European Union (EU) exports to Vietnam has been taxed less starting August 1, said the agency last week. This is the immediate effect of the entry into force of the two' trade agreement that will ultimately scrap duties on 99 percent of all goods traded between the two sides - Photo: Asia Times

JAKARTA (TheInsiderStories) – European Union (EU) exports to Vietnam has been taxed less starting August 1, said the agency last week. This is the immediate effect of the entry into force of the two’ trade agreement that will ultimately scrap duties on 99 percent of all goods traded between the two sides.

 “The European economy needs now every opportunity to restore its strength after the crisis triggered by the coronavirus. Trade agreements, such as the one becoming effective with Vietnam today, offer our companies a chance to access new emerging markets and create jobs for Europeans,” said President of the European Commission, Ursula von der Leyen, in an official statement

Commissioner for trade at the institution, Phil Hogan added, Vietnam is now part of a club of 77 countries doing trade with the EU under bilaterally agreed preferential conditions.  He hope through this agreement could strengthens EU economic links with the dynamic region of Southeast Asia and has an important economic potential that will contribute to the recovery after the coronavirus crisis.

“But it also shows how trade policy can be a force for good. Vietnam has already made a lot of effort to improve its labour rights record thanks to our trade talks and, I trust, will continue its most needed reforms,” he stated

Both agreement is the most comprehensive trade agreement the agency has concluded with a developing country. It takes fully into account Vietnam‘ development needs by giving the country a longer, 10-year period to eliminate its duties on EU imports.

However, many important EU export products, such as pharmaceuticals, chemicals or machinery will already enjoy duty free import conditions as of entry into force. Agrifood products like beef or olive oil will face no tariffs in three years, while dairy, fruit and vegetables in maximum five years.

In addition, comprehensive provisions on sanitary and phytosanitary cooperation will allow for improving market access for EU firms via more transparent and quick procedures. It also contains specific provisions to address regulatory barriers for car exports and grants protection from imitation for 169 traditional European food and drink products recognized as Geographical Indications.

At the same time, the trade agreement expresses a strong commitment of both sides to environment and social rights. It sets high standards of labour, environmental and consumer protection and ensures that there is no ‘race to the bottom’ to promote trade or attract investment.

Under the agreement, the two parties have committed to ratify and implement the eight fundamental Conventions of International Labour Organization (ILO), and respect, promote and effectively implement the principles of the organization concerning fundamental rights at work, implement the Paris Agreement, as well as other international environmental agreements.

Then, an act in favor of the conservation and sustainable management of wildlife, biodiversity, forestry and fisheries, and involve independent civil society in monitoring the implementation of these commitments by both sides. Vietnam has already made progress on these commitments by ratifying ILO Convention 98 on collective bargaining and in June 2020 ILO Convention 105 on forced labour in June 2019.

It also adopted a revised Labour Code in November 2019 and confirmed that it would ratify the one remaining fundamental ILO Convention on forced labour by 2023. The trade agreement also includes an institutional and legal link to the EU – Vietnam Partnership and Cooperation Agreement, allowing appropriate action in the case of serious breaches of human rights.

The entry into force of the trade agreement has been preceded by its approval by EU members in the Council and its signature in June 2019, and the European Parliament’ approval in February 2020.

Vietnam is the EU’ second largest trading partner in the Association of Southeast Asian Nations after Singapore, with trade in goods worth EUR45.5 billion (US$38.56 billion) in 2019  and trade in services of some EUR4 billion in 2018.

The EU’ main exports to Vietnam are high-tech products, including electrical machinery and equipment, aircrafts, vehicles, and pharmaceutical products. While, Vietnam’ main exports to the Europe are electronic products, footwear, textiles and clothing, as well as coffee, rice, seafood, and furniture.

With a total foreign direct investment stock of EUR7.4 billion (2018), the EU is one of the largest foreign investors in Vietnam. Most the block investments are in industrial processing and manufacturing.

The agreement with Vietnam is the second trade agreement the EU has concluded with an ASEAN member state, following the recent agreement with Singapore. It represents an important milestone in the EU’s engagement with Asia, adding to the already existing agreements with Japan and Republic of Korea.

US$1: EUR1.18

Written by Editorial Staff, Email: theinsiderstories@gmail.com