.1% to the real growth of GDP each year (ranging from 0-0.3%) only thanks to the cumulative trade impacts. pole.
“We think that textiles and footwear will be the biggest beneficiaries as the tax on this region is at its highest. In 2019, Vietnam has exported more than US $ 9 billion of textiles and footwear to the EU with an average weighted tax rate of 9%, ”said Mr. Tim Evans.
Currently, the EU market with a GDP value of about US $ 15 trillion, is Vietnams second largest export market. This position is expected to improve when EVFTA takes effect and starts the process of eliminating 99% of tariffs on goods, according to HSBC Vietnam.
About two-thirds of tariffs on EU exports will be lifted shortly after the agreement comes into effect, while about 71% of tariffs on Vietnamese goods exported to Europe will be lifted immediately with the rest. Valid for 7 to 10 years. As a new generation agreement, EVFTA also includes provisions on intellectual property protection, investment freedom and sustainable development.
“We have the opportunity to reposition Vietnam as the first choice for companies as they seek a cost-effective Asia production base. Vietnams effective control of the Covid-19 pandemic has strengthened its position and ensured that the country is ready to reopen its economy before other countries. "
According to Mr. Tim Evans, Vietnam is also an ASEAN economy that HSBC continues to forecast positive growth in 2020, contributing to ensuring an attractive position for companies seeking to enter the consumer market. domestic and regional. And now this new agreement will give them the privilege of reaching 450 million EU consumers.
Despite the many benefits, the integration challenges with this trade agreement are equally large.
A typical example is the textile and garment sector, currently the products of many Vietnamese textile enterprises have not yet reached the proportion of domestic raw materials to meet the strict EU regulations on the origin of goods. In order to expand the domestic textile and apparel industry, the production of input materials instead of imports is a matter to consider if you want to take full advantage of the Agreement, experts of HSBC said.
Vietnamese companies will also face global standards, a new legal framework for commitments under EVFTA, such as environmental commitments, intellectual property and origin protection, etc. They are also under increasing pressure, forcing them to scrutinize their supply chains, ensuring that each step meets global environmental, social and governance (ESG) standards.
According to HSBC Vietnam, the new free trade agreement will protect Vietnamese exporters on the one hand and create new opportunities at the same time. This trade transition needs to go hand in hand with changes in governance to realize the potential in the global supply chain.
“We need to reform and redesign the supply chain if we want to take full advantage of the opportunity from this agreement. This takes time and requires the cooperation of both business and government to go through the transition period as quickly as possible, ”said HSBC representative.