Czech businesses welcome EU-Vietnam agreements

In the middle of October, the European Commission adopted the EU-Vietnam trade and investments agreements that should eliminate basically all tariffs on goods sold between the partners. Apart from that, the trade agreement includes provisions that would support sustainable development, labour rights, and environment and climate protection.

The agreement will remove 99% of the duties on goods. While two thirds of these duties will be eliminated immediately when the agreement comes into effect, the rest of the duties will be removed gradually over a 10 years period. Importantly, the trade agreement focuses on non-tariff barriers as well, especially in the automotive sector, and on protection of geographical indications. As for investments, the agreement will improve investment protection rules and apply the new Investment Court System. It will also replace the existing bilateral investment agreements between Vietnam and EU Member States.

Czech businesses welcomed the adoption of the agreements by the European Commission, as the Czech Republic exports almost 100 million EUR worth of goods to Vietnam yearly (93 million EUR in 2017). However, the external trade balance is negative for the Czech Republic, as it imports large quantities of goods from Vietnam. Czech businesses hope that the free trade agreement will help to change the situation. For the Czech Republic, a major producer of automobiles and car parts, the biggest exporting potential lies in the automotive industry that is now burdened by up to 78% tariffs.

Apart from that, machines and equipment currently face tariffs up to 35%, which is another sector where Czech industry is very strong. As for the geographical indications, several of them related to the production of beer will protect Czech products on the Vietnamese market. Czech businesses also welcome the arrangements related to the public procurement market. As the agreement should ensure fair treatment of European companies in Vietnamese public procurement tenders, Czech businesses hope that they will be able to participate in them more frequently. The same goes for the investment agreement, as several Czech companies also invest in Vietnam.