EVFTA will officially come into effect on August 1, 2020

Free Trade Agreement between Vietnam and the European Union (EVFTA) have completed the process of ratifying and will officially come into effect on August 1, 2020.

The EVFTA is an ambitious pact providing almost 99 per cent of elimination of customs duties between the EU and Vietnam. Sixty-five per cent of tariffs on EU exports to Vietnam will be eliminated while the remaining will be gradually phased out over a period of 10 years. Seventy-one per cent of duties will be eliminated on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years.

For Vietnam, the tariff elimination will benefit key export industries, including the manufacturing of smartphones and electronic products, textiles, footwear and agricultural products, such as coffee. These industries are also very labour-intensive. Increasing Vietnam’s export volume to the EU, the FTA will facilitate the expansion of these industries, both in terms of capital and rising employment.

As per the Ministry of Planning and Investment, the FTA is expected to help increase Vietnam’s GDP by 4.6 per cent and its exports to the EU by 42.7 per cent by 2025. While the European Commission has forecast the EU’s GDP to increase by US$29.5 billion by 2035.

The EVFTA is an essential factor in that process, especially as the global supply chain has been severely affected by the decline in production and trade activities due to COVID-19. This is also an excellent opportunity for Viet Nam to diversify its trading partners more actively to reduce dependence on one or two critical markets regarding both imports and exports. 

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