Official signing of bilateral free trade agreement between Vietnam and EU

On the afternoon of June 30, in Hanoi, the trade agreement between Vietnam and the EU, including the Free Trade Agreement (EVFTA) and the Investment Protection Agreement (IPA), was just signed after 9 years of negotiations.

The signing ceremony took place under the witness of Vietnamese Prime Minister Nguyen Xuan Phuc and Ms. Cecilia Malmstrom - Commissioner for Trade of the European Union.

"15 years ago, Vietnam was a developing country with an export turnover of 26 billion USD and at that time Vietnam was a small trading partner, needing the EU's help. Now, Vietnam and the EU are entering a new phase, signing a new generation free trade agreement on the principle of transparency and openness," said Mr. Tran Tuan Anh - Minister of Industry and Trade at the signing ceremony.

However, Mr. Tuan Anh said that the signing of EVFTA and IPA is just the beginning and both sides still have a lot of work to do for these agreements to be ratified and come into effect. "The road ahead requires a lot of effort from both sides," said the Minister of Industry and Trade, and he believes that the ratification process will be implemented as soon as possible.

Cecilia Malmstrom, Commissioner for Trade of the European Union, mentioned the Vietnamese saying "When you eat the fruit, remember the person who planted the tree" to thank the preparation of partners and colleagues in Vietnam over the past 9 years. "Very soon, Vietnamese consumers will have access to goods from Europe and vice versa," she said.

The EU Trade Commissioner emphasized that EVFTA will eliminate 99% of tariffs on Vietnamese goods to the EU and the remaining 1% will be eliminated through tariff quotas. This will eliminate the bureaucracy that businesses, especially small and medium-sized enterprises, have to face.

She also welcomed Vietnam's opening of its procurement market, which will allow Vietnamese companies to buy equipment and services at competitive prices. "EU investment in Vietnam will grow significantly thanks to these agreements," said Cecilia.

The EU Trade Commissioner hopes that both sides will soon ratify the agreements so that they can be implemented, bringing benefits to businesses and consumers. "This is a signal to the world when protectionism is on the rise in many places. The EU is looking to its friends in Asia, and Vietnam is an economic pillar in ASEAN, so this agreement is an important foundation stone in the activities of both sides," Ms. Cecilia emphasized.

As the agency in charge of negotiating the IPA agreement, Mr. Nguyen Chi Dung - Minister of Planning and Investment said that the IPA with more comprehensive and balanced commitments on investment protection will contribute to strengthening the confidence of EU investors in the attractiveness, safety, friendliness and higher competitiveness of the investment and business environment in Vietnam, and vice versa. However, Vietnam is also facing a number of challenges in terms of infrastructure system, technology level... in the process of implementing this agreement.

To realize this agreement, the Government is directing the review and proposal to the National Assembly to amend or promulgate a number of important laws such as the Investment Law, Enterprise Law, Law on Investment under the public-private partnership model, Land Law, Construction Law, Law on Environmental Protection, Labor Code and a number of tax laws...

Prime Minister Nguyen Xuan Phuc has just returned from the G20 Summit to witness the signing ceremony of the Free Trade Agreement and Investment Protection Agreement between Vietnam and the EU on the afternoon of June 30. Photo: Giang Huy

These amendments aim to further simplify and facilitate market entry and investment and business activities of people and enterprises, including FDI enterprises. The Government will also improve mechanisms and policies to attract the private sector to invest in infrastructure construction and provide public services, and unlock capital sources for development investment.

EVFTAincluding 17 Chapters, 2 Protocols and a number of accompanying memorandums of understanding on trade in goods, services, investment, trade defense, competition, state-owned enterprises, government procurement, intellectual property... Textiles, footwear, wooden furniture, agricultural products... are the industries that benefit the most from this agreement.

Regarding tariffs, as soon as the EVFTA comes into effect, the EU will eliminate import tariffs on nearly 86% of tariff lines and more than 99% of tariff lines will be eliminated after 7 years.

In return, Vietnam also committed to immediately eliminate 48.5% of tariff lines for EU goods. After 7 years, the number of tariff lines eliminated will increase to 91.8% and after 10 years, the tariff elimination rate will be about 98.3% of tariff lines... Vietnamese consumers will have the opportunity to consume European products at competitive prices.

StillIPA Agreementincludes modern investment protection rules that allow for enforcement and implementation through a new investment court system, while still ensuring that governments on both sides have the right to regulate in the interests of their citizens.

The IPA will replace the bilateral investment agreements that 21 EU member states have signed with Vietnam, implementing a new legal framework to ensure the prevention of conflicts of interest and increase transparency.