5 years of implementing EVFTA: A fulcrum for Vietnam

That was the comment of Ms. Duong Phuong Thao - Vietnam Trade Counselor in Italy when answering an interview with VNA reporters on the occasion of the 5th anniversary of the EVFTA coming into effect (August 1, 2020 - August 1, 2025). She emphasized that EVFTA has created an important driving force, helping the two countries overcome many global challenges such as the COVID-19 pandemic, geopolitical conflicts and inflation.

Photo caption — Vietnamese Trade Counselor in Italy Duong Phuong Thao answers questions from VNA reporters. Photo: Truong Duy/VNA

In the context of global supply chain disruptions, the EVFTA has proven to be pivotal as the total two-way trade turnover between Vietnam and Italy increased by an impressive 49%, from 4.62 billion USD in 2020 to 6.91 billion USD in 2024. Vietnam's exports to Italy increased by 58%, reaching 4.94 billion USD. Key products with remarkable growth include: iron and steel (up more than 9 times), computers, electronic products and components (up 131.7%), footwear (up 88%), coffee (up 105%), machinery, equipment, tools and spare parts (up 97.5%) and means of transport and spare parts (up 82%). Not only that, some industries also recorded significant growth, of which textiles increased by 42.3%, plastic materials increased by 245%, seafood increased by 2.2%, handbags, wallets, suitcases, hats, umbrellas increased by 35.7%, iron and steel products increased by 57.7%, rattan, bamboo, sedge and carpet products increased by 76.3% and pepper increased by 304.1%. Only cashew nuts decreased slightly by 8.1%, reaching 38.3 million USD.

In the opposite direction, Vietnam's imports from Italy reached 1.97 billion USD, up 30%, focusing on machinery, equipment and high-end products such as wine.

The EVFTA has brought about clear tariff advantages, boosting Vietnam’s exports of agricultural, aquatic, textile and electronic products, while facilitating the import of technology and high-end goods from Italy. The agreement has helped Vietnam consolidate its position in the global supply chain, especially in the context of supply disruptions. The Italian government and businesses prioritize Vietnam as a leading internationalized market, with support from financial institutions, through credit guarantees and a platform connecting small and medium-sized enterprises. The EVFTA not only expands the market but also promotes institutional reform in Vietnam, orients green production and attracts Italian investment in technology and renewable energy.

Ms. Duong Phuong Thao commented that EVFTA has opened up many great opportunities for Vietnam's export industries to Italy. The iron and steel industry and iron and steel products have grown strongly thanks to the infrastructure demand in Italy and the tariff incentives from EVFTA. Computers, electronic products and components have also grown rapidly, although most of them come from FDI enterprises. Coffee, pepper and footwear have taken advantage of tariff advantages, however, most agricultural products are still in raw form, with low added value due to limitations in processing technology and traceability. The textile, handbag, wallet, suitcase, hat, umbrella and parasol industries benefit from the tax reduction roadmap, but face price competition from China and Bangladesh, along with high aesthetic requirements of the Italian market. Rattan, bamboo, sedge, carpet and plastic raw materials products have also recorded significant growth. Machinery, equipment, means of transport and spare parts benefit from the need for modernization in Vietnam and import tax incentives.

Regarding imports, Vietnam has increased the import of machinery and equipment from Italy, supporting the modernization of textile and food processing production. High-end products such as Italian wine and cheese are increasingly popular thanks to the growing middle class and the EVFTA tax reduction roadmap. The renewable energy sector has also made its mark with green energy projects, in line with Vietnam's sustainable development strategy.

However, not all industries can take advantage of the EVFTA effectively. The seafood industry faces the IUU "yellow card", limiting shrimp and pangasius exports to Italy. High transportation costs and long delivery times affect freshness and competitive prices. The EU's strict food safety standards require large investments in farming processes, beyond the capacity of many small and medium-sized enterprises. The textile, footwear and textile, leather and footwear industries face difficulties due to dependence on imported materials from China, which do not meet the EVFTA rules of origin. Requirements for sustainable production and green technology pose cost challenges. The supporting industry is still weak, depending on imported components, making it difficult for electronic products to take advantage of tax incentives. Lack of high-quality human resources and research investment limits the ability to compete with Italy, which is strong in high technology.

To overcome these barriers, Ms. Duong Phuong Thao emphasized that Vietnamese enterprises need to strictly comply with EU hygiene and quarantine standards, invest in clean production and traceability. Removing the IUU "yellow card" is urgent to maintain tax incentives for seafood. Cooperating with Italian designers to upgrade textile and interior products to meet Milan fashion tastes is a potential direction. The electronics and steel industries need to shift to producing specialized, high-value products to avoid low-cost competition. Investing in research and development, along with partnerships with Italian corporations, will help Vietnam participate more deeply in the global value chain.

Vietnam has been making efforts to reform to meet EVFTA commitments, notably the promulgation of the Intellectual Property Law in 2022 to strengthen copyright and patent protection, creating favorable conditions for Italian brands to invest in Vietnam. The business environment has also been significantly improved with the reduction of administrative procedures and shortening of licensing times, attracting the attention of Italian financial institutions. However, food safety standards and rules of origin remain major barriers, especially in textiles and seafood. Small and medium-sized enterprises lack the resources to meet the EU's green production and sustainable labor requirements.

To make the most of EVFTA and enhance Vietnam's position in the regional value chain, Ms. Duong Phuong Thao suggested that Vietnam should focus on improving logistics through investment in seaport infrastructure and digitizing customs procedures. The direct flight from Hanoi to Milan, which will open on July 1, 2025, is a great opportunity to reduce transportation costs and time. Developing supporting industries is a key factor, with preferential tax and credit policies for domestic raw material production, meeting EVFTA rules of origin. Attracting technology from Italy, especially in agricultural machinery, precision mechanics and food processing, will help modernize production. Cooperating with Italian designers to upgrade textile and furniture products to meet European tastes is also a potential direction.

During a bilateral meeting at the G7 Economic Summit in Calabria in July 2024, Minister of Industry and Trade Nguyen Hong Dien and Italian Deputy Prime Minister and Foreign Minister Antonio Tajani discussed enhancing economic cooperation. Italy selected Vietnam to host the business forum, focusing on priority areas such as machinery (agriculture, mechanical tools, stone processing machinery and textiles), energy transition and circular economy, infrastructure and transport (including aerospace), high technology (pharmaceuticals, healthcare, semiconductors and artificial intelligence). This is a great opportunity for both sides to identify specific areas of cooperation, mutual benefit and concretize the potential for future cooperation.

Ms. Duong Phuong Thao expects that EVFTA will continue to promote sustainable trade and investment, helping Vietnam shift to a green and high-tech economy. With Italy, cooperation in machinery, renewable energy, fashion and high technology will be the focus. To ensure long-term effectiveness, Vietnam needs to prioritize technology transfer from Italy, especially in agricultural machinery, precision mechanics and high technology. Upgrading supporting industries to reduce dependence on imported components is a key factor. Cooperation with Italian design institutes, especially in Milan, will help develop high-value products. Investment in green manufacturing, the use of renewable energy and training of high-quality human resources also need to be promoted.

The bigger challenge comes from the EU accelerating FTA negotiations with other ASEAN countries such as Thailand, Indonesia and Malaysia. If Thailand signs an FTA in 2026, preferential tariffs similar to the EVFTA will reduce Vietnam’s advantages, especially in agricultural products and textiles. Thailand is increasing rice and fruit exports to Europe, directly competing with Vietnamese coffee and pepper. The US-China trade tensions and the 20% reciprocal tariff imposed by the US on Vietnamese goods from August will further pressure the supply chain. Therefore, focusing on quality, design and sustainable production is the way for Vietnam to maintain its competitive position and make the most of the opportunities from the strategic partnership with Italy.

Source: https://doanhnghiepvn.vn/kinh-te/5-nam-thuc-thi-evfta-diem-tua-giup-thuong-mai-viet-nam-italy-cat-canh/20250729050146034