Enhanced protection and conditions for EU entrants

August 25, 2020 | 08:00
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August 1 has become a historic milestone for EU-Vietnam relations as the EU-Vietnam Free Trade Agreement (EVFTA) officially came into force to have a major impact on the economy and the legal system of Vietnam.
1506p12 enhanced protection and conditions for eu entrants
By Pham Duy Khuong - Managing director, ASL LAW

Firstly, the EVFTA has and will have a far-reaching impact on the legal system of Vietnam. Before it could come into effect, two important domestic laws – the Law on Investment and the Law on Enterprises – had to be adjusted. Specifically, a myriad of conditional business lines have been cut, opening the doors for EU businesses in areas where it used to be very challenging to invest in Vietnam.

Furthermore, many cumbersome administrative procedures were struck down to create a simpler and more efficient business environment. For instance, regulations have been simplified for livestock breeding, which is one of the industries of interest for European businesses highlighted in the EVFTA. These changes removed many unnecessary conditions and stages of quality inspection for imported livestock products.

Another highlight is the protection of intellectual property rights. The first issue of note is geographical indications (GIs). Specifically, Vietnam has agreed to provide legal protection for 169 GIs from the EU. Indeed, this is important for the EU, since products bearing GIs bring great benefits to EU countries from money to reputation, especially in the sectors of wine, agricultural products, foodstuff, and spirits which have accounted for a large part of the value of the EU’s exports.

Hence, the protection of GIs from the EU means the protection of the rights and interests of EU enterprises. This will help European businesses not only expand their markets to Vietnam but also give them the right to deal with infringements and unauthorised use of GIs by other parties or failure to meet the standards of goods derived from products bearing GIs. The GIs now enjoying protection in Vietnam include well-known indications such as French Champagne, Greek Feta, Italian Parmigiano Reggiano, Spanish Rioja, and Scottish Whisky.

However, there are some exceptions in the EVFTA. For example, during the 10-year transition period from the date of entry into force of the agreement, the protection of the GI “Champagne” does not prohibit the use of this indication nor the translation or transcription of the indication in Vietnamese territory as long as it is used in a fair and commercial manner for a product in the class of “wine”.

In addition, through the EVFTA, Vietnam made a commitment to extend the protection for industrial design (ID) by acceding to the Geneva Act of the Hague Agreement within two years of the EVFTA. With this, Vietnam will protect partial designs.

In addition, within three years of the EVFTA taking effect, Vietnam shall also join the World Intellectual Property Organization to protect the copyright of materials on digital networks by adding regulations for the protection against infringements of technological measures.

In terms of tariffs, since the EVFTA took effect, Vietnam has removed 48.5 per cent of tariff lines on EU goods, equivalent to 64.5 per cent of EU exports to Vietnam. Within seven years from the date of effectiveness, 91.8 per cent of tariff lines (97.1 per cent) shall be eliminated and the rate shall reach 98.3 per cent (99.8 per cent) after 10 years.

Moreover, for the 1.7 per cent of remaining tariff lines, Vietnam has also committed to applying tariffs as described in its World Trade Organization (WTO) commitments or apply special elimination schedules. This applies for products like cigarettes, petroleum, beer, cars and components, and motorbikes. For example, motorbikes and motorcycles over 150 cubic centimetres shall be subject to 0 per cent import tariffs within seven and 10 years, respectively. Another instance is cars which have a committed tax reduction schedule of 10 years, except for cars with larger engines.

The reduction of these tariffs will benefit EU enterprises and create a fair business environment between Vietnamese and EU companies.

In terms of market access, the elimination of customs duties on goods exported from the EU have created many opportunities to access the Vietnamese market and open the road for EU enterprises to invest in Vietnam. Besides, EU enterprises have great expectations in the pharmaceutical market in Vietnam. Since the EVFTA, customs duties were abolished for around half of the pharmaceutical products imported from the EU and the rest shall be duty-free within seven years. This provides far more access for EU enterprises.

For services, apart from those lines subject to WTO commitments, Vietnam has made deeper commitments in the EVFTA by opening many more sectors.

The EVFTA brings many opportunities for EU enterprises in the Vietnamese market. This has shown an aspiration for deeper integration and trade relations with the EU and for developing relations for sustainable development in the future.

By Pham Duy Khuong

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