Vietnam completed a trade agreement with the European Union on Monday, with a central focus on breaking down tariff barriers.
According to the Associated Press:
When it takes effect next month, the EU will eliminate 85 per cent of its tariffs on Vietnamese goods and phase out the rest over the next seven years.
Similarly, Vietnam has eliminated 49% import tariffs on its exports to the EU, and reached zero within 10 years. The move could significantly boost Vietnam’s economic growth.
Novel Coronavirus epidemic in Vietnam is well under control and has been recognized by many countries, and a tariff agreement with the European Union will be an important impetus to overcome the economic downturn, AP reported.
The Free Trade agreement with the EU will come into force in August, allowing Vietnam, an emerging Asian country, to export most of its goods to the EU at zero tariffs, the German news agency DPA reported.
Specifically, 71% of Vietnam’s exports to the EU and 65% of THE EU’s exports to Vietnam will be lifted immediately after the agreement takes effect. Over the next decade, 99 percent of tariffs on goods from both sides will be eliminated. It is expected to help Vietnam increase exports to the EU by 44% by 2030.
Manfred Junkert, President of the German Leather and Shoe Industry Association, said the passage of the EVFTA was important for free trade and fighting protectionism. Germany is expected to become an important partner in Vietnam’s leather and footwear industry and Vietnam is a potential market for German footwear products.
Vietnam exported 112 million pairs of shoes to Germany in 2019, up 6.9 percent year-on-year, making it the second largest supplier of German footwear products, accounting for 15.3 percent of the country’s total imported footwear products.
As for leather goods, Germany imported us $314 million from Vietnam in 2019, up 5.7% from the same period last year. It was the third largest supplier of German leather goods, accounting for 7.4% of total leather goods imports.
Manfred Junkert believes that the investment opportunities of German companies in Vietnam depend on the coVID-19 prevention and control situation in Vietnam and the strength of Vietnamese companies.
Vietnam wants to restructure its shoe and clothing industry chain
The outbreak has exposed a flaw in Vietnam’s manufacturing industry, which relies heavily on China for raw materials.
When Vietnam’s factories reopened, production was still limited by a lack of supplies from mainland China. The impact on Vietnam’s main exports today — textiles, shoes and electronics — is clear.
Analysts said that novel Coronavirus, while not causing a health crisis in Vietnam, showed the weakness of the heavy reliance on mainland China in the trading chain. So a free trade agreement (EVFTA) with the EU comes at a good time, as all sides realise they need to revise their supply chain diversification.
Vietnam is the EU’s second-largest trading partner in Southeast Asia, with two-way trade worth $56 billion last year, according to the EU.
Vietnam has also actively joined the Trans-Pacific Partnership (TPP) and has agreed to similar commitments.
Vietnam has been reforming its economy to integrate into the global economy for more than 30 years. The country of 95 million people is emerging as a manufacturing powerhouse, but it has a long way to go. Per capita income lags far behind that of Singapore, Hong Kong and Malaysia, and is less than half that of Thailand.
The aim is to build links with countries with advanced technology and good corporate governance, Lan said.
“The free trade agreement with the EU will help Vietnam improve its skills and standards. This is a great opportunity for Vietnam, “Lan said.
Post time: Jun-23-2020