The EU-Vietnam Free Trade Agreement (EVFTA) will officially be signed this year and take effect in early 2018. During his visit to Vietnam last week, Mauro Petriccione, deputy director general at the European Commission’s Directorate General for Trade, and the EU’s chief negotiator for the EVFTA, exclusively spoke with VIR’s Thanh Tung about how Vietnam will benefit from the agreement.
What will be the biggest trade and investment benefits that this agreement gives to Vietnam?
Vietnam is a very interesting country for us. We are among Vietnam’s biggest markets. We are going to increase both trade and investment opportunities. Under the agreement, in terms of trade, strong commitments in opening the markets will help boost bilateral trade. The two sides will remove import tariffs for over 99 per cent of tariff lines within seven years for the EU and ten years for Vietnam. For the remaining tariff lines, the two sides will apply tariff quotas or partial tariff reductions. This can be seen as the highest commitments attained by Vietnam in the FTAs it has inked with partners so far.
Thus the EVFTA will open new opportunities for both Vietnamese and European businesses.
The EU remains Vietnam’s second-largest trading partner. During 2003-2015, the two sides’ trade turnover augmented sevenfold, from $6.3 billion to $41.2 billion.
Economic ties between both sides continue to grow strongly and are expected to be further reinforced as a result of the EVFTA.
In terms of investment, Vietnam is a very fast developing market. It has a young and dynamic population, numbering nearly 100 million people. Vietnam has very high growth with great demand for consumption. This will bring about lots of investment opportunities for us.
The EVFTA will help Vietnam attract high-quality investments from the EU and other partners. Vietnam will have an opportunity to become a transit spot for EU investment and trade in the region. Currently, Vietnam has over 1,800 European valid investment projects registered at $23.16 billion, occupying 8.7 and 8 per cent of Vietnam’s total foreign-invested projects and total registered foreign direct investment capital, respectively. It is therefore essential that companies have a good understanding of what has been achieved so as to reap the benefits of the EVFTA.
Vietnam and the EU are trying to sign the EVFTA this year. What outstanding issues must be resolved beforehand?
At the moment, we only have some procedural issues. We are revising the text and seeking feedback from the two sides to ensure that the agreement is legally sound. The text will also need to be translated into 24 languages within the EU and also into Vietnamese. We expect that the EVFTA will be able to come into force in early 2018. We know that Vietnam is now boosting its economic and institutional reforms. If the reforms are well implemented, there will be no real problem in the implementation of the EVFTA.
Under the EVFTA’s strict legal requirements, European investors can sue Vietnam’s government without seeking approval from their home governments. What do you think about this?
The EVFTA sets out some relatively simple standards for the treatment of investors. All investors will be fairly treated without discrimination. According to the EVFTA’s Chapter 13 on dispute settlement, the deal creates a framework to resolve any future disagreements that may occur between the EU and Vietnam over the interpretation and implementation of the agreement.
The system is intended as a last resort should the parties fail to find a solution by other means. Should parties fail to reach an agreement through formal consultation, they can request the establishment of a panel, made up of independent legal experts. As an alternative to a formal settlement mechanism for disputes, the EU and Vietnam also set rules that will allow for mediation to tackle measures that adversely affect bilateral trade and investment.
With such an investment tribunal system stipulated in the EVFTA, investors may have their disputes resolved more conveniently and impartially. So I don’t think the Vietnamese government needs to be concerned by investors’ suits.
Under the EVFTA, Vietnam will open its doors to almost all European foodstuffs, such as wines and spirits, frozen pork (eliminating import tariffs after seven years), beef (after three years), milk products (after five years), and chicken (after ten years). Still, do you think that these products will be able to compete with Australian and American products which are now widespread in the Vietnamese market?
It is difficult for me to say about the competition. During the negotiations, we have carefully studied the levels of agricultural development of each other, and then set out the gradual tariff reductions. That’s why we have set a maximum of seven years for Europe and a maximum of ten years for Vietnam. This will help Vietnam’s producers gradually adapt to the EVFTA’s tariff reductions. We see Vietnam as a market with enormous potential.
We are confident that Vietnamese producers can adapt to new market situations. In some cases, they would need time to do so. We are co-operating with Vietnam’s government to help producers adapt and change their production methods, so that they can produce more safe products.
Source : http://www.vir.com.vn
Keyword : EU, and Vietnam, gear up, for trade pact.
