Vietnam advised to take bold reforms to benefit from EU trade pact

Tuesday, 2020-05-19 16:54:45
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NDO - Vietnam needs to fill major legal gaps and address key implementation issues in order to reap the full benefits of a trade agreement with the EU to be ratified by the country’s parliament, according to the World Bank.

In a report released on May 19, the WB estimates that by simply enjoying the tariff reduction as agreed, the pact known as the EVFTA could boost Vietnam’s GDP and exports by 2.4% and 12% respectively by 2030, while lifting an additional 100,000-800,000 people out of poverty by 2030.

Such benefits are particularly urgent so as to lock in positive economic gains as they country responds to the coronavirus pandemic.

The report argues that Vietnam could benefit even more from next-generation trade deals such as EVFTA and CPTPP if they stimulate a comprehensive agenda of economic and institutional reforms to facilitate compliance with non-tariff agreements.

The report estimates that such reforms would result in a “productivity kick”, increasing GDP by 6.8%, relative to the baseline scenario, by 2030.

The report highlights the need for Vietnam to increase its capacity to handle certain key issues, including rules of origin, animal and plant sanitary standards, and investor-state dispute settlement.

“If Vietnam can act in a decisive manner to close legal and implementation capacity gaps, it can capitalise on a trade deal whose direct benefits are estimated to be largest in the country’s history,” said Ousmane Dione, World Bank Country Director for Vietnam.

The report also makes the case for prioritising key sectors that make up the bulk of Vietnamese exports to the European market for post-coronavirus economic recovery efforts, to maximise the benefits of the trade deal.