EU-Vietnam trade agreement to eliminate 99% of all tariffs
The European Commission on October 17 adopted the long-planned trade and investment agreements between the European Union (EU) and Vietnam, paving the way for their signature and conclusion “as soon as possible.” The trade agreement will eliminate virtually all tariffs on goods traded between the two sides over certain time periods.
Almost all machinery and appliances will be fully tariff-free at entry into force, and the rest after five years. Current duties are up to 35 per cent. Motorcycles with engines larger than 150 cc will see tariffs fully removed after seven years (current duty is 75 per cent) and cars after ten years (down from 78 per cent), while car parts will be duty free after seven years (current duties are up to 32 per cent).
Moreover, roughly half of EU pharmaceuticals exports will be duty free at entry into force and the rest after seven years (current duties are up to eight per cent). Close to 70 per cent of EU chemicals exports will be duty free as the agreement entries into force (current duties are up to five per cent) and the rest after three, five or seven years (current tariffs up to 25 per cent).
All textile fabric exports will see their duties removed at entry into force (currently with a tariff of 12 per cent), while wines and spirits will be fully tariff-free after seven years (down from tariffs of 50 per cent and 48 per cent, respectively). Frozen pork meat will be duty free after seven years, beef after three years, dairy products after a maximum of five years and food preparations after a maximum of seven years. Tariffs on chicken will be progressively reduced to zero in the next ten years.
The agreements also includes a strong, legally binding commitment to sustainable development, including the respect of human rights, labour rights, environmental protection and the fight against climate change, with an explicit reference to the Paris Agreement.
“The trade and investment agreements with Vietnam are exemplary of Europe’s trade policy. They bring unprecedented advantages and benefits for European and Vietnamese companies, workers and consumers,” said Jean-Claude Juncker, president of the European Commission.
The agreement also contains specific provisions to address non-tariff barriers in the automotive sector and will provide protection for 169 traditional European food and drink products in Vietnam, the so-called Geographical Indications, like Rioja wine, Roquefort cheese, Champagne, Parmigiano Reggiano cheese or Feta cheese. Special Vietnamese products will also be recognised and protected in the EU, further promoting imports of quality products such as Moc Chau tea or Buon Ma Thuot coffee.
Through the investment agreement, EU companies will be able to participate on an equal footing with domestic companies in bids for procurement tenders with Vietnamese authorities and state-owned enterprises.
The agreement also commits the two parties to respect and effectively implement the principles of the International Labour Organisation concerning fundamental rights at work and includes an institutional and legal link to the EU-Vietnam Partnership and Cooperation Agreement, allowing appropriate action in the case of breaches of human rights.
The investment protection agreement, meanwhile, includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved. It will replace the bilateral investment agreements that 21 EU member states currently have in place with Vietnam.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €47.6 billion a year and €3.6 billion as it comes to services. While EU investment stock in Vietnam remains modest standing at €8.3 billion in 2016, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and agricultural products.
[caption id="attachment_32132" align="alignleft" width="300"] Ho Chi Minh City skyline © Arno Maierbrugger[/caption] The European Commission on October 17 adopted the long-planned trade and investment agreements between the European Union (EU) and Vietnam, paving the way for their signature and conclusion “as soon as possible.” The trade agreement will eliminate virtually all tariffs on goods traded between the two sides over certain time periods. Almost all machinery and appliances will be fully tariff-free at entry into force, and the rest after five years. Current duties are up to 35 per cent. Motorcycles with engines larger than 150 cc will see tariffs...
The European Commission on October 17 adopted the long-planned trade and investment agreements between the European Union (EU) and Vietnam, paving the way for their signature and conclusion “as soon as possible.” The trade agreement will eliminate virtually all tariffs on goods traded between the two sides over certain time periods.
Almost all machinery and appliances will be fully tariff-free at entry into force, and the rest after five years. Current duties are up to 35 per cent. Motorcycles with engines larger than 150 cc will see tariffs fully removed after seven years (current duty is 75 per cent) and cars after ten years (down from 78 per cent), while car parts will be duty free after seven years (current duties are up to 32 per cent).
Moreover, roughly half of EU pharmaceuticals exports will be duty free at entry into force and the rest after seven years (current duties are up to eight per cent). Close to 70 per cent of EU chemicals exports will be duty free as the agreement entries into force (current duties are up to five per cent) and the rest after three, five or seven years (current tariffs up to 25 per cent).
All textile fabric exports will see their duties removed at entry into force (currently with a tariff of 12 per cent), while wines and spirits will be fully tariff-free after seven years (down from tariffs of 50 per cent and 48 per cent, respectively). Frozen pork meat will be duty free after seven years, beef after three years, dairy products after a maximum of five years and food preparations after a maximum of seven years. Tariffs on chicken will be progressively reduced to zero in the next ten years.
The agreements also includes a strong, legally binding commitment to sustainable development, including the respect of human rights, labour rights, environmental protection and the fight against climate change, with an explicit reference to the Paris Agreement.
“The trade and investment agreements with Vietnam are exemplary of Europe’s trade policy. They bring unprecedented advantages and benefits for European and Vietnamese companies, workers and consumers,” said Jean-Claude Juncker, president of the European Commission.
The agreement also contains specific provisions to address non-tariff barriers in the automotive sector and will provide protection for 169 traditional European food and drink products in Vietnam, the so-called Geographical Indications, like Rioja wine, Roquefort cheese, Champagne, Parmigiano Reggiano cheese or Feta cheese. Special Vietnamese products will also be recognised and protected in the EU, further promoting imports of quality products such as Moc Chau tea or Buon Ma Thuot coffee.
Through the investment agreement, EU companies will be able to participate on an equal footing with domestic companies in bids for procurement tenders with Vietnamese authorities and state-owned enterprises.
The agreement also commits the two parties to respect and effectively implement the principles of the International Labour Organisation concerning fundamental rights at work and includes an institutional and legal link to the EU-Vietnam Partnership and Cooperation Agreement, allowing appropriate action in the case of breaches of human rights.
The investment protection agreement, meanwhile, includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved. It will replace the bilateral investment agreements that 21 EU member states currently have in place with Vietnam.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €47.6 billion a year and €3.6 billion as it comes to services. While EU investment stock in Vietnam remains modest standing at €8.3 billion in 2016, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and agricultural products.
