|An Italy- invested Piaggio motorcycle assembly line in Vinh Phuc province. (Photo: VOV)|
Enhancing trade and investment
On Wednesday in Strasbourg, France, the European Parliament (EP) gave its consent to the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EVIPA), which EP member Geert Bourgeois described ‘the most comprehensive and ambitious free trade agreements that the EU has signed with a developing country for the first time’, Vietnam News quoted.
The prolonged impact of the novel coronavirus (COVID-19) has served to hinder trips by EU firms to the country. Due to there being no clear end to the epidemic, investment and trade connection activities have been occurring in a variety of ways, with as many as 100 Dutch businesses launching a range of online investment and trade activities with Vietnamese enterprises during the first week of September.
Under the agreement, Vietnam will cut 65 percent of import tax on EU commodities after the deal takes effect, while the rest will be erased over a 10-year period. Meanwhile, the EU will cut more than 70 percent of tariffs on Vietnam’s commodities once the deal is effective, and the rest will be abolished over the seven subsequent years.
According to VOV, in contrast to a decline in imports from major markets such as the Republic of Korea (RoK), which reached US$28.7 billion, down by 8.3%, and ASEAN at US$19.4 billion, down 9.2%, the past eight months has seen the EU increase imports from the nation, with a value of US$ 9.5 billion, an annual rise of 4.7%.
Among the 27 EU member states already involved in investment activities locally, the Netherlands takes the lead in terms of registered capital. Indeed, by the end of 2019, the European nation had 344 projects worth a total of US$10.05 billion, making up 39.43% of the total EU investment capital in the Southeast Asian nation.
|Employees at a garment factory in Hanoi. (Photo: VN Express)|
EU considers Vietnam as its bridge to connect with ASEAN
Whilst EU firms seek to exploit the Vietnamese market due to fresh opportunities to promote investment and trade exchange through the EVFTA, many EU businesses also consider the country as a destination for investment connections to Southeast Asia.
Nguyen Hai Minh, Vice President of the European Chamber of Commerce in Vietnam (EuroCham), affirmed the sectors that EU enterprises are paying special attention to. In the long run, the trend of increasing Vietnamese exports to the EU will certainly continue, because once the market is opened, additional European firms will seek to invest in the country, therefore leading to more businesses from third countries seeking to invest in the Southeast Asian nation.
In line with commitments set out in the EVFTA, the country has immediately eliminated tariffs on 48.5% of tariff lines, accounting for 64.5% of imports from the EU. After seven years, 91.8% of tariff lines, equivalent to 97.1% of export turnover from the EU, will be abolished by the nation. After 10 years, the tariff removal will be approximately 98.3% of tariff lines, equivalent to 99.8% of the import turnover, VOV cited.
Vu Tien Loc, chairman of the Việt Nam Chamber of Commerce and Industry, said EVFTA is a new generation free trade agreement which is considered a “Western Highway”, connecting Vietnam and a very large and global leading market in both financially and technology.
The EU is currently allowing Vietnam to enjoy a general system of preference (GSP), a kind of most-favored-nation regime that reduces or exempts import duties on goods. Textiles, garments, and footwear are products enjoying GSP with an average preferential tax rate of 3-4 percent. VN Express reported.
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