Vietnam: free trade agreement with the EU reached

Following two and a half years of negotiations, the European Union and Vietnam have reached an agreement in principle on a free trade treaty that will remove almost all duties (over 99%) on goods traded between the two economies.

European Commissioner for Trade, Cecilia Malmström, highlighted the "careful balance" of the agreement and added that it is a significant achievement, noting that over 31 million European jobs depend on exports. Consequently, easier access to an emerging market of over 90 million consumers, such as Vietnam, represents a major opportunity for European businesses.

This is the first free trade agreement concluded with a developing country and will provide significant benefits to both parties in terms of market access for goods, services, and investment, further strengthening trade relations. In 2014, the EU was Vietnam's second-largest trading partner after China, accounting for 10% of total trade. The EU is also one of the largest investors in Vietnam (over €500 million in foreign direct investment in 2013).

Vietnam has agreed to liberalise financial services, telecommunications, transport and postal services. It will also reduce restrictions on the import of food and beverages (including wines and spirits), as well as in the textile and automotive sectors. Regarding public procurement, an agreement has been reached in line with the WTO Government Procurement Agreement (GPA), achieving high levels of transparency comparable to those in place with developed countries.

The agreement will also ensure a higher level of protection for geographical indications in Vietnam, which is essential for safeguarding European agricultural products.

A substantial chapter on trade and sustainable development has also been included in the agreement, covering both labour and environmental protection.

Regarding the opening of the European market, duties on footwear and textile products will be progressively eliminated. However, only fabrics produced in Vietnam will enjoy preferential access, with strict enforcement of rules of origin to prevent a massive influx of Chinese products. As for sensitive agricultural products such as rice, maize, sugar, and canned tuna, full liberalisation is not planned; instead, tariff rate quotas will be maintained.

Based on the agreement reached, technical experts from both sides will now proceed to resolve remaining issues and draft a text, which must then be approved by both the European Parliament and the Council of the European Union.