(STRASBOURG) – The European Parliament approved Wednesday the EU-Vietnam trade agreement, described as the “most modern and ambitious agreement ever concluded between the EU and a developing country”.
The free trade agreement is expected to contribute to setting high standards in the region, and could lead to a future region-to-region trade and investment agreement, according to MEPs.
“These state-of-the-art agreements just adopted present a unique opportunity to further the EU’s goal to become a geopolitical player that defends multilateral trade, rejects protectionism, and raises labour, environmental and human rights standards worldwide,” said Parliament’s rapporteur Geert Bourgeois MEP: “The deals will boost prosperity, create new and better paid jobs, cut costs for companies big and small, and give them better access to each other’s markets.”
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 when it comes to services. EU exports to the country grow by 5-7 percent annually, yet the EU’s trade deficit with Vietnam was 27 billion in 2018.
Main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports goods such as machinery and transport equipment, chemicals and agricultural products to Vietnam.
The agreement is seen as “a strong signal in favour of free, fair and reciprocal trade, in times of growing protectionist tendencies and serious challenges to multilateral rules-based trade”, say MEPs.
The agreement will remove virtually all customs duties between the two parties over the next ten years, including on Europe’s main export products to Vietnam: machinery, cars, and chemicals.
It extends to services such as banking, maritime transport and postal, where EU companies will have better access.
Companies will also be able to bid on public tenders put out by the Vietnamese government and several cities, including Hanoi.
The deal safeguards 169 emblematic European products.
In addition, the agreement is seen as an instrument to protect the environment and to sustain social progress in Vietnam, including labour rights. It commits Vietnam to apply the Paris Agreement. Vietnam committed to ratify two bills as requested by Parliament, one on the abolition of forced labour, the other on freedom of association, by 2020 and 2023, respectively.
The trade deal can be suspended if there are human rights breaches.
Also today, the Parliament agreed to an investment protection agreement providing an investment court system with independent judges to settle disputes between investors and state.
Once Council formally concludes the trade agreement and the parties notify each other that their procedures are closed, it can enter into force. For the investment protection agreement to enter into force, EU member states’ parliaments first need to ratify it.
Further information, European Parliament
Procedure file – trade agreement consent
Procedure file – investment protection agreement consent
EP Research: Trade and investment agreements with Vietnam (February 2020)
