Source: European Commission - Fact Sheet
Brussels, 04 August 2015
Today EU Trade Commissioner Cecilia Malmström and Vietnamese Minister of Industry and Trade Vu Huy Hoang agreed in principle on a comprehensive and ambitious trade and investment agreement.The final legal texts will have to be ironed out by negotiators after the summer break, but the substance of the deal has been agreed. This Free Trade Agreement (FTA), for which negotiations started in October 2012, is the most ambitious and comprehensive FTA that the EU has ever concluded with a developing country, the second in the ASEAN region after Singapore, and a further building block towards the EU’s ultimate objective of an ambitious and comprehensive region-to-region EUASEAN FTA. This agreement will allow EU exporters and investors to access a fast-growing market of 90 million people and to consolidate their presence in one of the most dynamic regions in the world.
What the EU-Vietnam FTA is about
1. Eliminating customs duties
The EU-Vietnam FTA willeliminate nearly all tariffs (over 99%), except for a small number of tariff lines for which the EU and Vietnam agreed on partial liberalisation through zero-duty Tariff Rate Quotas (TRQs):
- Vietnam will liberalise 65% of import duties on EU exports to Vietnam at entry into force, with the remainder of duties being gradually eliminated over a 10-year period.]
- EU duties will be eliminated over a 7-year period.
This is a far-reaching, fully symmetrical tariff elimination that has never before been achieved with a developing country, but with adequate transition periods to allow Vietnam to adapt.
A few concrete examples:
- Almost all EU exports of machinery and appliances will be fully liberalised at entry into force and the rest after 5 years.
- Motorcycles with engines larger than 150 cc will be liberalised after 7 years and cars after 10 years, except those with large engines (>3000cc for petrol, > 2500cc for diesel) which will be liberalised one year earlier.
- Car parts will be duty free after 7 years. Roughly half of EU pharmaceuticals exports will be duty free at entry into force and the rest after 7 years.
- The totality of EU textile fabric exports will be liberalised at entry into force.
- Close to 70% of EU chemicals export will be duty free at entry into force and the rest after 3, 5 and 7 years.
Vietnam will also open its market for most EU food products, both primary and processed, allowing EU high quality exports to reach its growing middle class consumers.
- Wines and spirits will be liberalised after 7 years.
- Frozen pork meat will be duty free after 7 years, beef after 3 years, dairy products after a maximum of 5 years and food preparations after a maximum of 7 years.
- Chicken will be fully liberalised after 10 years.
The EU will also eliminate duties with longer staging periods (up to 7 years) for some sensitive products, especially in the textile apparel and footwear sectors. The elimination of duties, however, will not be an open door for Chinese products to flood the EU market: to benefit from the preferential access, the strict rules of origin for garments will require the use of fabrics produced in Vietnam, with the only exception being of fabrics produced in South Korea, another FTA partner of the EU. Only some sensitive agricultural products will not be fully liberalised, but the EU has offered access to Vietnamese exports via tariff rate quotas (TRQs): rice, sweet corn, garlic, mushrooms, sugar and highsugar-containing products, manioc starch, surimi and canned tuna.
Besides eliminating tariffs, Vietnam will also remove almost all its export duties in its bilateral trade with the EU, and has agreed not to increase a few that will exceptionally remain in force.
- 2. Reducing non-tariff barriers to European exports
- 3. Protecting European Geographical Indications
- 4. Allowing EU companies to bid for Vietnamese public contracts
- 5. Creating a level playing field for EU companies and innovative products
- 6. Opening the Vietnamese market for EU services operators
- 7. Promoting and protecting investment
- 8. Establishing an efficient mechanism to resolve future disagreements
- 9. Safeguarding social and environmental protection standards
- 10. Promoting democracy and respect for human rights
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