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EU-Vietnam Free Trade Agreement (EVFTA) to take effect in July 2020, opening up many opportunities to restore production and boost exports for Vietnamese goods

It is likely that by July 2020, the Vietnam-European Union Trade Agreement (EVFTA) will take effect, opening up many opportunities to restore production and boost exports for Vietnamese goods.


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Producing footwear for export to Korea at Dong Nai Garment Corporation (Bien Hoa City)

 

Currently, the EU is a large market of Dong Nai, so businesses are also waiting for the official FTAs. Thus, the export tariff lines will be reduced immediately or gradually reduced to 0%, increasing the competitiveness of Vietnamese goods in the EU market. Besides, the attraction of investment from the EU into Dong Nai will increase in the near future.

 

EVFTA Agreement goes into force quickly

 

Recently, in an online meeting with provinces to prepare for the economic recovery after the COVID-19 epidemic, Prime Minister Nguyen Xuan Phuc said that the EVFTA Agreement, which takes effect in the coming time, will be a motivation for businesses to recover production and export after epidemic to compensate for the losses in the past. EU is the second largest import market in the world with nearly USD 2.3 trillion/year. The level of opening the EVFTA Agreement is quite high, so when it comes into force 85.6%, the tariff lines will be reduced to 0%.

 

Mr. Nguyen Van Hoang, General Director of Dong Tien Joint Stock Company in Amata Industrial Zone (Bien Hoa City) said: “Our company's exports to the EU are quite large, so we hope that EVFTA Agreement will come into effect soon and the tax rate will be 0%. Therefore, garment products will increase competitiveness compared with similar products from other countries.”

 

At present, Dong Nai is exporting a lot of textiles, footwear, wood products, machinery, components and agricultural products to the EU market. In the EU, there are 28 countries, but Dong Nai enterprises have only focused on the markets of England, France, Germany and Italy while other countries have trade but not much turnover. Therefore, this will be an opportunity for Dong Nai enterprises to expand trade with the rest of the countries. The EU is one of the four largest export markets of Dong Nai.

 

Major investors of Dong Nai

 

By the end of May 2020, 10 EU countries had invested in Dong Nai with nearly USD 2.3 billion, of which the Netherlands was leading with nearly USD 759 million, followed by Turkey with more than USD 660 million and Switzerland more than USD 560 million. Recently, many EU investors have come to the province to look for opportunities to expand and invest in the province to catch the EVFTA Agreement, including Bosch Group, Meggitt Group, Schaeffer Group ... has raised investment capital by several tens of millions of dollars to expand its production.

 

According to Vice Chairman of the Provincial People's Committee Tran Van Vinh, most EU enterprises have modern technology to meet the requirements of the province that is calling for investment. The relationship of companies with capital from EU to workers is also quite good, less dispute occurs. In addition to expanding exports to the EU, Dong Nai has also promoted investments to invite EU businesses into the province to implement projects on industry, agriculture, technical infrastructure, etc.

 

EVFTA will help Vietnam and Dong Nai attract more investors from other countries, as this is one of the two largest new-generation free trade agreements of Vietnam. According to a study by the Ministry of Industry and Trade, the EVFTA Agreement may help Vietnam's exports to the EU increase by 20% this year, by 2025 by nearly 43% and by over 44% by 2030. It is expected that the EVFTA Agreement will help Vietnam's GDP increase by 2.2-3.2% from now to 2023, increase by 4.6-5.3% in the period 2024-2028 and continue to increase in the the following periods..

 

Vietnam is currently planning to negotiate a bilateral free trade agreement with the UK so that when it leaves the EU, trade between the two countries will not be affected.

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