Today: 03/10/2023 23:39:47 (GMT+7)

EVFTA offering big benefits to Vietnam’s exports

Vietnam and the EU are increasing trade and investment ties backed by a bilateral free trade agreement, which are offering a raft of benefits over the past more than two years.

The General Department of Vietnam Customs on October 21, 2022 reported that in the first 10 months of this year, despite geopolitical tensions and declined demands in the EU which is home to a population of nearly 450 million people, total export-import turnover between Vietnam and the bloc hit 52.5 billion USD.

EVFTA, offering big benefits, Vietnam’s exports, trade and investment ties, bilateral free trade agreement,  export-import turnover

Garments and textiles are among many items exported to the EU with big revenues.

In which, Vietnam’s export turnover to the EU reached 39.76 billion USD – up 23.8% year-on-year and holding 12.7% of the country’s total export value, while the nation’s import turnover sat at 12.74 billion USD – down 8.1% year-on-year and accounting for 4.2% of its total import value.

Many export items have reaped big turnover as compared to those in the same period last year. Specifically, Vietnam’s exports of laptops, electronics products and their spare parts hit 5.99 billion USD - up 13.6%; industrial machinery, equipment, and spare parts 5.09 billion USD - up 44.7%; garments and textiles 3.73 billion - up 44.6%; footwear 4.99 billion USD – up 53.8%; and aquatic products 1.14 billion USD - up 32.5%.

The Ministry of Agriculture and Rural Development also reported that the agro-forestry-fishery trade turnover in the first seven months of this year between Vietnam and the EU increased strongly from 4.3 billion USD in 2015 to 4.5 billion USD in 2020, 5.2 billion USD last year. 

The EU-Vietnam bilateral trade turnover was 56.45 billion USD in 2019 (including Vietnam’s exports and imports of 41.5 billion and 14.95 billion USD, respectively). However, in 2020, Covid-19 affected their trade ties, with trade reduced to 50 billion USD (including Vietnam’s exports and imports of 35.1 billion and 14.9 billion USD, respectively).

The situation got brighter in 2021, when the bilateral trade turnover reached 63.6 billion USD, with Vietnam’s exports worth 45.8 billion USD – up 14.2% year-on-year, and the country’s imports were valued at 17.9 billion USD, up 16.5% year-on-year.

Notably, according to the Ministry of Industry and Trade, in 2021, Vietnam’s exports to the EU using the certificate of origin under the EUR.1 form stood at 7.8 billion USD, meaning many businesses in Vietnam took advantage of tariff cuts and reductions within the EU-Vietnam Free Trade Agreement (EVFTA) which became valid on August 1, 2020.

According to the Centre for WTO and International Trade under the Vietnam Chamber of Commerce and Industry (VCCI), in the first two years of EVFTA implementation, Vietnam’s export turnover from the 27 EU member states averaged at 41.7 billion USD a year, which is 24% higher than the average figure of 33.5 billion USD in the 2016-2019 period. This means that many exporters in Vietnam have been capitalising on tariff reductions from the EVFTA.

Vo Tan Thanh, vice chairman of the VCCI in Ho Chi Minh City, said at a recent conference on the EVFTA impacts on Vietnam’s economy that the EVFTA “has become a big leverage for Vietnam and the EU to further increase their trade and investment cooperation.”

The EVFTA is the most ambitious FTA that the EU has ever signed with a developing country. The deal will mutually lift about 99% of the tariffs within 10 years. Duty was lifted from 65% of EU exports to Vietnam and 71% of Vietnamese exports to the EU, immediately after the EVFTA took effect.

According to the Ministry of Planning and Investment, the EU is now one of the most important sources of foreign direct investment for Vietnam. As of October 20, 22, EU investors have registered more than 26 billion USD for nearly 2,250 projects. The most recent project is Danish’s LEGO Group which a few months ago got licensed to invest over 1 billion USD in the 44-hectare site in the southern province of Binh Duong for a carbon-neutral factory, which will be Lego’s sixth manufacturing site and second in Asia. This project will generate 4,000 jobs over the next 15 years.

Construction of this project was commenced early this month, and the factory is slated to start production in 2024, tapping solar power from panels on its roof and a neighbouring solar farm. It will supply Asia outside China, just as other factories in Europe, the US and Mexico sell to their respective regions.

However, the EU Delegation to Vietnam said that both intellectual property right protection and enforcement and sustainable development conditions are crucial elements for the attraction and retention of FDI from the EU.

To make it more favourable for EU investors and businesses to maximise the EVFTA benefits, the European Commission has established a new portal “Access2Markets” designed for EU exporters, in particular, small- and medium-sized enterprises. The portal provides useful and detailed information on applicable tariffs, rules of origin, product requirements, customs procedures and formalities, VAT/excise duties/sales taxes, trade barriers, and trade statistics. It is available in all 24 official EU languages.

It is expected that leaders of Vietnam and the EU will continue meeting with each other to beef up bilateral trade and investment relationship.

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Source: NDO

EVFTA, offering big benefits, Vietnam’s exports, trade and investment ties, bilateral free trade agreement, export-import turnover
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