NDO – The EU – Vietnam Free Trade Agreement (EVFTA) officially comes into effect today, August 1, which is expected to be an important push for Vietnam’s exports to the EU, the second largest import market in the world.
In fact, the EU has been one of Vietnam’s leading trading partners for many years, with two-way trade revenue of US$56.4 billion in 2019, including revenue of US$41.5 billion from Vietnam’s exports to the EU and US$14.9 billion from Vietnam’s imports from the EU.
Notably, the import-export structure between Vietnam and the EU is very complementary due to the difference in strengths and characteristics of exported goods from the two sides.
Vietnam has strengths in exporting various goods to the EU such as phones and components; computers, electronic products and components; textiles, aquatic products, machinery, equipment and spare parts, while Vietnam imports products like machinery, equipment, tools and spare parts; medicine; computers, electronic products and components; chemicals; and others.
Before the effectiveness of the EVFTA, the EU provided Vietnam with preferential import tariffs under the Generalized System of Preferences (GSP). To facilitate businesses, the EVFTA has regulations on the relationship between tax rates under the agreement and the tax rates under the GSP that the EU is giving to Vietnam.
Specifically, the EVFTA stipulates that EU preferential tax rates in any case must not be higher than the rates applied to goods originating from Vietnam before the date of the EVFTA taking effect. At the same time, from when the EVFTA takes effect, nearly 100% of tariffs on Vietnam’s exports to the EU will be eliminated after a short roadmap (maximum of seven years).
Thus, over the first seven years, Vietnamese goods exported to the EU will enjoy very preferential tax rates and then the import tax rates on goods from Vietnam will be basically cut to 0%.
It can be said that this is the highest level of commitment that a partner has provided for our country in a signed free trade agreement.
Recently, the COVID-19 pandemic has greatly affected the economic and trade situation in Vietnam. The country’s total export revenue in the first half of 2020 decreased by 2.1% compared to the same period last year.
In this context, the implementation of EVFTA is expected to create more motivation for domestic enterprises to recover and develop production and business activities.
Under the EVFTA, Vietnamese businesses will have the opportunity to access a market of nearly 500 million people with an average GDP of over US$35,000 and a zero tax rate right from the moment the agreement takes effect for more than 85% of the tax lines.
In addition, businesses can participate in new supply chains to replace traditional supply chains that have been disrupted or stalled due to the pandemic, while expanding and diversifying import and export markets, reducing the dependence on several specific markets.
However, experts say that the Government and businesses still must make a lot of preparations to realise the opportunities. Concerned ministries, branches and agencies need to quickly complete the implementation plan of the deal as well as issuing the necessary legal documents and strengthening dialogues and exchanges with the business community to remove obstacles in production and business activities.
Meanwhile, businesses should actively study the content of the agreement and fully prepare human resources, finances, and other necessary conditions to be able to meet the requirements of the agreement and the whole EU market.
- Trade surplus reaches record of $5.46 billion
- Vietnam’s Jan-June trade surplus seen expanding to $5.46bln despite virus
- 23 commodities see exports reach over US$1 billion each
- Import-Export reached US$ 1.5 billion each day in the second half of June
- General Department of Customs updates information on imports and exports to the Government information reporting system
- Vietnam trade surplus widens to US$6.5 billion in 7 months
- Vietnam has 22 export commodities worth “billion dollars” in the first half of 2020
- How does EVFTA impact on State revenue?
- Commodities gained export value of over US$1 billion
- Exports continued to be affected by Covid-19, the trade surplus increased to 6.5 billion USD