Learning about EVFTA through FTAP

On December 1, 2015, EVFTA negotiations were officially concluded, and the agreement’s full text was published on February 1, 2016. On June 26, 2018, the EVFTA was divided into two agreements: EVFTA, and EU-Vietnam Investment Protection Agreement (EVIPA). At the same time, the legal review of the EVFTA’s final text was formally concluded.

In August 2018, the legal review of the EVIPA was also concluded. The two agreements were signed on June 30, 2019. The EVFTA and the EVIPA were ratified by the European Parliament on February 12, 2020, and ratified by the Vietnamese National Assembly on June 8, 2020. On March 30, 2020, the European Council also approved the EVFTA. As for the EVFTA, due to the completion of the ratification procedure, this agreement has officially taken effect from August 1, 2020. As for the EVIPA, on the EU side, the agreement will still have to be ratified by the Parliaments of all 27 EU member nations to take effect.

According to the Ministry of Industry and Trade (MoIT), the EVFTA is the first FTA between Vietnam and the EU, connecting Vietnam with the economies of 27 EU member countries. It is the second new-generation, high-standard FTA Vietnam has signed, with commitments covering a wide range of fields, which are expected to liberalize trade at a high level. Therefore, the EVFTA is expected to have positive economic and institutional impacts on Vietnam.

So far, the EVFTA has been effective for more than three years. Most of its commitments have begun to be implemented, including those pertaining to tariff, opening of the service market, investment, public purchases and rules in various fields. In 2022, trade between Vietnam and EU member economies reached US$62.24 billion, a 9.2 percent increase compared with 2021. The sum included US$46.8 billion worth of Vietnam’s exports to the EU, up 16.7 percent, and US$15.4 worth of imports from the EU, down 8.6 percent.

A survey by the Center for WTO and International Trade under the Vietnam Chamber of Commerce and Industry (VCCI) shows that the EVFTA is known at different levels to nearly 94 percent of domestic companies – the highest percentage compared with other FTAs involving Vietnam. Among every 10 surveyed companies, three have good knowledge of EVFTA commitments while one has very good knowledge of EVFTA commitments related to its business activities. Nearly 41 percent of surveyed companies said they have benefited from the agreement, of which 40-42 percent have benefited from tariff preferences for import-export goods. However, according to the MoIT, the percentage of businesses benefiting from the EVFTA remains under expectation, and the number of exporters to EVFTA member countries is still modest.

One of the reasons is that measures to help businesses take advantage of preferences under FTAs in general and the EVFTA in particular are not focused on strong sectors and fields of localities. Moreover, the implementation of these measures still lack continuity and therefore cannot have sustainable effects. Although cities and provinces have organized workshops and conferences to introduce FTAs, they still lack further actions to make businesses aware of specific preferences from which they can benefit.

To improve the situation, the MoIT is accelerating the upgrade of the FTA Portal (FTAP) at https://fta.gov.vn, while tightening its coordination with other ministries, sectors and localities in efforts to make this portal useful to businesses, helping connect them with central and local management agencies in the process of taking advantage of FTAs in general and the EVFTA in particular.

The FTAP provides information about EVFTA commitments related to tax, tariff quota, rules of origin, services, trade, investment, and sustainable development. Businesses can search for the content of the EVFTA and other trade deals involving Vietnam through the portal. The FTAP also updates users on legal documents related to FTAs and shares digital publications and online training courses on FTAs, including the EVFTA.