On 2 December 2015, President Donald Tusk, President Jean-Claude Juncker and Vietnamese Prime Minister Nguyen Tan Dung announced the conclusion of negotiations on the EU-Vietnam Free Trade Agreement (EVFTA) after nearly three years and 14 rounds of negotiations. EvFTA is a next-generation free trade agreement between Vietnam and the EU. On June 26, 2018, the EVFTA was split into two separate agreements: the FREE-EXCHANGE ACCORD (NAFTA) and the Investment Protection Agreement (EVIPA). In August 2018, the EU and Vietnam completed the legal review of the APPV and the EVFTA must be ratified by the European Council, while EVIPA demanded further ratification by the parliaments of each EU member state. In addition, the EU signs a free trade agreement with Vietnam “EVFTA is more important than ever, as trade wars and a global pandemic disrupt normal affairs on an unprecedented scale,” the European Chamber of Commerce in Vietnam said on Monday. This agreement is not only a “win-win” for European and Vietnamese companies; but also for citizens on both sides. The next step is to ensure a smooth and effective implementation,” added EuroCham. Members of the Vietnamese National Assembly voted overwhelmingly in favour of the adoption of the agreement. To a rare extent and a demonstration of transparency, the vote was broadcast live on Vietnamese television. Analysts say the deal comes at the right time after the coronavirus pandemic has highlighted flaws in Vietnam`s manufacturing sector – and has focused on problems related to its dependence on China in its supply chain.
Hanoi already benefits from the EU`s preferential tariff. But the trade deal will certainly make the bloc a bigger buyer of Vietnamese products, which will increase its current share by about 15%. Read more: Poland gives EU an unlikely boost to Vietnamese trade Vietnamese textile companies have prepared for EU market. Once the agreement comes into force, the bloc will eliminate tariffs on 77.3% of Vietnam`s textile and clothing exports after five years and the remaining 22.7% after seven years. In May, the World Bank said the trade deal could help hundreds of thousands of people in Vietnam lift their lives out of poverty and increase gdp by 2.4% by 2030. Although WTO commitments in Vietnam form the basis of EVFTA`s service obligations, Vietnam has not only opened up additional sub-sectors to EU service providers, but has also made deeper commitments than those set out in the WTO to provide the EU with the best possible access to the Vietnamese market.