However, this increase is not necessarily associated with EVFTA. For example, EU exports to Vietnam in the field of electronic machinery (HS code 85) increased by 50% in value and 25% in volume seven months after the entry into force of the EVFTA. However, the correlation with the agreement is limited because the products whose exports have increased the most in this category, namely generator sets (HS code 8502) and electric accumulators (HS code 8507), were already duty-free before the EVFTA [2]. This increase could therefore be more related to the recovery of the economy in the second half of 2020. The agreements must now be ratified by the Vietnamese National Assembly and, in the case of the investment protection agreement, by EU member states. The agreement deepens relations between Vietnam and the European Union and was adopted by Council Decision (EU) 2020/753 of 30. March 2020 on the conclusion of the EU-Vietnam Free Trade Agreement. [2] The agreement was adopted in Vietnam on June 8, 2020 in the Vietnamese National Assembly and entered into force on August 1 of the same year. [3] Both agreements were approved by Vietnamese lawmakers by a large majority of about 95% of the vote.
[4] The agreement provides for full preferential treatment for products and services, the recognition and protection of geographical indications for more than 200 products, liberalised rules on public procurement and obligations on antitrust and mergers. It also contains provisions on sustainable development, including legally binding rules on climate, labour and human rights. As such, it is the most comprehensive agreement ever concluded between the European Union and an ASEAN Member State. However, it should be noted that EU-Vietnam trade performed better than total EU trade with other countries outside Europe in the seven months following the EVFTA. EU exports to Vietnam fell by 10%, while EU exports to third countries fell by 19%. Similarly, EU imports from Vietnam increased by 2%, while extra-EU world imports fell by 10% (Figure 2). A historic new free trade agreement between Vietnam and the European Union entered into force on August 1, 2020. Under the EUSFTA, the EU sets the same thresholds that it applies under the WTO Agreement on Government Procurement (`the WTO-GPA AGREEMENT`) and other free trade agreements, while Vietnam benefits from a transitional period of 15 years during which it provides for higher thresholds. Both the EU and Vietnam are committed to opening up public procurement to central, sub-central and other entities, as set out in the Annexes to the Agreement. In particular, the EU undertakes to open, with a few exceptions, the same central government bodies as under the WTO GPA. Vietnam undertakes to open procurement procedures of 20 central government agencies, including several ministries, departments and sub-agencies, 2 sub-central government agencies (Hanoi-City and Ho Chi Minh City) and 42 “other affected entities”, including Vietnamese railways and Vietnamese electricity.2 The legal text of the EUSFTA contains a number of joint declarations and agreements as annexes to the agreement.
which form an integral part of the Agreement in accordance with Article 17.21. The banking participation agreement requires the Vietnamese authorities to “favourably evaluate” the investments of EU financial institutions, which must hold up to 49% of the interest rate capital in two Vietnamese commercial banks within five years of the entry into force of THE TEUFTA. There is a specific split to exclude four commercial banks from this agreement, namely the Vietnam Investment and Development Bank (BIDV), Vietinbank, Vietcombank and Agribank, in which the Vietnamese government currently holds a majority stake. Given the continued interest of foreign investors in Vietnamese banks, we expect EU financial institutions to try to use this exemption for foreign direct investment in due course. In addition, it could indeed be a deliberate attempt by the Vietnamese government to introduce a more diversified investor base into its banking sector – the existing foreign minority investors in this sector are mainly Asian banks. However, the fact that this has been limited to just two Vietnamese banks is an indication that this may not be a precursor to broader foreign-invested reforms by Vietnamese banks – this, as well as how the Vietnamese government interprets this obligation in the context of its broader regulatory framework, remains to be seen. In order to benefit from preferential customs duties under the EUSFTA, economic operators must comply with the general rules of origin or product-specific rules of origin of the Agreement and complete a certificate of origin issued by the public authorities (form EUR.1) or an origin declaration issued by a certified exporter (i.e. self-certification of origin).
CEFTA allows for bilateral cumulation of origin, under which goods manufactured in one Party containing materials of the other Party may benefit from preferential treatment. It also allows for limited cumulation of South Korean substances used in textile production and the possibility of cumulating fishing materials from other ASEAN Member States. After signatures, the agreements will be submitted to the National Assembly for ratification on the Vietnamese side and to the European Parliament for approval on the EU side and, in the case of the investment protection agreement, to the respective national parliaments of the EU Member States. The EVFTA is the most comprehensive and ambitious trade and investment agreement the EU has ever concluded with a developing country in Asia. This is the second agreement in the ASEAN region after Singapore and contributes to the intensification of bilateral relations between Vietnam and the EU. Vietnam now has access to a market of about 448 million people and an average GDP of $13.918 trillion (excluding 2020 due to the impact of Covid-19 on the economy). [2] At the same time, EU exporters and investors also have other opportunities to access one of the largest and fastest growing countries in the region. According to a report published in early 2020 that covers 130 cities around the world[3], Hanoi and Ho Chi Minh City are among the 10 most dynamic cities due to their low costs, rapid expansion of the consumer market, strong population growth and transition to activities that attract significant amounts of foreign direct investment (FDI). According to the World Bank, Vietnam has one of the fastest growing economies in the world – GDP growth of 7.1% in 2018 and 7.0% in 2019, or 2.91% for 2020. [4] Although this is the country`s slowest GDP growth in the last 10 years due to the impact of the novel coronavirus, it remains among the highest in the world, especially compared to neighboring countries like Singapore, which has recorded GDP growth of around minus 6.
In addition, Vietnam has the fastest growing middle class in the region. Vietnam`s middle class accounts for 13% of the total population and this number is expected to reach 26% by 2026. [5] Vietnam`s super-rich population[6] is also growing faster than elsewhere, and there is no doubt that it will continue to grow over the next decade. Although trade statistics between the EU and Vietnam have not given the most optimistic terms over the past seven months, there are certainly better prospects, especially given the economic recovery expected in 2021. The 8. In June 2020, the Vietnamese National Assembly unanimously ratified the new Vietnam-European Union Free Trade Agreement (EUVFTA) and the EU-Vietnam Investment Protection Side Agreement (EUVIPA). This followed the approval of the two agreements by the European Parliament on 12 February 2020. TUEFTA now entered into force on 1 August 2020. EUVIPA, which falls under the shared competence1 of the EU and its Member States, is currently being ratified by the regional and national parliaments of the EU Member States. TEUFTA is discussed below.
We will deal separately with EUVIPA if this agreement is ratified and enters into force. On June 8, 2020, after nearly 10 years of negotiations, the Vietnamese National Assembly ratified the EU-Vietnam Free Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA). On the 12th. In February 2020, the European Parliament approved the ratification of EVFTA and EVIPA. On 30 March 2020, the Council of Europe ratified the EVFTA. .