The population of Vietnam registered in 2022 is 99.46 million people. Vietnam’s gross domestic product (GDP) has grown 3.32% year on year in the first quarter of 2023. Vietnam has posted a trade surplus of 9.8 billion USD in the first five months of 2023, with export revenue standing at over 136 billion USD and import revenue at more than 126 billion USD. As of April 20, foreign investors invested nearly 8.88 billion USD in Vietnam, or 82.1% compared to YTD April 2022. Belgium is now Vietnam’s sixth largest trading partner in the EU with a total investment of more than 1.1 billion USD to Vietnam, mainly in the field of logistics and infrastructure development.
The European Union and Vietnam signed a Trade Agreement and an Investment Protection Agreement on 30 June 2019.
The agreements provide opportunities to increase trade and support jobs and growth on both sides by:
- Eliminating 99% of all tariffs;
- Reducing regulatory barriers and overlapping red tape;
- Ensuring protection of geographical indications;
- Opening up services and public procurement markets, and;
- Making sure the agreed rules are enforceable.
The European Parliament gave its consent to both Agreements on 12 February 2020 and the Free Trade Agreement was concluded by EU Member States in the Council on 30 March 2020.
The Trade Agreement entered into force on 1 August 2020.
Elimination of tariffs
The agreement eliminate 99% of all tariffs on both sides. EU SMEs are able to export to Vietnam without having to pay tariffs. Some products, like almost all machinery and appliances and all textiles, were free from any duty from the date of entry into force. The same applies to around half of the EU’s pharmaceutical products. For other products, tariffs will be reduced over time and will be eliminated no later than ten years after the entry into force of the trade agreement.
Here are examples of duties before the agreement that were reduced to 0 since agreement fully in force :
Machinery and appliances Up to 35% ; Pharmaceuticals Up to 8% ; Cars Up to 78% ; Dairy Up to 20% ; Wine 50% ; Chocolates 30%.
For SMEs, barriers to trade are much harder to overcome than for larger companies which tend to have more resources to draw on. This is why SMEs have to struggle harder to get their goods across borders or to meet local requirements for the service they want to deliver.
The agreements the EU has concluded with Vietnam will help SMEs increase their exports to Vietnam. Vietnam is an attractive market for SMEs. The agreements contain many provisions that make doing business easier and at a lower cost.
Vietnam as an attractive market for SMEs
Vietnam is one of the fastest growing economies in the world. It is also a hub for EU companies to set up production and exporting facilities as Vietnam is a central location within ASEAN countries.
The EU has now preferential access to an economy of almost 100 million inhabitants with the fastest growing middle class in ASEAN and a young and dynamic workforce.
The trade agreement with Vietnam are the most ambitious the EU has ever concluded with a developing country. Through this trade agreement, Vietnam will consolidate its process of
integration in the global economy.
The agreement provides also European SMEs a competitive advantage over non EU SMEs willing to export to Vietnam.
Enterprise Europe Network is represented in Vietnam by the Chamber of Commerce and Industry France Vietnam. CCIFV belongs to CCI France International. The chamber promotes trade and investment relations with Vietnam. Your company has questions concerning trade with Vietnam and how to benefit from the FTA agreement? Your company is looking for business partners in Vietnam? Contact Enterprise Europe Brussels for advisory and partnering support.
