EU & Vietnam Agree Free Trade Deal
The European Union (EU) and Vietnam have reached an agreement in principle for a free trade agreement (FTA) that will remove the majority of tariffs on goods traded between the two economies.
The European Commission said that, following a telephone conversation between EU Trade Commissioner Cecilia Malmström and the Vietnamese Minister of Industry and Trade, Vu Huy Hoang, on August 4, all issues of substance have been agreed. Negotiators will now seek to resolve the remaining technical issues and finalize the legal text of the FTA.
The EU-Vietnam FTA will eliminate more than 99 percent of tariffs. Upon its entry into force, Vietnam will liberalize 65 percent of import duties on EU exports. EU duties will be removed over a seven-year period.
The European Commission said that the elimination of duties will not result in Chinese products flooding the EU market. Strict rules of origin for garments will require the use of fabrics produced in Vietnam, with an exception for fabrics produced in South Korea, another of the EU's FTA partners. Tariffs on some sensitive agricultural products will not be fully liberalized, but the EU has offered access to Vietnamese exports via tariff rate quotas. Vietnam has agreed to remove almost all its export duties in its bilateral trade with the EU, and will not increase those that remain in force.
The agreement will also create new market access opportunities in services and investment. Vietnam will liberalize trade in financial services, telecommunications, transport, and postal and courier services. It will remove or ease limitations on investment in the manufacturing of food products and beverages, and in non-food sectors. The FTA will largely follow the Government Procurement Agreement rules set by the World Trade Organization.
The EU was Vietnam's second-largest trading partner in 2014, when the EU purchased 18 percent of Vietnam's global goods. EU-Vietnam trade in goods was worth over EUR28.2bn (USD30.8bn) last year, with EUR22.1bn of imports from Vietnam into the EU and EUR6.2bn of exports from the EU to Vietnam. Total bilateral trade in services amounted to EUR2.9bn in 2013.
Commissioner Malmström said: "We have a deal. This finely balanced agreement will boost trade with one of Asia's most dynamic economies. It sets a new, better, and modern model for Free Trade Agreements between the EU and developing countries, and establishes a good standard for the trade relationship between the EU and South East Asia as a whole."
"Vietnam is a growing economy and once this agreement is up and running, it will provide significant new opportunities for companies on both sides, by increasing market access for goods and services. Over 31m jobs in Europe depend on exports, so having easier access to a growing and fast developing market like Vietnam, with its 90m consumers, is great news. And Vietnam's exporters will now get much easier access to the EU for their products, giving an important boost to the Vietnamese economy. Both sides have worked extremely hard in the past few months to achieve this breakthrough."
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