In February 2020, the European Parliament ratified a free trade agreement (FTA) and an Investment Protection Agreement (PPI) with Vietnam. MEPs (ENPs) voted in favour of the agreements in Strasbourg. Vietnam approved the agreement on 8 June, following the European Union`s decision to conclude it in early May. These trade agreements will benefit both parties and foreign investors will be able to take advantage of opportunities to invest in Vietnam. But it is still too early to conclude the positive effects of these agreements. The spotlight will now shift to how the potential benefits and losses for both parties translate into reality and on those who could earn the most. The two questions that most question businesses in the city of Ho Chi Minh about the Vietnamese Free Trade Agreement – the EU (EVFTA) is effective as a way to refund taxes and explain the origin of goods to be privileged. Read here for more information. The agreement provides for overall preferential treatment for both goods and services, recognition and protection of geographical indications for more than 200 products, liberalisation of procurement rules and obligations on cartels and mergers. It also contains provisions on sustainable development, including legally binding provisions on climate, labour and human rights. This is therefore the most comprehensive agreement to date between the European Union and each ASEAN member country.
To qualify for preferential tariffs under the EUSF, operators must comply with general rules of origin or rules of origin specific to the products of the agreement and complete a certificate of origin (eur.1) issued by the government or a declaration of origin from a certified exporter (i.e. self-certification of origin). The TFUE allows for the bilateral accumulation of origin, in which products manufactured in one part can benefit from preferential treatment and containing materials of the other party. It also allows for a limited accumulation of South Korean substances used in textile manufacturing and the possibility of accumulating fishing equipment from other ASEAN Member States. It took more than eight years and a dozen rounds of dialogue for both sides to negotiate the EVFTA. Nicolas Audier, President of EuroCham in Vietnam, welcomed the results of the vote: „The EVFTA is now more important than ever, as trade wars and a global pandemic disrupt normal affairs on an unprecedented scale. Free, fair and rules-based trade is the best roadmap for economic growth, and Vietnam will now have privileged access to an EU consumer market of around 500 million people who want to do business and invest with a strong, secure and prosperous nation in the heart of Asia. The agreements must now be ratified by the Vietnamese National Assembly and EU member states in the case of the Investment Protection Agreement.
The entry into force of TUEFTA comes amid growing global trade tensions with China. Combined with the ongoing COVID 19 pandemic, this has contributed to the growing trend of companies diversifying their supply chains, with Vietnam rapidly becoming the main beneficiary. The EU is already Vietnam`s second -largest destination for products. EMU will give new impetus to this important trade route and is an important step towards ending the security of EU investors and other global companies wishing to establish or develop trade relations between Vietnam and the EU, as well as the basis for creating fair and effective trading conditions. With regard to investment protection, both sides have already accomplished much, including agreement on important protection provisions, such as national treatment, and an agreement on key rules for material investment protection.