After 10 years of negotiation, the Free Trade Agreement between Vietnam and the European Union (EVFTA) officially took effect in August 2020 in a special context, when the whole world is struggling with COVID-19 pandemic.
With strong commitments in opening the
goods market, the EVFTA is expected to be a boost to Vietnam's economic growth;
helping to diversify markets and boost exports, especially for commodities
where Vietnam has many competitive advantages such as agriculture and fishery.
The EU-Vietnam Free Trade Agreement (EVFTA) after 1 year of implementation,
besides the obvious results, has also suggested to regulators and businesses
many issues that need attention, especially challenges.
On November 3, 2021, in Hanoi, the Institute for Economic and Policy Research (VEPR), under the VNU University of Economics and Business in collaboration with the Konrad Institute - Adenauer Stiftung (KAS) in Vietnam organized the workshop “One Year Implementation of EVFTA- Impacts on Vietnamese Economy and Policy Formation.”
Mr. Pham Van Long represented the VEPR
research team to report that, in the context of the unprecedented outbreak of
the Covid-19 epidemic globally, trade between Vietnam and the EU still has
witnessed certain improvements after one year since the EVFTA took effect.
While the value of Vietnam's key export products to the EU market such as
phones components, textiles and garments all decreased, Vietnam's export
turnover to the EU market still increased by 6.2% compared to the same period
last year, reaching 39.75 billion USD. This growth is thanks to the recovery of
the EU economy in the second quarter of 2021. At the same time, the impact of
tariff reductions on Vietnamese products entering the EU market helps promote
exports of items benefiting from the EVFTA. Some industries are exempted from
almost all import tax rates into the EU market with strong growth, such as iron
and steel products and products from plastic or rubber. Particularly for iron
and steel products, in addition to benefiting from the tax rate reduction with
the increase in the price of raw iron, the price of finished steel nearly
doubled in the past year, also causing the export turnover of this item to
skyrocket. Total import turnover of Vietnam's goods from the EU market reached
16.51 billion USD, up more than 24% over the same period last year. In which,
Vietnam imports the most goods from Ireland (mainly computers and electronic
products).
Assoc.Prof.Dr.
Nguyen Anh Thu opened the workshop
The Vietnamese legal system is gradually
changing positively to meet the requirements of the EVFTA. However, notable
areas that need further reform are included intellectual property, worker
rights, and environmental protection. In the context that the whole world is
struggling with the Covid-19 pandemic, the supply chain is interrupted due to
the countries’ closure to prevent the penetration of the virus. Trade between
Vietnam and the EU still has a certain improvement when import and export
turnover between the two sides still grows over the same period in 2020.
However, as a general trend, the negative impact of Covid-19 also affected the
cooperation between the two sides when FDI flows from the EU to Vietnam dropped
sharply in the period from August 2020 to August 2021. Agricultural, forestry,
and fishery products and products exported to the EU account for a high
proportion of the total export turnover. However, these items are facing many
risks because they often violate SPS regulations from partners. For Vietnam's
key export products, the value added in the production of domestically created
products is still low. Therefore, it is difficult for these products to fully
take advantage of the benefits of tariff reduction or exemption when they do
not meet the requirements in the origin inspection processes. Vietnam's trade
costs are higher than that of other ASEAN countries. Non-tariff measures and
administrative procedures are still complicated and hinder foreign investors as
well as the import of goods from abroad, thereby reducing Vietnam's
competitiveness compared to other countries. water in the same area.
The seminar attracted the participation of
experts, the business community of Vietnam, the EU, the German embassy in
Vietnam as well as the media. In addition to the participation of Assoc. Dr.
Nguyen Anh Thu, Director of VEPR of the VNU-UEB, Ms. Pham To Hang, Program
Manager, KAS Institute in Vietnam, the workshop also had the participation of
and discussion by Mr. Jean-Jacques Bouflet, Vice President, European Chamber of
Commerce in Vietnam (Euro charm), Dr. Le Dang Doanh, senior economist, Dr. Le
Quoc Phuong, Former Deputy Director of Industry and Trade Information Center,
Ministry of Industry and Trade, and Dr. Vu Thanh Huong, Vice Dean of Faculty of
Economics and International Business, UEB.
Dr. Vu Thanh Huong
discussed the report results
Experts highly appreciated and agreed with
the statements from the VEPR report, and discussed issues surrounding the
impact of the EVFTA, the problems posed to businesses, the Government of
Vietnam and proposed a solution number of policy implications. Experts
especially emphasized that the EVFTA has opened up special opportunities and
advantages for promoting trade between the EU and Vietnam while only a few
Asian countries have this advantage. However, to be able to take advantage of
opportunities from this Agreement, it is necessary to have specific support
programs for Vietnamese enterprises from information and digital transformation
to cooperation and deeper participation in the value chain global rule. It is
necessary to reform and increase the management and supervision capacity of SPS
Vietnam to limit violations of regulations on food safety and animal and plant
quarantine to importing countries. Policy commitments related to intellectual
property, labor, and information transparency need to be prioritized,
especially Vietnam needs to step up reforms and implement policies related to
intellectual property to develop trade in services as well as develop new forms
of trade. In the long term, it is necessary to have programs to support
training and improve the quality of human resources in order to improve the
competitiveness of domestic enterprises.
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RELATED INFORMATION:
1. Vietnam News Agency
https://bnews.vn/cong-bo-bao-cao-danh-gia-mot-n…/219632.html
2. Industry and Trade Newspaper
https://congthuong.vn/1-nam-thuc-thi-hiep-dinh-evfta-viet-n…
3. Da Nang Department of Foreign Affairs
https://fad.danang.gov.vn/web/guest/chi-tiet?id=3433&_c=59
4. Electronic newspaper of the Communist
Party of Vietnam
https://dangcongsan.vn/…/evfta-hiep-dinh-the-he-moi-huong-t…
5. Liberation of Saigon
https://www.sggp.org.vn/thay-doi-chien-luoc-hai-tao-thap-77…
6. Vietnam Science and Technology Magazine
https://vjst.vn/…/hiep-dinh-evfta--nhin-lai-mot-nam-thuc-hi…
7. Social Insurance Magazine
http://tapchibaohiemxahoi.gov.vn/…/tin-chi-tiet-dn-viet-nam…
8. CafeF.vn
https://cafef.vn/hien-tuong-la-ve-evfta-can-theo-doi-202111…
9. The messenger
https://www.nguoiduatin.vn/evfta-va-chien-luoc-de-lam-truoc…
10. Vietnam Financial Times
https://thoibaotaichinhvietnam.vn/con-nhieu-thach-thuc-tron…