EU-Vietnam free trade agreement takes effect
A free trade agreement between the European Union and Vietnam will enter into force on 1 August 2020. The agreement will open doors to a growing market of over 95 million consumers. “The agreement offers new opportunities for Finnish companies in Vietnam,” says Minister Skinnari.
The free trade deal is estimated to increase the annual trade between the EU and Vietnam, which is valued at around EUR 50 billion, by as much as 50% over the next few years. Almost all customs duties between the parties will be abolished either immediately after the agreement has entered into force or within ten years at the latest. At the moment, customs duties on many Finnish exports can be as high as 25%.
“The trade agreement taking effect is a positive signal in these challenging times. Rules-based trade and free trade agreements are important elements in promoting the recovery of economies and trade from the crisis caused by the COVID-19 epidemic,” says Minister for Development Cooperation and Foreign Trade Ville Skinnari.
The agreement also removes many barriers to trade, which will facilitate the market access of small and medium-sized Finnish companies in particular. From now on, as a rule, standards and technical regulations must be based on international standards. The agreement includes a separate chapter on the removal of barriers on trade in renewable energy. In addition, opportunities to participate in tendering for public procurement contracts in Vietnam will improve.
“The agreement offers new opportunities for Finnish companies in Vietnam. Finnish expertise is valued in the country thanks in part to our successful development cooperation history. However, we need an active approach to realise these benefits. I think it is important that Finnish businesses take a close look at the opportunities offered by the agreement,” Minister Skinnari says.
Vietnam is a lower middle-income country in a dynamic development phase with a growing middle class and a young working age population. In the 2000s, Vietnam’s annual economic growth has been more than 6 per cent on average.
Of the Southeast Asian countries, the EU has a free trade agreement with Singapore and is currently negotiating one with Indonesia. On the other hand, negotiations with Thailand, the Philippines and Malaysia have stalled due to differing views on the scope of the agreements and issues related to human rights and democracy.
The EU and Vietnam have also agreed on an Investment Protection Agreement, which aims to improve the investment environment between the parties. Before the agreement can take effect, it needs to be ratified by all EU Member States.
Inquiries: Tuuli-Maaria Aalto, Head of Unit, Market Access Unit, tel. +358 295 350 633