The European Council has ratified the EU-Vietnam Free Trade Agreement, which is expected to take effect in the summer after ratification by the Vietnamese National Assembly in May. The agreement includes a promise to reduce tariffs on Vietnamese shrimp from 12-20% to zero after seven years.
Immediate Cuts in Import Taxes
As part of the agreement, Vietnam will immediately reduce import taxes on EU commodities by 65%, with the remainder to be cut over a 10-year period. In contrast, the EU will remove over 70% of Vietnam’s commodities immediately, with the rest to be removed over the next seven years.
Signed in 2019
The EU-Vietnam Free Trade Agreement was signed in Hanoi, Vietnam, in June 2019, along with the EU-Vietnam Investment Protection Agreement.
Boost to Shrimp Industry
Vietnam’s shrimp exports were worth $3.36 billion in 2019, experiencing a decrease of 5.4% YoY. Despite this, the EU-Vietnam Free Trade Agreement is expected to bring significant advantages to the shrimp industry in Vietnam in the coming years.
The promise of zero tariffs on Vietnamese shrimp is a significant incentive for European importers to choose Vietnamese shrimp over those of other countries. The agreement provides an opportunity for Vietnamese shrimp to become more competitive and attractive to European customers.
Moreover, the immediate cuts in import taxes for EU commodities are expected to increase trade between Vietnam and the EU. This increased trade will enable Vietnam to access the EU’s market more easily and expand its market share.
The EU is currently the second-largest market for Vietnam’s shrimp exports, accounting for 18% of the country’s total shrimp exports. With zero tariffs, Vietnamese shrimp exports to the EU are expected to increase significantly in the coming years.
Other Advantages of the Agreement
In addition to reducing tariffs, the EU-Vietnam Free Trade Agreement offers other advantages to both parties. It removes non-tariff barriers to trade, including technical regulations and standards, and includes provisions for protecting intellectual property rights. The agreement also ensures that Vietnam complies with international labor standards.
Furthermore, the agreement offers opportunities for European businesses to invest in Vietnam and access its market. This investment is expected to boost Vietnam’s economic growth and create job opportunities.
