On June 30, 2019 the European Council (EC) and
Vietnamsigned the EVFTA and IPA. This is the largest free trade Agreement which
Vietnam signed which reaches 28 economies European countries.
EVFTA is separated into two agreements,
including Trade agreement and Investment agreement. In August, 2018, EU
announced the official document of the Free Trade Agreement (EVFTA) and the
Investment Protection Agreement (now called EVIPA). EVFTA is a comprehensive
agreement, high-quality agreement, balancing the benefits for both Vietnam and
EU, and in accordance with the provisions of the World Trade Organization (WTO).
The first, EVFTA includes 17 chapters, 2
Protocol and notes which are cover i.e. trade in goods (include general
procedures and commitment to market opening), Rules of origin, custom and trade
facilitation, the Safety and Health Protection (SPS), Technical Barriers
to Trade (TBT), commercial services (include general procedures and commit to
market opening), investment, trade defense, competition, national enterprises,
Government procurement, Intellectual
property, Commercial and Sustainable Development, cooperation and capacity
building, legal-institutional issues. Of which, the important parts
are in the trade in goods, services fields which EU will abolish about 85,6%
the import tax, equivalent to 70,3% the Vietnam’s export turnover after this
Agreement is effective. Therefore, most of the products and services exported
to Europe, taxes will be abolished. For products and services that are not
eligible for incentives, within 7 years after this Agreement takes effect, the
EU will abolish import duties on 99.2% of tariff lines equivalent to 99.7% of
Vietnam's export turnover. The remaining 0.3% of export turnover will be
committed by the EU with tariff quotas with the import tax rate in the quota of
0%.
Goods which are exported from EU to Vietnam
will enjoy preferential tariffs. Vietnam will abolish the tariffs bases on each
specific timeline, after the Agreement has valid. Vietnam will
abolish the tariffs or 48,5% the tariffs (equivalent to 64,5% import’s turnover).
After 7 years, Vietnam will abolish 91,8% the tariffs equivalent to 97,1%
export turnover from Vietnam to EU. After 10 years, the level of abolished
tariffs will be 98,3% tariffs (equivalent to 99,8% import’s turnover).
Further, Vietnam and EU agree with the
contents related to custom procedure, SPS, TBT, trade defense, etc. and make a
legal framework for the two parties to cooperate and facilitate export and
import of the enterprises.
The fields which Vietnam has a favorable
commitment to EU investors include a number of professional services, financial
services, telecommunications services, transport services, distribution
services. The two sides also made commitments on national treatment in the
field of investment, and discuss about the the ways to handle the disputes
between investors and the state.
The IPA includes the contents as follow:
The first, the parties commit to give the
national treatment and most favored nation treatment with the investment of the
other Party's investor, with some exceptions, as well as fair, satisfactory
treatment, safe and adequate protection, allowing the freedom to transfer
capital and profits from overseas investments, commit to not expropriation,
nationalization of assets by investors without adequate compensation, commit to
compensate for damages to the investor of the other party similar to domestic
or third party investors in case of losses due to war, riots, etc.
Second, in the case of dispute between a
party and the Investor of the remaining party, the parties agree to handle the
dispute based on the discussion and mediation, reconciliation. In the case the
dispute can not be handled by discussion and mediation, reconciliation, the
parties will use the specific ways regulated under this Agreement.
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