Vietnam and the European Union signed free trade and investment protection agreements in Hanoi on June 30 after years of negotiations with Prime Minister Nguyen Xuan Phuc and EU Commissioner for Trade Cecilia Malmström in attendance.
The EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement are the most ambitious agreements with the highest standards between the EU and a developing country.
Once the EU-Vietnam Free Trade Agreement (EVFTA) takes effect, more than 99 percent of tariff on goods from both sides will be lifted.
It also sets the highest standards on safety and labor, environmental, and consumer protection. The investment protection deal will help increase EU investment in Vietnam.
The free trade agreement is expected to be passed by the European Parliament and the parliaments of 28 EU members by the end of this year or early next year while the approval of the investment protection agreement will take at least two years.
According to Chu Hoang Long, a senior lecturer at the Crawford School of Public Policy at the Australian National University (ANU), the trade and investment deals are the most comprehensive agreements concluded between the EU and a middle-income country.
By signing the agreements with the EU, Vietnam is on par with its major partners of the EU in Asia such as Japan and the Republic of Korea, he told the Vietnam News Agency. Vietnam is the second ASEAN country to sign a free trade pact with the EU after Singapore.
The EU considers the signing of the agreements an important step to reach a deal with ASEAN in the future, Long said, adding that the agreements will help increase the competitiveness of Vietnamese goods in the EU market - the second largest importer of Vietnam in 2018 - and promote Vietnam’s deeper integration into the global economy.
However, Long said that domestic producers will have to compete with products imported from the EU, and Vietnam needs to make legal changes to implement its commitments related to services, intellectual property, origin of goods, the rights of laborers and environmental protection.
Helena Konig, EU chief negotiator and Deputy Director General for European Trade said many European businesses see Vietnam as a feasible investment destination after agreements come into force.
Konig told the Vietnam News Agency that the agreements will build Vietnam into a connectivity centre of ASEAN. European firms have also seen the country as an important berth in the region with opportunities for pouring more investments into Vietnam and accessing the ASEAN market via the country, she added.