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FTA with Vietnam is win-win deal

16 September 2016

The EU’s FTA with Vietnam will boost growth and investment according to the top officials who negotiated the deal. Speaking at a conference on 14 September, co-sponsored by the EU-Asia Centre, Tran Quoc Khahn, Vice Minister of industry and trade, and Mauro Petriccione, Deputy Director General, DG Trade, both expressed optimism about the potential for both sides to ensure a win-win outcome.

Opening the panel discussion, Fraser Cameron, Director of the EU-Asia Centre, said that free trade was under attack as never before from populist forces. It was important that all supporters of the FTA lobbied hard to ensure ratification of the EU-Vietnam agreement. The FTA was a potential model for future agreements with SE Asian countries.

Mr Petriccione said that the EU had developed very close economic relations with Vietnam in the past decade and the two economies were largely complementary. Vietnam had embraced free trade quicker than most Asian countries. Vietnam was involved in the supply chains of many European companies. He expected ratification to be done by 2018.

Mr Khan said the FTA was negotiated in record time and very comprehensive in nature. The FTA will eliminate 99.8% of tariffs on EU goods exports to Vietnam. The government would ensure that SOE activities would not distort the market for EU companies. Products made in Vietnam would also enjoy tariff free entry into the entire ASEAN market.

Markus Beyrer, Director General of Business Europe, noted that Vietnam had a bigger population than Germany. It had made amazing progress and the FTA would provide a further boost to its impressive transformation. It was a top priority to secure ratification as soon as possible.

A range of business speakers covering the retail, spirits, auto and legal sectors all pronounced themselves in favour of the FTA. They said it would spur new skills, new investments and accelerate the transfer of technology for sustainable development.

The EU-Vietnam FTA was concluded on 2 December 2015. It is the EU’s second FTA with a Southeast Asian country (after Singapore) and links the EU market with the 90 million consumers in Vietnam – with a middle class expected to reach 30 million by 2020. It is the most ambitious and comprehensive FTA that the EU has ever concluded with a middle income country. The agreement will eliminate nearly all duties on European products gradually over a 10 year period. Two-way trade between the EU and Vietnam was over 45bn euros in 2015 and is set to increase this year. This successful model of FTA is expected to be followed with more countries from the region, including the Philippines, Malaysia and Indonesia.