>>> Vietnam, EU sign free trade, investment protection agreements
Following is the full text of the article translated by Nhan Dan Online:
One of the main characteristics of international economic and trade cooperation in recent years is the emergence of new economic cooperation linkages and the strong development of trade conflicts at bilateral and regional levels, even within the multilateral framework of the World Trade Organisation (WTO). In this complicated and unpredictable context, Vietnam is one of the few countries that still maintains its determination to open up its market and integrate with the world economy on the basis of the principles suitable for its diversified and multilateral relations. A testament to that consistent approach is the EVFTA that was signed in Hanoi on June 30.
The international situation has been complicated and unpredictable, as many countries have turned to trade protection measures, even participating in "trade wars". However, Vietnam is one of the few countries that continues to be consistent with the international economic integration. One of the important guidelines was given in Resolution No. 06-NQ/TW dated November 5, 2016 on "Effectively implementing international economic integration, maintaining socio-political stability in the context of the country participating in new generation free trade agreements (FTAs).”
The key guideline for international economic integration is defined as "ensuring the supreme benefit of the nation." The policy has helped the country confidently enter a new phase of the international economic integration process - a period of proactively building new rules in international trade through new FTAs.
The first result during the implementation of the Party's new policies on international economic integration is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially adopted by the National Assembly (NA) and came into life in January this year. By mid-year, there was more positive information about the implementation of the guidelines under Resolution 06, which is the signing of EVFTA.
So far, Vietnam has joined two new generation FTAs, contributing to the establishment of equal partnerships, on the basis of mutual benefits with several of the most developed economies in the world. In particular, Vietnam is the second country in ASEAN and the first developing country in the region to sign a FTA with the EU. This is the result of a long journey, demonstrating great strides to bring the country from a latecomer to rise, and now for the first time into the top group of countries in the region for proactively boosting international economic integration.
Regarding a FTA, people often pay attention to opportunities for increased trade. Indeed, EVFTA is expected to contribute positively to export growth as well as the diversification of markets and export products for Vietnam. With EVFTA, as soon as the agreement comes into effect, 85.6% of items, equivalent to 70.3% of Vietnam's exports to the EU, will enjoy 0% tax. After seven years, 99.2% of the items will be entitled to 0% tax, equivalent to 99.7% of Vietnam's exports (the remaining items are subject to tariff quotas with the import tax in the quota being 0%).
However, with the new generation FTAs, the scope does not stop with commitments to open goods markets. EVFTA regulates many other issues, such as opening the market for services, investment and procurement of government agencies, e-ecommerce, intellectual property rights, State-owned enterprises and sustainable development. Regulations based on international standards in many areas, covering business, trade, investment, bidding and intellectual property. This is the basis for Vietnam to boost reform and transform the economic structure towards modernity, efficiency and successful confrontation with challenges amidst the world production is facing rapid changes in the fourth Industrial Revolution.
Therefore, according to experts, if EVFTA is implemented immediately, it may contribute to increasing Vietnam’s gross domestic product (GDP) by 2.18-3.25% on average for the 2019-2023 period, 4.57-5.3% for 2024-2028 and from 7.07-7.72% for 2029-2033. In parallel with economic growth, EVFTA also helps to generate jobs for about 146,000 employees per year. This can be said to be the highest number compared to the FTAs Vietnam has signed and implemented so far.
Of course, along with these opportunities, the implementation of EVFTA also poses challenges, especially as Vietnam’s economy has the lowest development level compared to other countries in the region that have signed FTAs with the EU. Firstly, competitive pressure is the first issue for Vietnamese economy and businesses. However, competition always has a clear duality. On the one hand, competition will be very negative for weak enterprises, especially those that still rely on subsidies from the State and businesses with outdated production and business technologies. On the other hand, competition offers incentives for businesses who constantly innovate, while providing more choices for consumers. Most importantly, it is important to recognise that this way sooner or later Vietnam must go through to innovate its growth model and facilitate economic restructuring successfully, towards improving added value, quality and effectiveness of economic growth.
Secondly, EVFTA's commitments in many new areas also require the adjustment and revision of legal regulations. In recent years, the NA has proactively introduced a roadmap to amend multiple important legal documents, such as the Labour Code and the Intellectual Property Law. These are active steps to prepare for the integration process, including the implementation of EVFTA.
Finally, the EU market is one of the most demanding markets in the world. Passing tariff barriers does not mean that Vietnamese goods and services will be accepted by the EU market. The EU has a range of regulations that are related to not only product standards, but also the production process of that product (for example, not using illegally caught seafood or not using wood extracted from natural forests without permission). In addition, the EU labour and environmental requirements are also among the highest in the world. Therefore, businesses as well as State management agencies must constantly improve to be able to overcome challenges and exploit opportunities provided by EVFTA.
In 2020, Vietnam will assume the chair role of ASEAN. The EVFTA is considered a model for ASEAN countries and the EU to build a common FTA between the two blocks, thus creating a new impetus for regional cooperation. Let’s lay hopes and beliefs in a new path in cooperation between Vietnam and EU in particular, as well as ASEAN and EU in general.
