On 1st August 2020, EUVFTA – the new landmark free trade agreement between Vietnam and European Union – has entered into force.
The new agreement, signed on 30th June 2019 by Ms. Cecilia Malmstrom (European Trade Commissioner) and Mr. Tran Tuan Anh (Vietnam’s Minister of Industry and Trade), is the most comprehensive trade agreement that the EU has concluded with a developing country. Indeed, at the core of the EUVFTA there is a near complete removal of tariffs between the two countries, including the elimination of more than 99% of customs duties within 10 years. Immediately upon entry into force, 65% of EU exports to Vietnam and 71% of Vietnamese exports to the EU have been duty free.
Under the agreement, the two parties have committed to ratify and implement the eight fundamental Conventions of International Labour Organization (ILO) and respect its principles. They have also implemented the Paris Agreement as well as other international environmental agreements.
Moreover, the deal 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.
Finally, the entry into force of the EUVFTA comes in conjunction with the on-going Covid-19 pandemic and the growing global trade tensions with China. This has contributed to the growing trend for companies to diversify their supply chains, with Vietnam quickly becoming a principal beneficiary.
(Source: European Commission)