The EVFTA and IPA agreements were started and ended the negotiation in the context of the increasingly well-developed bilateral relationship between Vietnam and the EU, especially in the economic and trade field. The EU is currently one of Vietnam’s leading trade partners, with a two-way turnover in 2019 reaching 56.45 billion USD, of which exports reached 41.5 billion USD, and imports from the EU reached 14.9 billion. U.S. DOLLAR. The EVFTA is a comprehensive, high-quality and benefits-balanced agreement for both Vietnam and the EU, and recognizes the difference in development levels between the two sides.
If effective, EVFTA will be a big boost to Vietnam’s exports, helping to diversify markets and export products, especially agricultural and aquatic products as well as Vietnamese products. There are inherently many competitive advantages. Commitments to fair, equitable, safe and satisfactory treatment of each other’s investments and investors in the IPA will also contribute positively to the construction of an investment and governance climate. Therefore, Vietnam will attract more investors from the EU and other countries.
Strategically, the negotiation and implementation of these Agreements also send a positive message about their determination to promote deep integration into the world economy in the context of the growing world economic situation. . . Economic geopolitics have many complicated and unpredictable developments.
Some of the main contents of EVFTA and IPA Agreement
EVFTA is a comprehensive, high quality, balanced agreement of interests for both Vietnam and the EU, and in accordance with the provisions of the World Trade Organization (WTO).
The Agreement consists of 17 Chapters, 2 Protocols and a number of memoranda of understanding with the main contents: trade in goods (including general regulations and commitments to open markets), rules of origin, Customs and trade facilitation, food hygiene and safety measures (SPS), technical barriers to trade (TBT), trade in services (including general regulations and commitment to open markets). Investment, trade defense, competition, SOE, government procurement, intellectual property, commerce and sustainable development, cooperation and capacity building, legal issues Institutional.
Trade in goods
For Vietnam’s exported goods, as soon as the Agreement comes into effect, the EU will eliminate import duties on about 85.6% of tariff lines, equivalent to 70.3% of Vietnam’s export turnover. EU. After 7 years from the date of entry into force of the Agreement, the EU will eliminate import duties on 99.2% of tariff lines, equivalent to 99.7% of Vietnam’s export turnover. For the remaining 0.3% of export turnover, the EU commits to give Vietnam a tariff quota with the import tax in the quota of 0%.
Thus, it can be said that nearly 100% of Vietnam’s export turnover to the EU will be eliminated from the import tax after a short journey. So far, this is the highest level of commitment a partner gives us in the FTA agreements has been signed. This benefit is especially meaningful when the EU is consistently one of the two largest export markets of Vietnam today.
For EU exports, Vietnam commits to eliminate tariffs as soon as the Agreement comes into force with 48.5% of tariff lines (accounting for 64.5% of import turnover). Then, after 7 years, 91.8% of tariff lines equivalent to 97.1% of export turnover from the EU were deleted by Vietnam. After 10 years of tariff elimination, about 98.3% of tariff lines (accounting for 99.8% of import turnover). For about 1.7% of the remaining EU tariff lines, we apply the tariff elimination schedule over 10 years or apply tariff quotas according to WTO commitments.
Other issues related to trade in goods: Vietnam and EU also agreed on the contents related to customs procedures, SPS, TBT, trade defense, … to create a legal framework for the two sides. Co-operation. Cooperation and facilitation for import and export of businesses.
Trade in services and investment
Commitments of Vietnam and the EU on trade in investment services aim to create an open investment environment, favorable for the operation of enterprises of both sides. Vietnam’s commitments go further than its WTO commitments. The EU’s commitments are higher than the WTO commitments and equivalent to the highest level of EU commitments in recent EU FTAs.
Areas Vietnam committed to facilitate EU investors include a number of specialized services, financial services, telecommunications services, transportation services, distribution services. The two sides also made commitments on national treatment in the field of investment, and discussed the content of dispute settlement between investors and the state.
Some of the key features of commitments in some service areas are as follows:
- Banking services: Within 5 years from the date of entry into force of the Agreement, Vietnam commits to give favorable consideration to allow EU credit institutions to increase their foreign ownership to 49% of their charter capital. Percentage at 02 joint stock commercial banks in Vietnam. However, this commitment does not apply to the 04 joint stock commercial banks in which the State is holding large shares, namely BIDV, Vietinbank, Vietcombank and Agribank.
- Insurance services: Vietnam commits to allow cross-border reinsurance, commits to voluntary health insurance services in accordance with Vietnamese law. As for the requirement to allow the establishment of reinsurance branches, we only allow it after a transition period.
Telecommunication services: We accept the same level of commitments in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Especially for value-added telecommunication services without network infrastructure, we allow the EU to set up 100% foreign-owned enterprises after a period of transition.
- Distribution Services: I agree to remove the requirement of an economic needs test after 5 years from the date of entry into force of the Agreement, however I have the right to perform the distribution system planning irrespective of. Behave. We also agree not to discriminate in the production, import and distribution of alcohol, to allow EU businesses to reserve their operating conditions under the applicable license and only need one license to do so your activities. Import, distribution, wholesale and retail.
Vietnam and the EU have agreed on equivalent contents to the Government Procurement Agreement (GPA) of the WTO. With a number of obligations such as online bidding, setting up a portal to publish bidding information … Vietnam has a roadmap for implementation. The EU also commits to provide technical assistance to Vietnam to fulfill these obligations.
In terms of commitments, we commit to open bids for ministries, central agencies and some units under the Ministry of National Defense (for goods and services purchased normally not for security-defense purposes), Thanh Hanoi City, Ho Chi Minh City, Vietnam Electricity. , Vietnam Railway Corporation, 34 hospitals under the Ministry of Health, National University of Hanoi, National University of Ho Chi Minh City and several central institutes. Regarding the market opening threshold, we have a 15-year roadmap to gradually open up shopping activities.
Vietnam has the right to reserve a certain percentage of the value of the bidding package for domestic contractors, goods, services and workers for a period of 18 years from the date of entry into force of the Agreement.
As for pharmaceutical products, Vietnam commits to allowing EU businesses to participate in pharmaceutical procurement bidding of the Ministry of Health and public hospitals affiliated with the Ministry of Health with certain conditions and itinerary.
Commitments on intellectual property include commitments on copyrights, inventions, inventions, commitments related to pharmaceuticals and geographical indications, … Basically, commitments on intellectual property of Vietnam in accordance with current law. Some of the main features of commitments to intellectual property are as follows:
- Regarding geographical indications, when the Agreement comes into effect, Vietnam will protect over 160 geographical indications of the EU (including 28 members) and the EU will protect 39 geographical indications of Vietnam. Vietnam’s geographical indications related to agricultural products and foodstuffs, create conditions for some Vietnamese agricultural products to build and affirm their brands in the EU market.
- Regarding trademarks: The two sides are committed to applying transparent and favorable registration procedures, including having an electronic database of trademark registration applications that has been published and the trademark has been registered. To the public. Concurrent access allows termination of a registered trademark that has not been in actual use for 5 years.
- Regarding enforcement: The Agreement contains provisions on border control measures for exported goods suspected of infringing intellectual property rights.
Most Favored National Treatment Commitment (MFN): The Most Favored National Treatment Commitment in this Agreement ensures that EU organizations and individuals benefit not only from high standards of protection. For objects of intellectual property rights under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), but also other objects of intellectual property rights in the Agreements. Free trade in which Vietnam participates (such as CPTPP Agreement).
In order to develop e-commerce between Vietnam and the EU, the two sides committed to not impose import tax on electronic transactions. The two sides also committed to cooperate through maintaining a dialogue on management issues raised in e-commerce, including:
- Responsibilities of intermediary service providers for the transmission or storage of information;
- Deal with forms of electronic communication in commerce without the recipient’s permission (such as sales emails, advertisements …);
- Protect consumers when participating in electronic transactions.
The two sides will also cooperate in exchanging information on domestic laws, regulations and related enforcement issues.
Trade and sustainable development
Both sides affirmed their commitment to pursuing sustainable development, including economic development, social development and environmental protection. In terms of labor, as members of the International Labor Organization (ILO), the two sides pledged to respect, promote and implement the 1998 ILO Declaration on Fundamental Principles and Rights in Labor. This includes promoting the ratification and effective implementation of ILO Core Conventions. In addition, the two sides also agreed to strengthen cooperation through information and experience sharing mechanisms to promote the ratification and implementation of labor and environmental conventions in some areas such as gas change. Climate, biodiversity, sustainable forest management and forest product trade .
Other contents of the EVFTA Agreement
The EVFTA Agreement also includes Chapters related to cooperation and capacity building, legal – institutional, competition policy and subsidies. These contents are consistent with the legal system of Vietnam, creating a legal framework for the two sides to strengthen cooperation and promote the development of trade and investment between the two sides.
The two sides undertake to grant national treatment and most favored nation treatment to the investment of the investors of the other Party, with a number of exceptions, as well as fair, complete, safe and adequate treatment. Sufficient, permitting the freedom to transfer capital and profits from investment abroad, undertaking not to appropriate, nationalize investors’ assets without adequate compensation, undertaking to compensate for damages appropriately for Investors of the other party as well as domestic or third party investors in case of damage caused by war, riot, etc.
In the event of a dispute between one Party and an investor of the other Party, the two parties agree to prioritize the settlement of the dispute in good faith through negotiation and conciliation. In cases where a dispute cannot be resolved through consultation and mediation, the dispute settlement mechanism set forth in this Agreement may be used.
Bilateral relations between Vietnam and the EU
The EU is a region that accounts for a large proportion of the trade relationship between Vietnam and Europe. Vietnam – EU trade relations have developed very quickly and effectively, from 2000 to 2017, the turnover of Vietnam – EU trade relations has increased by more than 13.7 times, from US $ 4.1 billion. In 2000 to 56.45 billion USD in 2019; In which, Vietnam’s exports to the EU increased by 14.8 times (from $ 2.8 billion to $ 41.54 billion) and imports to Vietnam from the EU increased by more than 11.4 times ($ 1.3 billion to 14). ). , 90 billion USD).
In 2019, the import and export turnover between Vietnam and the EU reached more than 56.45 billion USD, up 1.11% over the same period in 2018, of which exports reached more than 41.54 billion USD (down 0.81%). ). ) and imports reached US $ 14.90 billion (up 6.84%). The markets with an export value of over 1 billion USD in 2019 are the Netherlands (6.88 billion USD, down by 2.89% compared to 2018), and Germany (6.56 billion USD, down by 4.63%). . , UK ($ 5.76 billion, down 0.38%), France ($ 3.76 billion, down 0.01%), Italy ($ 3.44 billion, up 18.46%), Austria (3, $ 27 billion, down 19.93%), Spain ($ 2.72 billion, up 3.38%), Belgium ($ 2.55 billion, up 5.83%), Poland (1.50 USD billion) USD, up 12.42%) and Sweden (1.18 billion USD, up 2.39%).
Statistics on import and export turnover in Vietnam – EU
Regarding the Free Trade Agreement and the Investment Protection Agreement between Vietnam and the European Union (EVFTA and EVIPA)
On June 30, 2019, under the witness of Prime Minister Nguyen Xuan Phuc, Minister of Industry and Trade Tran Tuan Anh representing Vietnam and High Commissioner for Trade Cecilia Malmstrom, Romanian Minister in charge of business, commerce and business Stefan-Radu Oprea, representing the EU, officially signed the Free Trade Agreement between Vietnam and the European Union – EU (EVFTA).
The successful signing of this agreement marks a new milestone on the road of nearly 30 years of cooperation and development between Vietnam and the EU, and is a positive message of Vietnam’s determination to promote integration. And deeply penetrating the world economy in the context of many complicated and unpredictable developments in the world economic and political situation.
The EVFTA Agreement’s strong market opening commitment will certainly boost the Vietnam-EU trade relationship, further expanding markets for Vietnam’s exports. With the commitment to abolish the import tax up to nearly 100% of the tariff and the trade value agreed by the two sides, the opportunity to increase exports for Vietnamese products with advantages such as textiles, footwear, agriculture Seafood (including rice, sugar, honey, fruits and vegetables), furniture, etc. Is very significant; At the same time, it helps Vietnamese consumers to access the EU’s supply of high quality products and services in sectors such as pharmaceuticals, healthcare, infrastructure construction and public transport …
Along with strengthening the overall relationship with the EU, the Free Trade Agreement between Vietnam and the EU also creates very good conditions for Vietnam and each member country to open up new opportunities for cooperation on the basis of Advantages of each country, bringing the bilateral cooperation between Vietnam and each member country into reality and sustainability.
However, the two sides still have to go through another step to put the two Agreements into effect and submit to the National Assembly of Vietnam and the European Parliament for ratification of the two agreements. For Vietnam, the Ministry of Industry and Trade will be responsible for preparing the EVFTA approval dossier, the Ministry of Planning and Investment will be responsible for the EVIPA approval dossier. The process of ratifying the Agreement will comply with the process specified in the Law of the Treaty, the Government will submit a dossier of application for ratification to the President and the President will decide to submit to the National Assembly for ratification. . For the EU, the ratification process differs between EVFTA and EVIPA. Specifically, with the EVFTA, only the European Parliament’s approval can take effect immediately. The EU side calls it ‘provisional’ because then, in principle, the EVFTA still has to be ratified by the Parliament of 28 EU member countries. EVIPA on the other hand, this agreement must be approved by the European Parliament and Parliament of all 28 member countries to come into effect.
On January 21, 2020, the International Trade Commission (INTA) voted on the adoption of two agreements, whereby the EVFTA Agreement received 29 votes in favor and EVIPA 26 votes in favor. This is the highest voting rate compared to some recent FTAs between the EU and its partners. The European Parliament (EP) is scheduled to vote in a plenary session on February 12, 2020. After that, the two Agreements will need to be ratified by the National Assembly of Vietnam (scheduled for the May 2020 session) to officially come into effect.
Investment relationship between Vietnam – EU
EU investment in Vietnam
In 2019, the EU has 2,375 projects (an increase of 182 projects compared to 2018) from 27/28 European Union (EU) countries in effect in Vietnam with a total registered investment capital of 25.49 billion USD. (up 1.19 billion USD) accounting for 7.70% of the number of projects of the country and accounting for 7.03% of the total registered investment capital of the countries. In which, the Netherlands ranked first with 344 projects and 10.05 billion USD, accounting for 39.43% of the total EU investment capital in Vietnam (an increase of 26 projects and 692.76 million USD of investment capital). The United Kingdom ranked second with 380 projects and 3.72 billion USD of total investment capital, accounting for 14.58% of total investment capital (up 29 projects and 210.10 million USD in investment capital. 563 projects and 3.60 billion USD of total investment capital, accounting for 14.13% of total investment capital (increasing 23 projects but decreasing 72.07 million USD of investment capital).
In general, European investors have a technological advantage, thus actively contributing to the creation of a number of new industries and new products with high technology content. Some large EU corporations are operating effectively in Vietnam such as BP (UK), Shell Group (Netherlands), Total Elf Fina (France and Belgium), Daimler Chrysler (Germany), Siemens, Alcatel Comvik (Sweden). )…. The EU’s investment trend is still mainly focused on high-tech industries, however, recently there is a tendency to develop more focus on services (post and telecommunications, finance, offices for Rent, retail).
Vietnamese investment in the EU
Regarding the investment of Vietnamese enterprises to the EU, in general, investment from Vietnam to the EU is not much, mainly focusing on some countries such as the Netherlands, the Czech Republic, and Germany. By the end of December 31, 2018, Vietnam had 78 investment projects in 10 EU countries (UK, Poland, Belgium, Portugal, Germany, Netherlands, France, Czech Republic, Spain and Slovakia. And Pakistan) with a total registered capital of about 320.20 million USD. In which, mainly to Germany with 29 projects with total registered capital worth 120.3 million USD, to UK and British Virgin Islands (20 projects worth 144.5 million USD), to France (10 projects Worth 5.4 million USD), to Slovakia (2 projects worth 36.4 million USD), …
(Europe – American Market Department, Ministry of Industry and Trade)
The impact of the EVFTA and IPA agreements on the Vietnamese economy
First of all, the strong market-opening commitment in the EVFTA Agreement will certainly promote the Vietnam-EU trade relationship, helping to further expand markets for Vietnam’s exports. With the commitment to abolish the import tax up to nearly 100% of the tariff and the trade value agreed by the two sides, the opportunity to increase exports for Vietnamese products with advantages such as textiles, footwear, agriculture Seafood (including rice, sugar, honey, fruits and vegetables), furniture, etc. Is very significant. The level of commitments in EVFTA can be considered as the highest level of commitments that Vietnam has achieved in the signed FTAs so far. This is even more meaningful when currently, just over 42% of Vietnam’s exports to the EU enjoy a 0% tariff rate under the Common Preferential Tariffs (GSP).
According to research by the Ministry of Planning and Investment, the EVFTA Agreement will help Vietnam’s export turnover to the EU increase by about 20% by 2020; 42.7% in 2025 and 44.37% in 2030 compared with no Agreement. At the same time, imports from the EU also increase but at a lower rate than exports, namely about 15.28% by 2020; 33.06% in 2025 and 36.7% in 2030. In terms of macro, EVFTA contributes to an increase in GDP of Vietnam at an average rate of 2.18-3.25% (in 2019-2023); 4.57-5.30% (years 2024-2028) and 7.07-7.72% (years 2029-2033).
In addition, commitments to services – investment, government procurement, as well as specific regulations on market access and technical measures in specific sectors will also create opportunities for businesses, EU products, goods and services have more convenient access to the market of nearly 100 million people in Vietnam, and at the same time help Vietnamese consumers access the supply of high quality products and services from the EU. Fields such as pharmaceuticals, healthcare, infrastructure construction and public transport …
In addition, commitments on state governance will ensure a stable and open business and legal environment for investors of both parties in general and EU businesses and investors in particular. .
Through EVFTA and IPA, EU investors will also have the opportunity to access markets in countries that have signed FTAs with Vietnam with more preferential treatment. This Agreement also helps to promote relations between the EU and each ASEAN country in particular and the ASEAN bloc in general, creating a premise towards discussing an FTA between the EU and ASEAN in the future.