Vietnam and the European Union (EU) last Sunday signed a Free Trade Agreement and Investment Protection Agreement, known as EVFTA and EVIPA.
These are the agreements that ensure bilateral benefits with strong commitments to opening respective markets.
The EU-Vietnam Free Trade Agreement (EVFTA) will open up a dual opportunity for Vietnam's economy. On one hand, it will create conditions for Vietnamese businesses to access a variety of trading partners in the world, allowing them to promote their products to different markets. On the other hand, it is also an opportunity for them to gain professional experience from partners in Europe.
EVFTA is an important key to modernize the Vietnamese economy, especially as Vietnam is boosting the reform of state-owned enterprises. In addition, it will help Vietnam improve business management to be able to compete with European enterprises.
Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said that through the EVFTA, Vietnamese enterprises will access a market of 500 million people with potential purchasing power. This means that Vietnamese businesses will gain added value and create more jobs when they penetrate the EU market.
Loc said, “To meet the requirements set by the EU, a market with high standards, Vietnamese businesses should improve their technology, management, and social responsibility. This will make domestic enterprises more mature and allow them to grow more sustainably.
The EVFTA will create both pressure and a driving force to reform Vietnam’s institutions and develop a more transparent, fair, and favorable business environment. The EVFTA will be an integrated solution to internationalize Vietnamese businesses, especially small and medium-sized enterprises.”
Vietnam is one of the world’s biggest exporters of rice, peppers, cashews, seafood, vegetables and fruit. It is gradually affirming its brand in its reputation for quality and competitive prices.
In the first 5 months of this year, trade turnover between Vietnam and the EU totalled nearly 23 billion USD, 2.7 billion USD from farm produce. Vietnam’s agricultural exports to the EU earned more than 15% of total revenue.
Tran Tuan Anh, Minister of Industry and Trade, said that to export agricultural products efficiently, Vietnam should enhance its processing capacity, because when the EVFTA takes effect, the tax imposed on almost all exported agricultural products will be slashed to 0%.
“By joining the CPTPP, Vietnam will have a market of countries with a total GDP of about 10 trillion USD. For the EVFTA, we will approach an economic region with a GDP of 18 trillion USD. That means exports of agricultural products and seafood to EU and CPTPP members will fetch 35% of Vietnam’s total export revenues”, Mr Anh noted.
The EVFTA will offer a great opportunity for Vietnam to improve its competitiveness and export value, but it also challenges the agricultural sector to change greatly to compete with other countries with long experience in agricultural production, the agricultural market, and comprehensive policies.