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EU–Vietnam Free Trade Agreement

EU–Vietnam Free Trade Agreement

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EU–Vietnam Free Trade Agreement

On 2 December 2015, President Juncker and the Vietnamese Prime Minister Dũng officially concluded negotiations on a Free Trade Agreement (FTA) between the EU and Vietnam. The agreement will give the EU access to one of Asia's most promising markets. Vietnam is a fast growing economy and became a WTO member in 2007. With its 90 million inhabitants and growing middle class, it arises as an interesting market for EU exporters.

EU Commissioner for Agriculture and Rural Development Phil Hogan said today: "This is a good deal for the European agri-food sector which will open up significant export opportunities for our farmers and agri-businesses. Vietnam is an important emerging economy, and increased trade will benefit both sides. Our world-renowned EU Geographical indications will enjoy a high level of protection through the agreement."

The FTA will set a precedent for other trade agreements that are under negotiation (such as Japan) or will be negotiated in the region (with other ASEAN countries like Malaysia, Philippines). After Singapore it is the 2nd FTA negotiated with a partner in South-East Asia. The EU also has an FTA with Korea in force since July 2011.

The main achievements in the agricultural field include:

  • The opening of the EU and Vietnamese markets by liberalizing 99% of trade within a maximum of 10 years after the entry into force of the agreement.
  • In particular a good result was achieved for EU offensive sectors like wines and spirits (full liberalization in 7 years – currently Vietnam applies MFN tariffs of up to 55%), dairy (3-5 years), meats (3-10 years), fruit and vegetables (3-5 years) and processed agricultural products (5-7 years).
  • At the same time, the EU managed to cover its sensitive sectors like rice, starch and sugar under Tariff Rate Quotas (TRQs).
  • The protection of a list (169 names) of EU Geographical indications (GIs) with a high level of protection directly through the agreement is another major gain. This is assured on the Vietnamese market by the appropriate administrative action, including upon the request of an interested party. The GIs will be able to coexist with prior registered trademarks in Vietnam. The EU GIs cannot become generic, neither can they unilaterally be invalidated by the other party. This is a very good outcome, bearing in mind that Vietnam was engaged in parallel TPP negotiations.

In 2014, global trade (imports and exports) in agricultural and food products between Vietnam and the EU was worth over € 2.7 billion in 2014 – with EU exports worth € 817 million and Vietnamese products worth € 1.903 billion. Today Vietnam has a negligible position in terms of EU agricultural exports, therefore this agreement will open up opportunities for EU operators in this market. At present, the EU's main exports include infant food, malt, pet food and feed. At the same time, the EU is the 2nd most important export market for Vietnam in particular for products such as coffee, cashew nuts and peppers. Vietnam already benefits from GSP status meaning it benefits from some lower import duties into the EU.

The text of the future FTA will be made public shortly. The next steps will involve legal review and translation of the full text followed by ratification by the Council of Ministers and the European Parliament, with entry into force likely towards the end of 2017/early 2018.