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 ECOFORUM
[Volume 8, Issue 2(19), 2019]

THE EU - VIETNAM FREE TRADE AGREEMENT (EVFTA)

OPPORTUNITY AND CHALLENGES FOR VIETNAM

Nghiêm Xuân KHOÁT

Faculty of Economics and Business Administration West University of Timisoara, Romania
Viet- Hung University of Industry, Vietnam
Email: [email protected]
Laura Mariana CISMAS
Faculty of Economics and Business Administration West University of Timisoara, Romania
Email: [email protected]

Abstract
The EU-Vietnam Free Trade Agreement is a new generation of trade agreements between Vietnam and 28 EU
Member States called EVFTA. The EVFTA was negotiated in mid-2012. After 14 formal meetings, the EVFTA
negotiation process was finalized on December 2, 2015. On 17/10/2018, the European Commission has
submitted a free trade agreement between Vietnam and Europe and the Investment Protection Treaty to the
Council of Europe to consider and sign the delegation, to be expected at the end. 2018 will officially sign this
Agreement. It will also be submitted to the European Parliament for approval in early 2019. When the
agreement is officially put into effect, it will have a significant impact on Vietnam's economy and social life. This
paper focuses on analyzing and evaluating opportunities and challenges for Vietnam in a number of areas
related to trade agreements such as trade in goods; Vietnam's exports to the EU; Customs and trade facilitation;
Sanitary and phytosanitary measures; Technical barriers to trade; Trade defense; Invest; Intellectual Property;
Sustainable Development;

Key words: trade agreements, trade, investment, intellectual property, import-export, development, rules of
origin

JEL Classification: A10

I. I NTRODUCTION

EVFTA is the EU's third trade agreement with an Asian country, after the EU-Korea agreement (effective
from 2011) and EU-Singapore agreement (negotiation completed in 2014, but not yet effective). The EU is
negotiating a number of free trade agreements with Japan and four ASEAN countries other than Vietnam are
Malaysia, Indonesia, Thailand and the Philippines.

Table 1: EU free trade agreements with Asian countries

Nation Start the negotiation End the negotiation Effective
South Korea 2007 07/2011
Singapore 2010 10/2014
Malaysia 2010
Vietnam 2012 12/2015
Japan 2013 12/2017
Thailand 2013
Phillipines 2016
Indonesia 2016
Source: European Commission
As soon as the EVFTA comes into effect, 85.6% of the tariff lines will be eliminated immediately
(equivalent to 70.3% of Vietnam's exports to the EU), and 99.2% will be eliminated within 7 The next year
(equivalent to 99.7% of Vietnam's export turnover to the EU) is the highest level of free trade agreements that
Vietnam has ever signed. For the remaining 0.3% of exports (including: some kind of rice products, sweet corn,
garlic, mushrooms, canned tuna, sugar and high sugar content such as cassava starch). The EU pledged to open
to Vietnam tariff quota (TRQs) with tariff quota of 0%.
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

Table 2: Summary of EU opening commitments for some commodity groups in VietnamCam kết của
EU
Items Commitment of Europe
Elimination of taxes within 7 years
Note: Rules of origin: use of fabric
Textile
produced in Vietnam Especially
allowed to use fabric produced in Korea
Footwear Tax elimination within 7 years
Aquatic products (except canned
Tax elimination within 7 years
tuna and pellets)
Canned tuna Tariff quota
Rice husks, unmilled rice and
Tariff quota
aromatic rice
Broken rice Remove by roadmap
Products from rice Tax elimination within 7 years
Sweet corn / cassava starch Tariff quota
Honey Get rid of taxes now
Sugar and sugar-containing
Tariff quota
products
Vegetable Much of the elimination right now
Handbags, suitcases Much of the elimination right now
Plastic products / Glass-ceramic
Much of the elimination right now
products
Source: European Commission and Ministry of Industry and Trade, Vietnam

With a strong market access commitment in the EVFTA, it is certain that it will promote bilateral trade,
which will further expand the market for exports, particularly those that Vietnam has strengths like: textile
garment, footwear, agricultural products (including rice, sugar, honey, vegetables, fruits, etc.), seafood, furniture.
It can be said that all Vietnam's exports to the EU will be eliminated immediately after the entry into force of the
Agreement, or after a short roadmap. This can be considered as the highest level of commitment that Vietnam
has achieved in FTAs signed with other countries. This is more significant when only 42% of Viet Nam's exports
to the EU are enjoying zero tariffs under the Generalized System of Preferences (GSP). However, in the coming
time, when Vietnam reaches a certain level of economic development, the GSP will no longer exist. If EVFTA is
not effective soon, it will be difficult for Vietnamese enterprises to compete in the EU market.
The trade agreement will allow a 99 percent reduction in tariffs on all items, some of which will reduce
tariffs over time, with specific timetables and some with quota restrictions. For example, Vietnam will exempt
tariffs on imported cars from the EU (currently 78%) for the next 10 years, tax exemptions for wine (currently
50%) for seven years. Enterprises from the EU will also be contracted for contracts in the public sector of
Vietnam.
Vietnam is committed to protecting 169 EU food and beverage products. In contrast, the EU will exempt
import tax for 7 years for some Vietnamese products, such as textiles and footwear.
The complementarity in trade between Vietnam and the EU is creating a strong trading climate for the
two sides, when EVFTA is implemented. In addition, Vietnam's economy is growing strongly, the consumer
market with nearly 100 million people is really the ideal destination for European consumer goods, especially
agricultural products, food, meat products, milk. and pharmaceuticals.
According to the report of the EU-Vietnam Free Trade Agreement: Views from Vietnam, announced by
the European Business Association (EuroCham) 10/2018 in Brussels (Belgium), almost all enterprises The
European Union expects EVFTA to be adopted and enforced by 2019, or as soon as possible.
Nearly 80% of businesses surveyed said that EVFTA will impact "strongly" or "light" on medium or
long-term business. Most believe that EVFTA will help Vietnam to increase its competitiveness, of which 72%
said that the agreement will help Vietnam become a gateway for European businesses in Southeast Asia.
Nicolas Audier, co-chairman of EuroCham, said that EVFTA brings "mutual benefits" to Europe and
Vietnam, with the European business community, which is an important motive for their peace of mind. market.
European businesses indicated a positive, optimistic picture with 85% predicting that EVFTA will have a
significant or moderate impact on their long-term business and investment plans in Vietnam.
With less direct competitive characteristics in the structure of imports and exports of Vietnam and the EU,
many products from the EU such as machinery, beef, milk, wine, cosmetics ... are waiting for "time gold point "
to enter Vietnam.
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

II. C ONTENT

For Vietnam, the implementation of EVFTA is an important step towards diversifying trade partnerships,
diversifying the import-export market, avoiding dependence on a specific area. In the period from 2010
backwards, most of the FTAs that Vietnam participates with are partners in the Asia-Pacific region such as the
Free Trade Agreement signed between Vietnam and ASEAN with China, Korea, Japan, India, Australia, New
Zealand ...
The EU is Vietnam's second largest trading partner. The prominent feature of the import-export structure
between Vietnam and the EU is its large complementarity with less direct competition. By 2014, total bilateral
trade between Vietnam and the EU would be more than $ 36.8 billion, up 9% from 2013. Of which, exports to
the EU reached nearly $ 28 billion and imports from the EU were close to $ 9 billion. The main groups of
exports to the EU are footwear, textiles, coffee, furniture and seafood. EU is also a big investor in Vietnam. As
of June 2014, 25 out of 28 EU countries have invested in Vietnam with more than 2030 valid projects, total
registered capital of over US $ 36.1 billion (Ministry of Industry and Trade, 2015). EU investors have been
present in most of Vietnam's key economic sectors, focusing most on industry, construction and some service
sectors. Therefore, the signing of the Vietnam-EU free trade agreement will open opportunities for both sides.
There are opportunities for Vietnamese enterprise

2.1. Vietnam's opportunity for free trade agreement (EVFTA)

a. Opportunity to expand markets, promote the import and export of goods to the EU market.

Once this agreement is approved, it will create better conditions for Vietnamese enterprises to access
European markets, a large market with about 500 million people and bring many benefits to Vietnamese
enterprises as exempted with tariffs of at least 90% of tariff lines on Vietnamese exports to the EU.
- With the reduction of import tax to 0%, it will create opportunities to import machinery, equipment and
modern technologies from the EU market. To serve the production and business activities of domestic
enterprises. Some industries in the past that Vietnam has to import raw materials or products from some
neighboring countries in the region such as China, Thailand ... when the EVFTA was signed, it will be an
opportunity to help Vietnam can be diverted to other countries in the EU. This will cause the domestic
enterprises to face relatively competitive pressure. However, many argue that with a highly complementary
economy to the Vietnamese market like the EU, opening up the Vietnamese market to EU exporters and service
providers is not necessarily a disadvantage for Vietnam. EVFTA allows enterprises and Vietnamese to buy
goods and services for domestic production at competitive prices, better quality and more modern technology.
From there, there is a chance to increase the competitiveness of Vietnamese products. To some extent, this also
helps Vietnam avoid over-reliance on a substandard and volatile supply source like China.
Opportunity to improve the production process, improve the quality of products in order to meet the
requirements of the EU. When EVFTA is signed, it will provide legal basis for trade exchange for Vietnamese
goods exported to Europe. To meet the quality and safety standards that this market requires. Commitments in
areas such as trade defense (anti-dumping, anti-subsidy, safeguard), technical barriers to trade (TBTs), sanitary
and phytosanitary measures Whole food (SPSs) ... have had certain impacts on the export of Vietnam to the EU
market in the past. It is expected that there will be more positive impacts, bringing significant benefits to
Vietnam's exports in the future. The main content does not commit to specific regulations on detailed issues but
focuses on establishing a cooperative mechanism to clarify and quickly handle disputes. EVFTA will contribute
to improving the implementation of relevant regulations (the opportunity to comment more on the promulgation
or revision of EU regulations, the opportunity to resolve issues arising in the past application process ...).
Enterprises also have the opportunity to learn about, access to, and express their views on these EU regulations.
This is also a good opportunity for Vietnam to join this agreement.
Opportunity to access investment capital, modern technology, expand business opportunities for
businesses ... from the EU market. More and more EU companies choose Vietnam as their investment
destination. Vietnamese companies often lack know-how, technology and capital. Meanwhile, this factor is
relatively available in European companies. In addition, the cost of labor in Europe is quite high, much different
than the cost of labor in Vietnam. This makes the competitiveness of European businesses is not high. In
contrast, the cost structure of Vietnamese enterprises is quite attractive, the advantages of Vietnam are quite
diversified, better quality of labor as well as the protection of intellectual property rights better than other
countries in area. Thus, the cooperation between Europe and Vietnam is a very beneficial relationship, helping
Vietnamese companies gain access to European knowledge and technology while giving European companies a
basis reliable, cost-effective production in Asia.
EVFTA also increases the attractiveness of EU funds to Vietnam. Through EVFTA, it will contribute to
strengthening bilateral trade investment. Currently, Vietnam is adjusting the strategy of attracting foreign direct
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

investment (FDI), attaching importance to the quality of investors with the possibility of transferring new
technologies. The EU is fully capable of meeting the demand that bridge. EU is also an important provider of
official development assistance (ODA) for Vietnam for many years. Successful conclusion of this agreement will
give Vietnam more opportunities to access European markets, access to foreign direct investment from the EU,
and create more jobs for Vietnam. At the same time, Vietnamese consumers will have the opportunity to use
good quality goods from the EU at a more reasonable price. On the EU side, through EVFTA, these alliance
members can expand the market to Vietnam. It helps the economy of these countries grow faster. Moreover, this
can be seen as a springboard for the EU to expand free trade agreement negotiations with other ASEAN Member
States.

b. Contributing to economic growth

EVFTA is considered one of the most comprehensive and expected trade agreements that the EU has
signed with a developing country. After Singapore, this is the second EU agreement signed in the ASEAN region
and is expected to strengthen the bilateral relationship between Vietnam and the EU.
In the context of deepening economic integration, the resonance effect of this agreement is very
significant, contributing to the economic development and renovation process of Vietnamese enterprises to help
enterprises and investors of other countries or of Vietnam growing in markets where both sides have FTAs, in
particular:
Firstly, EVFTA impacts on the process of building modern market institutions and international
integration.
With extensive commitments on market access in terms of trade in goods, trade in services and
investment; Ensure that elements of the reproduction process of goods and services move more freely between
the parties to the Agreement; Promote transparency, stability, predictability of economic law and policy, and
market-based economic institution commitments, including competition policy and regulatory barriers. The
operation of state-owned enterprises in accordance with market principles, Vietnam-EU FTAs have an important
impact on the process of building modern market economy institutions and international integration.
In addition, the FTA has a chapter on Sustainable Development addressing the challenges that humanity
faces, such as climate change, the deployment of non-renewable resources, addressing worker protection claims
under Basic principles of the International Labor Organization, ensuring sustainable development.
Second, EVFTA impacts on economic growth through investment attraction and export expansion.
In the absence of EVFTA, the EU, comprising 28 members, is the top investor in Vietnam. With
extensive market access commitments in manufacturing and service sectors, bound by commitments to protect
intellectual property, EVFTA will create a new impetus for engagement the investment of EU businesses in
Vietnam.
Prior to EVFTA, the EU was Vietnam's second largest export market. With a 7/10 duty rate cut, the EU
would eliminate all tariffs on imported goods from Vietnam for a maximum of seven years, with clear removal
schedules, three years, five years and after 7 years.
In the context of the negotiations, some tariff lines on both sides have a longer roadmap, but the EU
remains the party with a faster removal timetable, many of which are Vietnam's export strengths, absolutely
immediately after the entry into force of the Agreement or with a shorter route. This will create new impetus for
Vietnam's exports to the EU market.

c. Opportunity for investment

EU was one of the early investors in Vietnam and soon became one of the big investors after Korea,
Japan, Singapore and Taiwan. As of September 2018, the EU has directly invested in Vietnam 2142 projects
with a total capital of $ 48.5 billion..

D. Opportunity for development cooperation

The European Union and its member countries are the leading non-refundable funders in Vietnam,
providing € 5.8 billion in total funding for the period 2007-2014, 41% of which is non-refundable (2.4 billion
euros) and 59% of loans (3.4 billion euros).
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

Chart 1: EU commitment to Vietnam for the period 2009 – 2015 (Million dollars)

Source: https://eeas.europa.eu/sites/eeas/files/aid_disbursement_vn.pdf

e. EVFTA help sharply cut tariffs

As soon as the EVFTA comes into effect, 85.6% of the tariff lines will be eliminated immediately
(equivalent to 70.3% of Vietnam's exports to the EU), and 99.2% will be eliminated within 7 The following year
(equivalent to 99.7% of Vietnam's exports to the EU) - the highest level of free trade agreements that Vietnam
has ever signed.
For the remaining 0.3% of exports (including some rice, sweet corn, garlic, mushrooms, sugar and high
sugar content, cassava starch, canned tuna) The EU is committed to opening up to Viet Nam under tariff quota
(TRQs) with 0% tariff quota.

f. Increasing competition with the same kind of products of other countries

Currently Vietnamese goods are entitled to the Generalized System of Preferences (GSP). Accordingly,
developing countries are paid lower taxes on goods exported to the EU, but this is considered periodically. This
is lower than the Most Favored Nation (MFN) tariff which applies to Singapore, Malaysia and Brunei, which
makes Vietnam's products more competitive than exports from other countries. This. However, all commodities
(except weapons and explosives) from less developed countries such as Laos, Cambodia and Myanmar are
exempt from tariffs when goods arrive in the EU through the Everything but not Arms (EBA). Thus, when
EVFTA becomes effective, the competitiveness of Vietnamese goods will increase significantly compared to
MFN and GSP countries, and reduce the gap with less developed countries.

Table 3: EU tariff preferences for goods imported from ASEAN countries

MFN GSP EBA
Brunei Indonesia Lao
Malaysia Vietnam Campuchia
Singapore Thailand Myanmar
Philippines
Source: Ministry of Industry and Trade, Vietnam

g. Bilateral trade continues to be strengthened

In 2017, the EU is Vietnam's second largest export market ($ 38.3 billion), behind only the United States
($ 41.5 billion). The main export items of Vietnam to the EU market are: telephone and spare parts ($ 11.96
billion); textiles, footwear ($ 8.44 billion); computers, electronic products and components ($ 4.61 billion);
machinery and equipment (USD 1.87 billion); seafood products ($ 1.46 billion) and cashew nuts (~ $ 1 billion).
In the ASEAN region, Vietnam is now the second most important partner of the EU (after Singapore), but does
not directly compete with the same group in this market. Therefore, with EVFTA, Vietnam's exports continue to
be benefited, with the most direct beneficiaries being textile and footwear; seafood (excluding tuna and canned
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

fish) and some agricultural products (coffee, pepper, etc.), indirectly benefiting from trade such as logistics,
seaports.

2.2. Challenges for Vietnam before the Free Trade Agreement (EVFTA)

a. Increasing competitive pressure on the domestic market.

Demand for products imported from abroad, especially products originating from Europe, Increasingly
recently. When tariff barriers are removed, European goods will easily enter the Vietnamese market. At this
time, Vietnamese businesses will face great pressure from European businesses. Pressure here is reflected in both
the trade in goods and the trade in services. As committed in the WTO, many areas of Vietnam have opened
wide, accepting foreign enterprises to establish branches and companies with 100% capital in Vietnam. Engage
in areas where Vietnam is not strong or in the early stages of development such as logistics, seaports, financial
services, distribution. With the management experience, the superior quality of the EU businesses, the risk of
Vietnamese enterprises will be underpaid is quite clear.

b. The strict requirements on rules of origin, dumping issues, subsidies and the use of trade remedies are also a
major constraint for Vietnamese firms to gain access to the EU market.

Normally, goods that want to enjoy tariff preferences under the FTA, the material must meet a certain
percentage of the volume, especially the garment sector. Accordingly, garment enterprises should pay attention
to the strict regulations of the agreement on the origin of garments. Because, in order to enjoy the 0% tax rate,
garment enterprises must ensure a double origin. At least fabric and garment must be made in Vietnam or the
only exception for fabrics Which made in Korea.
A simple, flexible system of rules of origin that is consistent with Vietnam's situation and which allows
Vietnam to enjoy legitimate interests from EVFTA will be a prerequisite. This requirement is perfectly
reasonable from the point of view of benefits (the biggest benefit of signing EVFTA is the EU tariff reduction
for Vietnamese exports). As proof of the legal origin of timber is a challenge to this industry. In the case of
textiles and garments, rules of origin are also an important issue in exporting this product to the EU market of
Vietnam.

c. EU strict requirements on hygiene, environment, labor and technological processes

Considered a longstanding barrier to Vietnam's export activities to this market. To export to the EU,
Vietnamese enterprises must comply with the provisions on hygiene, environment, labor and technological
processes. This has made it difficult for Vietnamese small and medium enterprises to meet the demand due to
their limited technical and financial capacity, and inadequate products for sale in the market. In addition to rules
of origin, regulations on food hygiene and safety, SPS, environmental regulations, technical barriers to trade
(TBT) ... will also create difficulties and obstacles to Vietnam's export activities. For seafood, strict food safety
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

regulations, rules of origin and "voluntary quality certification" requirements, the environmental responsibility of
many organizations in Europe are also great difficulties for the fishery sector in Vietnam today.

d. The lack of information by businesses about free trade agreements.

Many real businesses have not fully utilized the tax benefits of not knowing about FTAs. The procedure
for issuing certificates of origin is still complicated, especially the majority of enterprises do not meet the
conditions of origin. According to data from the Vietnam Trade Office, in the past only Vietnamese enterprises
exporting to Korea is taking advantage of the preferential tariffs from the Vietnam - Korea FTA.

e. Reduction of state budget revenues from taxes

Figure 4: Export and import turnover and EU-Vietnam trade balance

Source: General Department of Vietnam Customs

Reducing revenue from taxation, a challenge for Vietnam in implementing this agreement. Represented in
the form of tariff reductions for goods from EU partner countries. Vietnam is still a market with many
commodity groups still holding high MFN tariffs with long-term open roadmap. Therefore, the commitment to
reduce tariffs for most EU commodity groups will lead to a reduction of state budget revenues from about $ 10
billion of goods imported from the EU.

f. The threat of trade remedies

Normally, when tariff barriers are no longer an effective means of protection, enterprises in import
markets tend to use more anti-dumping, countervailing or safeguard measures to protect them domestic
production. The EU is one of those "traditional" markets that use these tools.

h. Competitive pressure from EU goods and services

Opening up the Vietnamese market for goods and services from the EU means that Vietnamese
enterprises will have to compete harder in the domestic market. In fact, this is a huge challenge, because EU
businesses have advantages over Vietnamese companies in terms of competitiveness, market experience and the
ability to make use of FTAs. However, Vietnam's commitment to openness is a roadmap, especially for sensitive
product groups, so EVFTA is also an opportunity and reasonable pressure for Vietnamese enterprises to adjust
and change their direction business and capacity building.

2.3 The impact of the free trade agreement (EVFTA) on the Vietnamese economy

The impacts of the EU – Vietnam Free Trade Agreement are forecasted and announced. Can be divided
into 8 main impact groups:

a. Impact on macroeconomy

- Vietnam will significantly increase its national income from now until 2025 - EVFTA will contribute to
the economic growth of Vietnam.
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

- The annual welfare increase is expected to reach $ 1.5 billion by 2020 when tariff reductions are almost
complete - GDP is projected to grow from 0.7% to 1.1%.
- The number of people out of poverty expected in the next time will increase. In particular, in 2020, the
number of people out of poverty in Vietnam increased significantly 95.7 thousand people. In particular, the
number of people in rural areas out of poverty will outnumber those in urban areas. To some extent, the signing
of EVFTA will have a positive impact on other social issues besides the economic problems we already know.

Figure 5: Number of people out of poverty due to the impact of implementing the FTA under the expected
scenario (thousand people)

Source: Report Mutrap mutrap.org.vn

b. Impact on import and export of Vietnam

- Assuming the FTA with the EU comes into force in 2019, exports to the EU will increase by US $ 16
billion in the first or second year compared to the absence of an FTA. By 2028, it will increase to $ 75-76 billion
compared to the absence of an FTA. For textiles and clothing, EVFTA could help increase exports by $ 1.54
billion by 2023 and $ 5.82 billion by 2028.
- Negotiations will help increase exports, Vietnam's global export turnover will increase to 23-24%
- Imports from the EU are estimated to increase by 25-35%.
- Vietnam's imports from all sources increased by 5%. Vietnamese enterprises need to import raw
materials to meet the demand for production of goods for export to the EU.
- The size of the trade balance will depend on the level of investment capital, intermediate inputs, other
factors (exchange rates, other macroeconomic variables)

c. Impact on bilateral trade growth and trade in services

Basically, the services sector of Vietnam exports to the EU will grow at a faster rate than the growth rate
of services from the EU to Vietnam. There are two groups of service sectors, namely transport and business
services, which have a higher growth rate of Vietnamese trade than EU imports from the EU (107% and 81%
97% and 74% respectively).

Table 4: Forecast of EVFTA Impact on Bilateral Trade Growth and Trade in Services
Vietnam imports EU imports from Total exports Total import of
Branch from EU Vietnam of Vietnam Vietnam
increased by% increase% increase% increases%
Traffic 107 81 4 1
The media 29 63 13 2
Wholesale and retail 14 33 4 1
Finance, insurance 37 61 6 0

Business services 97 74 4 1
Other services 14 46 3 1
Source: Claudio Dordi et al., 2018
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

d. Impact on labor and employment

- Exports increase, resulting in expanded production, employment opportunities are created accordingly.
When EVFTA is implemented, with the removal of tariff barriers for exports from Vietnam, the export turnover
of Vietnamese goods to the EU market will surely increase. As exports increase, to encourage enterprises to
actively expand production, study many ways and forms to improve labor productivity, improve product quality
to gain more access to the market. EU countries. Expanded production will also open up more employment
opportunities for Vietnamese workers. Then solve other social problems of the country.
- Export labor from Vietnam to foreign countries increased. This is also one of the positive effects that we
can see clearly. Openly, international economic integration inevitably the process of international division of
labor will take place more strongly. The combination of labor force of other countries will help the production
process, exports will be much more effective. As the market expands, the foreign workforce will have easy
access to the domestic market as well as domestic workers will have easy access to foreign markets..
- The market receives labor from Vietnam as Germany, Poland, Norway, Romania, Czech Republic
Republic of Cyprus, Italy - Export workers mainly work in areas such as nurses, skilled workers are also on the
rise next time.

e. The impact of creating trade for Vietnam

Establishment of trade is based on the level of import duty and the share of that product in the total import
turnover of the country. As tariffs decrease, imports of these goods will increase. With EVFTA, import tariffs on
EU-origin goods will be lifted to 0%, which will facilitate the import of goods from the EU into Vietnam.
Particularly, it is the source of goods for production or goods of high technology. This will be the conditions, the
foundation to help the process of industrialization and modernization of the country is more favorable.

f. Trade diversion effect for Vietnam

Redirecting imports from Asian markets, countries in the region to the EU market. When tariff barriers
are removed, it is clear that Vietnam-EU trade relations will be easier. Facing the context of import-export
structure that is complementary to each other, the more favorable conditions for Vietnam can be instead of
importing from Asian (traditional) markets. Especially the dependence on Chinese goods. Switch to imports of
these goods from the EU.

e. Impact on Vietnam's international relations

This will provide the basis for Vietnam's rapid access to EU preferential markets as well as access to
other EU markets that were previously inaccessible to Vietnam. In addition, the position of Vietnam in the
international arena is somewhat more assertive as Vietnam has another strategic partner, the EU. This is also the
driving force for Vietnam's international economic integration process more and more easy.

h. Impact on some production and business sectors of Vietnam

Firms are the most affected entities from the fact that Vietnam and the EU signed the EVFTA. The
enterprise itself is the person who directly conducts trade exchange with EU partners. However, depending on
the case, the specific sector in which the business will bear different effects from this agreement.
- Electronic industry: forecasts that electronic parts import tariffs from the EU will fall, the electronics
sector will shift its import of electronic parts from the EU instead of the current Asian markets..
- Automotive industry: import tariffs on automobile parts and accessories from the EU have also led to
the shift of import of parts and accessories to the EU market. In addition, Vietnam's automobile industry will
face more difficulties and challenges. As the supporting industry is still underdeveloped, Vietnam's automobile
industry is mainly assembled. Reduction of import tax on raw materials, accessories and spare parts will support
assembly activities of Vietnam, but if reducing import tax on cars in complete units, this will again be a big
problem of the automobile industry in Vietnam.
- Mechanical industry, the import tax on machinery and equipment imported from EU into Vietnam is
very low. In case of further tax reduction will not have much impact on this industry.
- Banking sector: It is forecasted that the sector will attract more EU banks and EU finance companies to
access and invest. This is expected to blow up new wind for the Vietnamese banking industry in the near future.
- Agriculture and fisheries: This is a sensitive commodity group, both Vietnam and the EU will focus on
protectionist measures for this sector. Rules on origin, sanitary and phytosanitary (SPS), technical barriers
(TBT), etc. will be common measures applied in this sector..
 ECOFORUM
[Volume 8, Issue 2(19), 2019]

- Textiles, footwear and handicrafts, wood products: These are the main export sectors of Vietnam to the
EU in recent years. When EVFTA is signed, the tariffs applied to these goods from Vietnam to the EU will be
reduced, which is the advantage that makes Vietnamese goods more accessible to this market.

III. C ONCLUSION

Over the past years, the trade and investment relations between Vietnam and the EU have seen positive
developments. Bilateral trade has increased more than 12 times, from $ 4.1 billion in 2000 to $ 50.4 billion in
2017; Of which, Vietnam's exports to the EU increased by 13.6 times (from $ 2.8 billion to $ 38.3 billion) and
imports from the EU increased by 9 times ($ 1.3 billion to $ 12,1 billion). The most prominent feature of trade
and investment relations between Vietnam and the EU is the strong complementarity. There are few areas in
which the two sides compete. EVFTA will bring significant economic benefits to both parties. On this basis, the
potential for the development of trade, investment and bilateral cooperation after the signing of EVFTA is
enormous. While Vietnam is actively negotiating and signing FTAs with many major trading partners, EVFTA
will have a synergy effect with the ASEAN Economic Community and other FTAs, for investment from the EU,
thereby promoting the reform of the growth model of Vietnam, contributing to building a transparent business
environment, stable for businesses and investors.

IV. REFERENCES

1. Đông N. (2015), "Opportunities and challenges of joining the Vietnam-EU free trade agreement"
2. Economic and Forecasting (2014), "Vietnam-EU FTA: Opportunities and Challenges"
3. European Commission (2018), “Guide to the EU-Vietnam Free Trade Agreement”
4. European Commission, Directorate General for Trade http://ec.europa.eu/trade/
5. German Chamber of Commerce and Industry in Vietnam (2018), "The European Union publishes detailed information on
EVFTA: 21 September 2018”.
6. Ha D. (2018), “Vietnam - EU Free Trade Agreement: Successful Breakthrough", VCCI, Vietnam
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