Since the EU-Vietnam Free Trade Agreement (EVFTA) entered into force a year ago, the agreement has made good progress even in these most difficult of circumstances with the overwhelming challenges of the pandemic.
|Alain Cany - Chairman, European Chamber of Commerce in Vietnam |
Now that the EVFTA has been implemented, both companies and consumers are able to benefit from a gradual elimination of tariffs and a mutual opening of markets. From the moment it entered into force, 65 per cent of EU exports to Vietnam and 71 per cent of Vietnamese exports to the EU became tariff-free. Over the next decade, this will rise to almost 99 per cent.
In time, this will enable European enterprises to compete on an equal footing with companies from other countries with which Vietnam has free trade agreements. In other words, it will create a level playing field for European companies. And this, in turn, will make Vietnam a more attractive destination for European investment.
Meanwhile, more European financiers will also help Vietnamese companies to level up at home and become more competitive abroad. Therefore, the EVFTA is a true win-win for companies and consumers, as well as for business communities on both sides.
In the first six months of 2021, EU-Vietnam trade in goods reached $27 billion. That is an increase of more than 18 per cent compared to the same period in 2020 – a remarkable achievement considering the worsening COVID-19 outbreak in Vietnam since April.
This should increase even further when the EU-Vietnam Investment Protection Agreement (EVIPA) enters into force, once it has been ratified in each EU state. Meanwhile, the European Chamber of Commerce’s (EuroCham) Business Climate Index (BCI) shows that almost two-thirds of our members have benefited from the EVFTA since it entered into force.
But if we want to build on this promising start and unlock the full potential of this agreement, we need to work together. The EVFTA will not be a success without a coordinated effort between the Vietnamese and European business communities. Implementation is not the end of the road and success is not guaranteed, and we need to put the same effort into the next decade that we put into the last.
|Promoting free, fair, and rules-based trade through historic European deal, Illustration photo |
For instance, our BCI also shows that the biggest barrier for companies remains administrative procedures. More than a third of our members report issues such as customs and import-export processes as a barrier to implementation. Meanwhile, around one-fifth report difficulties from technical barriers to trade.
This is the reason EuroCham and Vietnam Chamber of Commerce and Industry created the EU-Vietnam Business Council in 2020. Securing successful implementation requires companies doing business in Vietnam and the EU to highlight issues and provide practical solutions based on the real situation on the ground.
This is what the council is designed to provide. In connecting our respective members, it will give us a joint forum in which to raise concerns and a tool with which to resolve them.
Free, fair, and rules-based trade will be our roadmap to recovery after this pandemic has been brought back under control. Therefore, despite these significant short-term challenges, we must not lose sight of the long-term opportunities that the EVFTA brings.