The European Parliament (EP) has ratified the EU-Việt Nam Free Trade Agreement (EVFTA) and the EU-Việt Nam Investment Protection Agreement (EVIPA) on Wednesday. The ratification of these two agreements is a significant result for Việt Nam and the EU, who are comprehensive strategic partners. The agreement creates a sustainable foundation for both sides to improve quality in comprehensive cooperation, showing the EU’s trust in Việt Nam as a reliable partner in Southeast Asia and worldwide.
EU-Việt Nam Free Trade Agreement (EVFTA) is a lever for growth that opens up opportunities for Việt Nam to infiltrate a market with a gross domestic product of US$18 trillion. Under the agreement, nearly 100% of Việt Nam’s goods to the EU will see their import tariffs eliminated in the short term, the highest level of commitment that a partner has given to Việt Nam in signed free trade agreements.
The EVFTA is expected to create a significant push for Việt Nam’s exports, helping diversify the country’s exports and markets. The agreement will cut 65% of import tax on EU commodities after the deal takes effect, and the rest will be erased over ten years. Meanwhile, the EU will cut more than 70% of tariffs on Việt Nam’s commodities after the deal takes effect, and the rest will be abolished over the next seven years.
According to research by the Ministry of Planning and Investment, the two agreements will help Việt Nam increase its GDP by 4.6% and its exports to the EU by 42.7% by 2025. The European Commission has projected the EU’s GDP to increase by $29.5 billion and its exports to Việt Nam by 29% by 2035. The investment commitments will replace bilateral investment agreements between Việt Nam and EU members, helping the country continue to reform its economic structure, perfect business environment and institutions, and facilitate EU investors’ business in Việt Nam.
ILO Welcomes EP’s EVFTA Ratification
The International Labour Organisation (ILO) office in Việt Nam welcomes the European Parliament’s ratification of the EVFTA in Paris, which is expected to bring economic benefits to both sides. ILO Vietnam Country Director Chang-Hee Lee said the deal’s requirements on labour and environment will help bring about benefits for all sides, help Việt Nam achieve sustainable development and ensure that the current growth is achieved at the expense of future generation’s opportunities.
Việt Nam’s entry into the EVFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will make it easier for the country to modernise labour laws and industrial relations systems. The adoption of the revised Labour Code in November 2019 brought its legal framework closer to ILO fundamental conventions. Modern industrial relations based on recognition of freedom of association, together with a better skilled workforce and effective social protection, is a key social driver for Việt Nam to move towards an upper-middle-income country in a sustainable manner.