Czech Business Today

After more than two and half years of negotiations, the EU and Vietnam have reached an agreement on a free trade deal at the beginning of August. Both parties agreed in principle on the FTA, meaning that the main parts of the agreement have been negotiated, but the scrutiny process will continue. 

The FTA is a success for both parties, as it is the most ambitious and comprehensive agreement with a developing country so far, second in ASEAN region and it has a potential to become a model agreement for other ASEAN countries. The FTA will eliminate more than 99 percent of custom duties over the next years, as Vietnam committed to liberalize 65 percent of import duties on EU products when the FTA enters into force and eliminate the rest gradually in a 10-year period, while the EU will do so over 7 years. A big step forward can be seen also in the non-tariff barriers area, where Vietnam agreed to implement a variety of international standards, sanitary and phytosanitary measures and the agreement will have a separate automotive annex focused on non-tariff barriers elimination. As for the rules of origin, for the first time in any FTA, Vietnam has agreed to use the “Made in EU” marking for non-agricultural products, except for the pharmaceuticals, where the rules depend largely on national legislations. In addition, the FTA recognizes and protects 169 European food and drink products geographical indications. Furthermore, EU companies should benefit from simpler access to public procurements and service sectors, investment and better IPR and data protection. 

The agreement was welcomed by businesses on both sides. As for the EU, the agreement was welcomed mainly by the pharmaceuticals industry. For example, the European Federation of Pharmaceutical Industries and Associations expressed its satisfaction with the outcome of the negotiations, especially with the level of protection of IPR and increased data protection. Furthermore, food and drink industry welcomed the elimination of import duties and expects exports to significantly increase for some products, especially for some alcoholic beverages. On the other hand, the ICT sector expressed concerns about certain provisions of Vietnamese government that could limit the access of European companies to public procurement and hopes that they will be eliminated during the finalization process of the agreement.