4 August 2015, the EU and Vietnam have reached an agreement in principle for a free trade agreement (FTA), after two and a half years of intense negotiations. Following a telephone conversation this morning between EU Trade Commissioner Cecilia Malmström and Vietnamese Minister of Industry and Trade Vu Huy Hoang, all issues of substance have been agreed, and both sides have reached a mutually beneficial and balanced package.
This agreement will remove nearly all tariffs on goods traded between the two economies.
"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" Commissioner Malmström said. “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 31 million jobs in Europe depend on exports, so having easier access to a growing and fast developing market like Vietnam, with its 90 million 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".
On the basis of today’s agreement, the negotiating teams will now continue the process, settle some remaining technical issues and finalise the legal text. Once finalised, the agreement will then need to be approved by the Council and the European Parliament.
"Our deal will also make sure that trade does not happen at the cost of the environment or of people’s rights. The EU and Vietnam have committed to ensure the respect of workers' rights and to support a sustainable management of natural resources," Commissioner Malmström added.
This agreement is the first of its kind that the EU has concluded with a developing country. As such, the ambitious and symmetrical liberalisation agreed upon – with a transition period to allow Vietnam to adapt – breaks new ground compared to other EU agreements with developing countries. It shows the shared conviction of the EU and Vietnam that trade is essential to growth, the creation of jobs and sustainable development.
Besides eliminating tariffs, Vietnam will also remove almost all of its export duties. The agreement will also create new market access opportunities in services and investment. Vietnam has agreed to liberalise trade in financial services, telecommunications, transport, and postal and courier services. On investment, Vietnam will open its market to the EU, for instance by removing or easing limitations on the manufacturing of food products and beverages, as well as in the non-food sectors.
On government procurement, the EU and Vietnam have agreed on disciplines fully in line with Government Procurement Agreement (GPA) rules of the WTO, achieving a degree of transparency comparable to other EU Free Trade Agreements with developed countries and more advanced developing countries.
The agreement will also improve the protection in Vietnam of Geographical Indications (GIs) representing EU flagship agricultural products, such as Champagne, Parmigiano Reggiano cheese, Rioja wine, Roquefort cheese and Scotch Whisky. Vietnamese GIs too will be recognised as such in the EU, providing the adequate framework for further promoting imports of quality products such as Mộc Châu tea or Buôn Ma Thuột coffee.
After this breakthrough, technical discussions will have to be completed so as to finalise the legal text of the agreement. Given the cooperation established with Vietnam over many years and strengthened by this negotiating process, it is expected that this process could be finalised in a few months' time and certainly before the end of the year.