Maintaining the growth rate of economic cooperation between Vietnam and the EU

According to data from the Vietnam Customs Department, in the period from 2020 to 2024, Vietnam-EU bilateral trade grew by 46.5%, reaching more than 64.6 billion USD, compared to 44.1 billion USD five years ago.

Illustrative photo (Source: VNA)

In a recent interview with VNA reporters in Berlin, Vietnamese Trade Counselor in Germany, Ms. Dang Thi Thanh Phuong, summarized the achievements and prospects of the Vietnam - European Union Free Trade Agreement (EVFTA) after 5 years of officially taking effect from August 2020.

According to her, this is an important step forward to promote economic cooperation between Vietnam and the EU, while opening up many great opportunities for Vietnamese businesses, but also posing many challenges that need to be overcome.

According to data from the Vietnam Customs Department, in the period from 2020 to 2024, Vietnam-EU bilateral trade grew by 46.5%, reaching more than 64.6 billion USD, compared to 44.1 billion USD five years ago.

Of which, Vietnam's exports to the EU increased by 56.4%, from 31.1 billion USD to nearly 48.7 billion USD, while imports increased by 13%, from 14 billion USD to 15.9 billion USD. In the German market, bilateral trade also recorded positive growth, reaching an increase of 17%, of which Vietnam's exports to Germany increased by 20% and imports from Germany increased by 13%.

Although there has not been a clear breakthrough, EVFTA has played an important role in maintaining the growth of Vietnam-EU trade in the context of many fluctuations in the world such as the COVID-19 pandemic, the Russia-Ukraine conflict or the disruption of the global supply chain.

According to her, EVFTA has created great opportunities for Vietnam's key industries to take advantage of the import tax elimination policy. As soon as the agreement comes into effect, the EU will eliminate import taxes on 85.6% of tax lines, equivalent to 70.3% of Vietnam's export turnover to the EU.

After 7 years, this rate will increase to 99.2%, almost all of Vietnam's export turnover will enjoy preferential tariffs. Some items such as rice, coffee, seafood, vegetables, textiles, and footwear are all likely to enjoy a 0% tax rate right from the start, helping businesses improve their competitiveness and expand their markets.

This advantage is especially evident in agricultural and aquatic products such as coffee, seafood, cashew nuts, and tea, which have seen remarkable growth.

Specifically, Vietnam's coffee exports to the EU increased by 120%, from 983 million USD in 2020 to 2.2 billion USD in 2024; vegetables and fruits increased by 65.6%, from 146 million USD to 242 million USD; footwear exports increased by 52.4%, from 3.7 billion USD to 5.65 billion USD.

This is a clear demonstration of making good use of EVFTA incentives, especially for large enterprises focusing on improving quality, meeting standards on rules of origin and building sustainable brands.

However, Ms. Dang Thi Thanh Phuong said that industries such as textiles, footwear, wood and pharmaceuticals still have many points to overcome to maximize the advantages brought by EVFTA.

The main reasons stem from internal factors such as outdated production technology, lack of in-depth investment in design and branding, along with difficulties in meeting the rules of origin, especially the “from fabric onwards” rule, causing many small and medium-sized enterprises to face difficulties because raw materials are mainly imported from China, Korea and other sources outside the EU, making them ineligible for preferential treatment under the rules of origin.

Technical barriers and strict standards on origin, technology and design also reduce the competitiveness of Vietnamese enterprises.

Besides, according to her, the pharmaceutical industry has not yet flourished because domestic enterprises are still weak, lack European GMP standards, and are not yet able to compete with European generic drugs.

In the wood sector, the decline in turnover also shows the challenge of meeting requirements on legal origin and converting technology to suit market tastes.

Sharing the common assessment of many trade experts, EVFTA is a driving force for Vietnam to carry out institutional reforms and sustainable development with standard regulations on labor, environment, intellectual property, etc.

Counselor Dang Thi Thanh Phuong also said that Vietnam has made clear efforts to improve working conditions and the environment to comply with EVFTA, such as ratifying a number of core conventions of the International Labor Organization (ILO) such as Convention No. 98 on the Right to Organize and Collective Bargaining, Convention 105 on the Abolition of Forced Labor, and implementing the revised Labor Law of 2019 (effective from 2021) which allows the establishment of employee representative organizations at enterprises outside the Vietnam Trade Union system - in accordance with the requirements of EVFTA.

In addition, Vietnam has also passed the Law on Environmental Protection 2020, emphasizing sustainable development, extended producer responsibility (EPR), environmental impact assessment, and increased community participation; Implementing commitments within the framework of the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), such as the target of net zero emissions by 2050; Amending the Law on Intellectual Property in 2022, including strengthening intellectual property rights protection, more clearly regulating the protection of geographical indications, patents, copyrights, improving intellectual property rights enforcement mechanisms, increasing penalties and measures to handle violations.

It can be said that Vietnam has made important steps in institutional reform to implement the EVFTA, especially in the fields of labor, environment and intellectual property.

However, the actual implementation still has many limitations such as the effectiveness of labor organizations, the assurance of intellectual property rights, and the enforcement of environmental laws are not consistent... and much effort is needed to strengthen the effective implementation of commitments, promote the participation of businesses and people, raise business awareness of EVFTA and related international standards, continue to improve transparent and public institutions, and strengthen international cooperation...

Counselor Dang Thi Thanh Phuong said that the implementation of EVFTA is expected to continue to bring benefits to businesses as many products will continue to be exempted from taxes. By 2027, the EU will eliminate about 99.2% of tax lines, equivalent to 99.7% of export revenue.

In particular, in the context of the US increasing tariffs on other countries, the EU and Vietnam both need to diversify their markets and partners. Vietnam has a great advantage as it has an FTA with the EU, with very high commitments on tariffs for many of Vietnam's key export groups.

To promote the long-term effectiveness of EVFTA, Ms. Dang Thi Thanh Phuong said that Vietnam needs to make stronger steps in upgrading production capacity, green and sustainable transformation, developing human resources, and promoting localization.

This is not only an opportunity to expand the market, but also a lever to upgrade the growth model, enhancing Vietnam's position in the regional and global value chain.

Especially in the context that the EU is stepping up efforts to diversify its markets by signing an FTA with the MERCOSUR bloc in December 2024 and actively negotiating FTAs with Thailand, Indonesia, Australia, New Zealand, etc., Vietnamese enterprises need to quickly improve their capacity and meet market standards so as not to lose their advantage when many direct competitors of Vietnam also benefit from the FTAs that have been and are being negotiated with the EU./.

Source: https://baolangson.vn/giu-vung-nhip-tang-truong-hop-tac-kinh-te-viet-nam-va-eu-5054422.html