The European Parliament (EP) has officially ratified the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA), marking a significant milestone in the partnership between the two entities. With 407 votes for, 188 against, and 53 abstentions for the EVIPA, and 401, 192, and 40 respectively for the EVFTA, the agreements have gained substantial support.
Strengthening Comprehensive Cooperation
Minister of Industry and Trade, Trần Tuấn Anh, expressed his satisfaction with the ratification, emphasizing the importance of the agreements in enhancing comprehensive cooperation between Vietnam and the EU. He stated that this achievement has laid a sustainable foundation for both sides to improve the quality of their cooperation.
The ratification also signifies the EU’s recognition of Vietnam as a comprehensive and trustworthy partner in Southeast Asia and the world at large. Minister Anh described the EVFTA as a lever for growth, presenting opportunities for Vietnam to access a market with a staggering gross domestic product of $18 trillion.
Favorable Trade Conditions
The EVFTA holds great promise for Vietnam’s exports, offering the potential to diversify the country’s export markets. In the short term, almost 100% of Vietnamese goods exported to the EU will enjoy tariff elimination. This level of commitment in terms of tariff reduction is unprecedented among Vietnam’s signed free trade agreements.
Furthermore, the EVFTA is expected to lead to a 65% reduction in import taxes on EU commodities in Vietnam, with the remaining tariffs phased out over a period of ten years. In return, the EU will eliminate over 70% of tariffs on Vietnamese goods, with the rest gradually abolished within the following seven years.
The Road Ahead
The upcoming session of Vietnam’s National Assembly, set for April-May, is anticipated to finalize the ratification of the agreements. If all goes as planned, they are likely to come into effect in Vietnam from July this year.
According to research conducted by the Ministry of Planning and Investment, the EVFTA and EVIPA will contribute significantly to Vietnam’s economic growth, projecting a 4.6% increase in GDP and a 42.7% rise in exports to the EU by 2025. Similarly, the European Commission foresees a $29.5 billion boost in the EU’s GDP and a 29% increase in exports to Vietnam by 2035.
The investment commitments outlined in the agreements will replace existing bilateral investment agreements between Vietnam and EU member states, enabling Vietnam to further reform its economic structure, enhance the business environment, improve institutions, and facilitate EU investors’ operations within the country.
ILO Welcomes EVFTA Ratification
The International Labour Organisation (ILO) office in Vietnam has welcomed the EP’s ratification of the EVFTA, acknowledging the economic benefits that are expected to arise from the agreement. ILO Vietnam Country Director, Chang-Hee Lee, emphasized the positive impact of the deal’s labor and environmental requirements, which will contribute to sustainable development and ensure that growth does not come at the expense of future generations.
Lee noted that Vietnam’s entry into the EVFTA, along with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will facilitate the modernization of labor laws and industrial relations systems in the country. He also highlighted the recent adoption of the revised Labor Code, which brings Vietnam’s legal framework closer to the fundamental conventions of the ILO.
By fostering modern industrial relations based on the recognition of freedom of association, combined with a skilled workforce and effective social protection, Vietnam can move towards becoming an upper middle-income country in a sustainable manner.
For further inquiries or interest in the frozen seafood products, please contact us.