Vietnam's National Assembly ratifies the EVFTA and EVIPA
Last week the National Assembly of Vietnam has voted to ratify the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EVIPA). This ratification is the next step in the implementation of the EVFTA. The EVIPA will be implemented later, because it needs to be ratified in each individual EU member State.
Confidence in EU - Vietnam trade
Everybody agrees that this agreement means a vote of confidence of Vietnam in the EU to become its most important partner in trade. And of course the same is true for the confidence of the EU in Vietnam. The implementation of the EVFTA will mean that almost all tariff lines and barriers to trade will be phased out over the next decade. And from day one the cut of tariffs will apply to 65 per cent of the EU exports to Vietnam and 71 per cent of EU imports from Vietnam. For Vietnam the EVFTA creates a unique opportunity to become a regional production hub, due to the fact it has a privileged access to the EU’s market for the next 7-10 years.
Luckily the numbers also show there is great room to grow together. Vietnam is the biggest exporter of goods to the EU in the ASEAN region. However, Vietnam only buys a third of the number two in exports, Singapore, buys from the EU. As to FDI in the ASEAN region the EU is the largest investor, however only the fifth largest in Vietnam.
Especially in the current situation working together is more important than ever before. The fact that it will be easier to invest in each other’s economies could lead to more diversification in Vietnam and thus increasing the opportunities for trade. The Corona crisis has also shown that current supply chains are vulnerable, so setting up a production hub closer to the customers is on the agenda of many companies. The EVFTA and EVIPA show that Vietnam offers an excellent opportunity for such investment.