VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO.

3 (2024) 151

DISCUSSION
A PRELIMINARY ANALYSIS ON THE VIETNAM'S EXPORTS
INTO THE EU AFTER THREE-YEAR IMPLEMENTATION
OF THE EVFTA: PRACTICE, CHALLENGES AND PROSPECTS

Nguyen Thi Van Anh

Faculty of English, VNU University of Languages and International Studies,
No.2 Pham Van Dong, Cau Giay, Hanoi, Vietnam

Received 10 May 2024

Revised 06 June 2024; Accepted 10 June 2024

Abstract: The EU-Vietnam Free Trade Agreement (EVFTA) has ever been a concerted effort
to cooperate and narrow down the gaps between Vietnam and the EU with the common aims of mutual
benefits, understanding and developments for both. Started in 2010, it took 10 years to complete the
negotiations and legal arrangements before taking effect officially in August, 2020. Three years have
passed since the day of being ratified, the EVFTA has contributed a certain push towards the recovery
and growth for Vietnam’s economy, especially when the COVID-19 pandemic has severely damaged
most of the world’s economies. However, as there are going to be a great deal of changes when the EU
has been now actively changing and adapting itself to the greener” level as of the requirements of the
era and transformation economy, the new time and new contexts have continuously revealed a great
number of new challenges to Vietnam’s adaptable abilities, besides the ones which have been foreseen
and overcome in the past. This article looks at the overview of the EVFTA, and the trade volume from
Vietnam to the EU during the first three years of the EVFTA implementation before discussing the new
prospects and challenges to Vietnam in the near future.
Keywords: Vietnam, EU, the EVFTA, free trade, exports

1. An Overview of the EU-Vietnam Free Trade Agreement (EVFTA)

Started in October 2010, “the EU-Vietnam Free Trade Agreement (EVFTA) is a new
generation FTA between Vietnam and the 27 European Union member states” (Center for WTO
and International Trade [WTO Center], 2016a). In general, “a free trade agreement is a pact
between two or more nations to reduce barriers to imports and exports among them. Under a
free trade policy, goods and services can be bought and sold across international borders with
little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange” (The
Investopedia team, 2024). This EVFTA of the new free trade generation can be considered an
ambitious concerted effort of the two parties - between the EU with a significant number of
members (27 countries and territories) and Vietnam - a developing active country in South East
Asia. It is considered a “new generation FTA” as it is covered a wide range and high degree of
commitments, including: (1) trade in goods; (2) rules of origin; (3) customs and trade
facilitation; (4) the sanitary and phytosanitary measures; (5) the technical barriers to trade;


Corresponding author.
Email address: [email protected]
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 152

(6) trade remedies; (7) trade in services; (8) investment; (9) competition; (10) state-owned
companies; (11) government procurement; (12) intellectual property; (13) trade and sustainable
development; (14) legal institutional issues; and (15) collaboration and capacity development
(WTO Center, 2016b).
The negotiations and ratifying processes asked for the 10 years’ continuously diligent
workings by the two parties as the related agents and discussion themes are of a great figure
while the two economies bare considerable differences that need to be narrowed and cut off.
Finally, two major agreements under the EVFTA, namely Trade Agreement (EVFTA) and
Investment Protection Agreement (EVIPA), “were signed on June 30, 2019. EVFTA and
EVIPA were ratified by the European Parliament on February 12, 2020, and ratified by the
National Assembly of Vietnam on June 8, 2020. On March 30, 2020, the European Council
also approved the EVFTA. As for the EVFTA, due to the completion of the ratification
procedure, this Agreement has officially taken effect from August 1, 2020. As for EVIPA, on
the EU side, the Agreement will still have to be ratified by the Parliaments of all 27 EU member
states to take effect” (WTO Center, 2016a).
To the EU, “this is the second FTA signed by the EU with an ASEAN member state,
which was done after Singapore. The FTA represents a step towards implementing policies
aimed at boosting the EU’s economic cooperation with the East Asian region after the failure
to negotiate with the entire ASEAN bloc” (Doan & Nguyen, 2021). This ambitious agreement
is set to eliminate over 99% of customs duties. While the EU duties on Vietnamese products
will be eliminated over seven years, 99.3% of exports from Vietnam will be fully cut off. Those
tariff and non-tariff reductions are expected to enhance trading and increase export values by
Vietnam.
However, when it comes to the challenges of the EVFTA, a large number of scholars
expressed their concerns over the asymmetries of the two partners’ economies and development
and trade policies. Besides the reduction in tax revenues to Vietnam’s side, Rabea Brauer, Vu
Dang Tuan and Natalie Frey (2014) pointed out the rising competition pressure on the domestic
market, and the dependency on export products with cheaper prices and import products with
expensive prices from the EU towards Vietnam’s economy. Moreover, the Vietnamese legal
system is expected to undergo fundamental reforms until the full relevance to the EVFTA
requirements. The fact that the EU markets ask for rigorous rule-based commitments and
obedience also raises a great deal of reluctance and worries over Vietnam’s applying capacities.
2. EVFTA - A Chance for Both Sides
The EVFTA has been expected to bring about new chances of advancement and
development for both the partners. The immediate benefits are of much lower tariffs for goods
and services from and to the EU and Vietnam; but the long-term advantages are tremendous
and not only in the form of financial incentives, as the European officials admitted: “The official
signing of the EVFTA and Investment Protection Agreement (EVIPA) on the 30th of June 2019
will have tremendous and positive benefits for the business communities of both sides. These
agreements will create a breakthrough moment, contributing to perfecting the legal framework
and business environment and ensuring a huge leap forward in cooperation between Vietnam
and the EU, building a solid foundation for sustainable development” (European Chamber of
Commerce in Vietnam [Eurocham], 2019).
To Vietnam, the EVFTA is expected to increase Vietnam’s GDP by 2-3% (Eurocham,
2019), and ensure that Vietnam is firmly the 2nd business partner of the EU. The tariff
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 153

reductions and schedules for Vietnamese exports such as coffee, fresh fruits and vegetables,
rice and seafood… will facilitate the flow and revenues of both goods and services being
exchanged bilaterally, making the brand names from the partners more familiar and competitive
at least in the markets with strict regulations. After having satisfied the EU’s strict and
demanding markets, the Vietnamese goods and services then are expected to conquer more of
the other regional and global ones, taking advantage of the lessons learnt from the EVFTA.
To the EU, not only they have more choices of better qualities and price ranges for its
markets and consumers, but the EVFTA is also expected to facilitate the goods, services, and
more importantly, the investments from the EU rich countries with abundant financial
capacities into Vietnam. It is important to note that Vietnam has an increasingly important
position in the ASEAN, the regional institution that the EU has been longing for getting closer
to. “In an increasingly geopolitical world, both the EU and ASEAN are committed to peace,
stability and the multilateral rules-based order. Both have successfully resolved regional
tensions through cooperation in a wide range of fields. On the international stage, ASEAN and
EU countries have a stronger voice collectively than they would on their own” (Russell, 2020).
After many years trying to push up the relationship with ASEAN, so far the EU has only
succeeded in signing the bilateral agreements with Singapore and Vietnam. Then looking from
this aspect, the EVFTA will serve as a platform for the EU to get on the same boat with the
other countries left in ASEAN.
3. The Practice of Vietnam’s Exports to EU During the COVID-19 Years (2020-2023)
The years of 2020-2021 witnessed significant increases in exports from Vietnam to the
EU. Specifically, the first five months of EVFTA implementation (since the officially in effect
of the agreement in August, 2020) Vietnam’s export values into this important market reached
15.62 billion USD – an increase of 3.8% compared to the same period of the year 2019. The
year 2021 saw a much better growth of the exports with 40.12 billion USD being exported into
the EU, a 14.1% increase of the same time category (WTO Center, 2022). The negative growth
rate of -1.82% in the exports values of goods indicated that the COVID-19 pandemic starting
at the end of the year 2019 had impacted severely onto most economies of the world, with
Vietnam being no exception. However, when the world began to recognize and reacted more
smoothly and effectively to the pandemic, also when the supplies for exported goods from
developing exporting countries came back to normal situations, the year 2021 even saw an
impressive growth rate for Vietnam’s exports.
Table 1
Exports Value of Goods From Vietnam Into the EU During 2016-2021 (WTO Center, 2022)
Exports values of goods from Vietnam into EU (27)
Year
Values (at billion USD) Growth rate
2016 29.11 10.73%
2017 32.92 13.09%
2018 36.01 9.39%
2019 35.79 -0.61%
2020 35.14 -1.82%
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 154

2021 40.12 14.1%

The next period of 2022-2023 even witnessed much slower growth of the export
volumes from Vietnam into the EU, as the below figure of Vietnam’s exports into the EU
between 2022 and 2023 has shown (European-American Market Department & Vietnam
Industry and Trade Information Centre, 2023a). It is said that the aftermath slowdown in the
world’s economy has caused the demands going down, while the exporting developing
countries are gradually coming back to the level of manufacturing goods before the COVID-19
pandemic to support their economies. The adverse situations have created more difficulties to
Vietnam, especially when the EU - one of its main “customers” has continuously met with
unexpected negative events of the conflicts between Russia and Ukraine, which asks them to
take part of the burden to support its neighbor; and also the disruption in the world supplies
with the case of Red Sea, or the conflicts between Iran and Israel, etc.
Figure 1
Vietnam’s Exports Into the EU During the Years of 2022-2023

The year 2023 alone witnessed a twisted turn-around when the rate lowered down 4.4%
compared to the previous year of 2022. According to Tu (2024), for the whole year 2023, the
total import and export turnover of goods was estimated to reach 683 billion USD, going down
6.6% compared to 2022 (2022 reached 732.5 billion USD in total, of which exports decreased
by 4.4%; and imports decreased by 8.9%). Thus, Vietnam's import and export in 2023 did not
meet the set target. However, because the rate of decline in import turnover was faster than that
of exports, the trade balance of goods was still to be a surplus of 28 billion USD, far exceeding
the figure of 11.2 billion USD in 2022. The whole year's trade balance continued the trade
surplus position in previous years, positively contributing to the balance of payments, and
helped increase foreign exchange reserves, stabilizing exchange rates and other macroeconomic
indicators of the economy. To the exports specifically, for the whole year 2023, export turnover
of goods is estimated to reach 355.5 billion USD, going down 4.4% compared to 2022.
Compared to the beginning of 2023 when export turnover decreased deeply by double digits,
this number still represents a spectacular and remarkable recovery of the business community.
Nguyen Anh Duong, Head of General Research Department, Central Institute for
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 155

Economic Management (CIEM) said: “EVFTA creates conditions for exports to the EU to
recover strongly, especially in the first two years of the Agreement’s taking effect. The impact
on exports to the EU in the third year is less positive, due to the Russia-Ukraine conflict,
increasing commodity prices on the world market and inflationary pressures, as well as
operating interest rates and regulations for imports tend to increase in the EU market...” (WTO
Center, 2023).
In short, after more than 3 years of the EVFTA implementation (August 2020 - August
2023), this FTA significantly contributes to improving the growth of commodity trade between
Vietnam and the EU. The EVFTA has elevated its role in promoting institutional reforms in
accordance with new development requirements and contexts. The areas such as trade,
investment, intellectual property rights, sustainable development, financial services, and public
procurement all have many adjustments in institutions, legal documents, and the legal system.
Vietnam is considered as highly compatible with the commitments in the EVFTA at the present.
In the period 2020-2022, after EVFTA is implemented, exports to the EU recover from a
decrease of 1.8% in 2020 to a growth of 14.2% in 2021 and 16.8% in 2022. In addition, the
EVFTA also helps Vietnam increase imports of modern machinery, equipment and technology,
contributing to the country's industrialization and modernization process, helping products to
reach higher standards, and increase the ability to join the global value chain, increasing the
competitiveness of Vietnamese products in the world market (WTO Center, 2023).
4. A Preliminary Analysis and Explanation Towards the Trade Volume From Vietnam to
the EU During the First Three Years of the EVFTA
The stagnant and even negative growth rate of the exports in the first year of the EVFTA
(-1.82% in 2020 compared to -0.61% in 2019) can be attributed to the two most vital reasons:
(1) the first year of COVID-19 pandemic when global economies were confronted with
unexpected situations of chaos with irrelevant, inconsistent and even opposite economic
policies by individual countries. “Some governments are adopting rather extreme measures -
complete lockdown of the cities, the provinces and even the country itself, school closures,
travel ban and cancellation of flights. The lack of responsible world leadership when it is most
needed in terms of providing basic subsistence to the vulnerable especially in Africa has also
proven problematic in the spread of the contagious disease” (Efebeh, 2020). The prevalent
lockdowns in the globe had caused not only the economic damages but also the detrimental
contemporary collapses in certain weak points or locals. The proof is that after the pandemic
there have been at least some countries falling into bankruptcy, of which Sri Lanka has been
called up (The Straits Times, 2023). To an exporting country like Vietnam, the global markets’
lockdowns and collapses caused certain awkward stagnancies which had pulled down the
demands to its goods in most fields and to most customers, of which includes the largely
significant EU. Looking at the Chart of Imports, exports and trade balance between the EU and
Vietnam, 2010-2020 below we can easily see that the imports-exports between Vietnam and
EU in two first years of the COVID 19 pandemic went down clearly compared with the previous
duration of time. (See the chart below).
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 156

Figure 2
Imports, Exports and Trade Balance Between the EU and Vietnam, 2010-2020 (Eurostat
Statistics Explained, 2022)

The second cause is derived from the EVFTA itself. As this was the first year of the
implementation, despite all the good will and whole-hearted cooperation between the two
partners of Vietnam and EU, certain irrelevant and asymmetric differences still existed and
asked for fine-tuning. As a result, the year 2020 witnessed a decrease in exports of some of the
most competitive goods from Vietnam worldwide and into the EU in particular. Commenting
on this situation, Do Thi Bich Thuy (2020) from Department of Information, Library and Trade
Promotion – VIOIT said: “2020 is a particularly difficult year for Vietnam's textile and garment
industry when the market has many complicated and unpredictable fluctuations. Under the
impact of the Covid-19 pandemic, the textile and garment industry are one of the industries that
suffer the largest direct losses along with the tourism, aviation, and footwear industries.
Difficulties due to lack of raw materials in the first months of the year and slowing demand
from the EU and the United States... from April 2020, when consumers around the world
focused only on essential supplies and disease prevention Vietnamese textile and garment
enterprises have faced a shortage of orders. Small orders, quantity and low value only maintain
production for a short period of time every month, even week, many businesses have to extend
shifts, lay off workers on a rotational basis, greatly affecting export action.” As mentioned
above, the two partners bear considerable differences and asymmetries, from the scale of the
economy to demographic characteristics or aspects, to the political system and institutions. It is
therefore understandable if the EVFTA needs more time to adjust to suit the expectations and
contemporary situations of the two players.
The second year of the EVFTA (2021) and the third year (2022) both witnessed
impressive growth of the exported from Vietnam into the EU with the growth rates of 14.2 and
16.8% respectively. These bright motivational signals and indicators were considered coming
from both inside and outside the EVFTA. Inside, the two partners of the EU and Vietnam had
been gradually familiar with the rules, regulations and policies and markets requirements from
each other, and had stepped into a smoother period of cooperative implementation of the
EVFTA. Moreover, during this time, the EU and the world markets had just begun to return to
the normal pace of advance; in some parts of the world the demand had soared to above the pre-
pandemic levels as the compensations for the constraining times of aforementioned lockdowns.
Worrying that the pandemic may last longer than expected or other pandemics or other spells
of the plague may come up, the importing wealthy were actively storing the goods for future
uses, which contributed considerably to the growth rates of the exported from developing
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 157

countries like Vietnam. Outside in the context of global markets, China - the largest exporters
of the world in the two first decades of the twentieth century, implemented the ZERO-COVID
policy, which locked down itself in its own shell, as well as its giant supplying capacities of
manufacturing and exporting goods. Those changes and contemporary situations have actually
facilitated more Vietnam’s exported goods to traditional markets dominated by China,
including the EU. It is reasonably evident that during the two years of 2021-2022 in the middle
of the pandemic, the export volumes from Vietnam to the EU reached such high positive rates
of growth. Specifically, in 2021, the Vietnam - EU trade increased 14.8 percent. “According to
the Ministry of Industry and Trade, in the year, Vietnam exported USD 45.8 billion worth of
goods to the EU, up 14.2 percent year on year, while importing 17.9 billion USD worth of
products from the market, a rise of 16.5 percent” (National Institute for Finance, 2022). The
Ministry of Trade attributed the promising results to the EU - Vietnam Free Trade Agreement
(EVFTA), which took effect more than one year ago. It emphasized that “Notably, the export
revenue of products using the EUR.1 certificate of origin (C/O) reached about 7.8 billion USD,
which showed Vietnamese firms’ greater attention to optimizing incentives from the deal… At
present, 20 percent of local enterprises have taken export tax incentives from the EVFTA with
the EUR.1 certificate of origin (C/O). For shipments to the EU worth less than 6,000 EUR, local
enterprises are allowed to self-certify origin. This helps ensure smaller businesses do not have
to spend time applying C/O, while still being able to enjoy tax incentives” (National Institute
for Finance, 2022). Continuing in this trend, the year 2022 proved that Vietnam has quite a
resilient economy despite the covid-19 pandemic. “The trade turnover between Vietnam and
the European Union (EU) reached 76.3 billion USD last year, a year-on-year increase of 5.1%,
according to the European-American Market Department under the Ministry of Industry and
Trade…” (Vietnam News Agency, 2023).
However, the year 2023 witnessed a twisted turn-around when the rate lowered down
4.4% compared to the previous year of 2022 (Tu, 2024). This lowering was supposed to derive
from the returning to the global markets by China and other exporting countries, and also from
the disruptions of the supply chains, of which Vietnam’s manufacturers depend much on for
their raw materials, when conflicts in Ukraine and Red Sea vehemently escalated. The
disagreements on the fiscal policies and spending incentives by the EU governments and its
citizens in different states also contributed a great deal to the reduction in the demands in these
markets, in turn making Vietnam’s exports go down.
5. The Prospects and Challenges to Vietnam’s Exports Into the EU With the EVFTA
The year 2024 is expected to facilitate Vietnam’s exports more than in the previous time
as the EU is gradually returning to its normal and even higher demands compared with the pre-
COVID-19. However, an important fact to highlight is that the EU is now in the leading group
in efforts to promote a green, clean, and circular economy, and therefore standards and
obligations on these aspects are and will increasingly be added or upgraded. The most recent
example is the new Carbon Border Adjustment Mechanism - CBAM, approved by the EU
Parliament in March 2021, implemented step by step according to the roadmap starting from
July 2021. According to CBAM, the EU will impose additional taxes on goods imported from
countries without carbon pricing mechanisms, starting with some groups of goods whose
production process emits a lot of carbon, then will gradually expand to the others which produce
almost all types of goods. Therefore, Vietnamese exports in the next period will have to handle
the above barriers to increase efficiency in taking advantage of the EVFTA (WTO Center,
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2022).
In addition, the geographical distance is far, leading to high expenses of transportation
and logistics costs which limit competition possibilities of Vietnamese businesses. Recently,
in the Gulf of Aden and Red Sea areas, ships carrying goods are being attacked, leading to a
number of shipping companies having to stop transporting goods through the area Red Sea, or
change their schedule, or detour passing through Africa's Cape of Good Hope for transport
shipping and insurance fees for goods exchanged between these areas increase (European-
American Market Department & Vietnam Industry and Trade Information Centre, 2023b).
Despite the returning back to the normal level of demands in the EU market, in the
context of regional on-going conflicts and the forecasted EU economic situation of a slow
growth in 2024 and 2025, while the market is accelerating the application of regulations new
regulations and standards for imported goods, Vietnamese businesses need to do a lot to be
identified full of opportunities and challenges to maintain market position and even enhance its
competitive capacities for its exports in the coming time. In short, in order to maintain and
upgrade Vietnam’s exports in this important “playground”, Vietnam has to be alert, actively
innovate its manufacturing and producing processes in order to fully meet the increasing
requirements by the EU.
6. Conclusion
Until now, the EVFTA has just covered 3 years of the implementation. Therefore, it is
advised to wait for further adjustments and improvements to come to a clearer picture of the
effects and challenges of this paramount comprehensive agreement to the both sides of the EU
and Vietnam. However, the above analysis and discussions have somehow captured the first
period of the agreement and envisioned the near future of prospects and challenges to the related
sides. There was an awkward step in the year 2021 when the EVFTA could not contribute much
to the economic advancement of the two partners. The reasons came from both the inside and
outside, with the former being the reluctant and unfamiliar to the new body of legislations and
the latter of the COVID-19 pandemic with detrimental effects. The next two years of 2022-
2023 have gone more smoothly through the difficult time as the two partners have been
willingly supporting each other towards better cooperation and exploitation of the agreement.
The exports from Vietnam into the EU have therefore increased a great deal in both the volumes
and the revenues.
In conclusion, this article has outlined the general aspects and aims of the EVFTA - an
ambitious common cooperative work towards more beneficial trade between Vietnam and the
EU - two partners of great asymmetries and differences both in the economic scales and legal
systems. Hopefully, the first three years of the Agreement have passed with more of the
advances and motivation than disadvantages, under the light of unexpected COVID-19
pandemic and certain reluctances or awkward interactions of any new partners in any new
cooperation field. The coming time has revealed better pace of growth for Vietnam’s exports
in this vast market as the country and its producers have been more familiar with the EVFTA,
enough to know how to use up its advantages. However, as the EU has been stepping into
tremendous changes in the regulations of green and circular economy, Vietnam should
proactively foresee and get ready for more adaptabilities in the future to maintain and upgrade
its exports position in the EU.
VNU JOURNAL OF FOREIGN STUDIES, VOL. 40, NO. 3 (2024) 159

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MỘT NGHIÊN CỨU SƠ BỘ VỀ XUẤT KHẨU CỦA VIỆT NAM

VÀO EU SAU 3 NĂM THỰC HIỆN EVFTA:
THỰC TIỄN, TRIỂN VỌNG VÀ THÁCH THỨC

Nguyễn Thị Vân Anh

Khoa Tiếng Anh, Trường Đại học Ngoại ngữ, Đại học Quốc gia Hà Nội,
Số 2 Phạm Văn Đồng, Cầu Giấy, Hà Nội, Việt Nam

Tóm tắt: Hiệp định Thương mại tự do EU-Việt Nam (EVFTA) từ lâu đã cho thấy nỗ lực hợp
tác nhằm thu hẹp khoảng cách giữa Việt Nam và EU với mục tiêu chung là cùng có lợi, hiểu biết và phát
triển cho cả hai bên. Bắt đầu vào năm 2010, EVFTA phải mất 10 năm mới hoàn tất đàm phán, sắp xếp
pháp lý trước khi chính thức có hiệu lực vào tháng 8/2020. Ba năm trôi qua kể từ ngày được phê chuẩn,
EVFTA đã phần nào đó thúc đẩy sự phục hồi và tăng trưởng của nền kinh tế Việt Nam, đặc biệt là khi
đại dịch COVID-19 đã gây thiệt hại nặng nề cho hầu hết nền kinh tế trên thế giới. Tuy nhiên, trong bối
cảnh EU đang tích cực thay đổi và thích ứng theo mức độ xanh hơn trước yêu cầu của thời đại và nền
kinh tế chuyển đổi, Việt Nam sẽ phải đối mặt với những thách thức mới về khả năng thích ứng, bên
cạnh những thách thức đã được lường trước và vượt qua trong thời gian trước. Bài viết này xem xét tổng
quan về EVFTA và kim ngạch thương mại từ Việt Nam sang EU trong 3 năm đầu thực thi EVFTA trước
khi tiếp tục thảo luận những triển vọng và thách thức mới đối với Việt Nam trong thời gian tới.
Từ khóa: Việt Nam, EU, EVFTA, thương mại tự do, xuất khẩu