Vietnam-UAE Relations: Waiting for a New “Boost”

In recent years, trade between Vietnam and the United Arab Emirates (UAE) has been extremely vibrant. The UAE is currently Vietnam's largest trading partner in the Middle East and North Africa region, with bilateral trade reaching approximately US$5 billion.

Prime Minister Pham Minh Chinh meets with UAE President Mohammed bin Zayed Al Nahyan. Photo: Duong Giang - VNA.

However, according to experts, trade relations between the two countries could boom even more if they sign the Comprehensive Economic Partnership Agreement (CEPA).

It's getting more and more vibrant.

Vietnam and the UAE officially established diplomatic relations on August 1, 1993. Over the past 30 years, the friendly relations and cooperation between Vietnam and the UAE have developed positively in many areas, including politics , diplomacy, trade, investment, labor, and tourism. Political trust and mutual understanding between the two countries have been continuously strengthened.

Politically, in recent years, exchanges between the two countries have been very active at many levels. Notably, on the Vietnamese side, there were visits to the UAE by the Minister of Industry and Trade Nguyen Hong Dien (April 2023) and Vice President Vo Thi Anh Xuan (May 2023), and on the UAE side, visits to Vietnam by the UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan (June 2023) and the Minister of State for International Trade, Ministry of Foreign Trade of the UAE Thani bin Ahmed Al Zeyoudi (June 2023)... These visits have contributed to deepening bilateral relations and opening up many opportunities for cooperation between the two countries in many fields in the future.

In terms of trade, the UAE is currently Vietnam's largest trading partner in the Middle East, with trade turnover in recent years consistently reaching approximately US$5 billion. Over the past years, Vietnam has consistently maintained a trade surplus with the UAE market, exceeding US$4 billion annually. Notably, export product groups in which Vietnam has a competitive advantage, such as agricultural products, seafood, processed foods, textiles, footwear, electronics, machinery, and equipment, continue to show growth in both volume and value. Currently, the two countries are striving to achieve a trade turnover target of US$10 billion in the near future.

In terms of investment, the UAE is one of the largest investors in Vietnam. UAE investors currently have 38 direct investment projects in Vietnam, with a total capital of US$71.4 million (cumulative as of October 2023).

A new boost is coming soon.

During his visit to the UAE in April 2023, Minister Nguyen Hong Dien and the Minister of State for International Trade, Ministry of Foreign Trade of the UAE, Thani bin Ahmed Al Zeyoudi, signed a Ministerial Declaration on the launch of CEPA negotiations.

Minister of Industry and Trade Nguyen Hong Dien and UAE Minister of State and Foreign Trade Thani Bin Ahmed Al Zeyoudi announce the launch of CEPA negotiations. Photo: VNA.

According to Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan, since the start of negotiations, Vietnam and the UAE have held three rounds of negotiations on the CEPA covering the following areas: trade in goods, trade in services, investment facilitation, rules of origin, intellectual property, digital trade, trade remedies, sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), customs and trade facilitation, government procurement, legal and institutional issues, economic cooperation, and small and medium-sized enterprises.

"With these contents, the CEPA between Vietnam and the UAE is considered a comprehensive agreement and promises to ensure a balance of interests for both Vietnam and the UAE," Deputy Minister Nguyen Sinh Nhat Tan said.

Deputy Minister Nguyen Sinh Nhat Tan also stated that with the determination and efforts at all levels of Vietnam and the UAE, the two sides have made significant progress and have signed a working minutes on the final package of negotiating contents, which can be reported to the leaders of both sides for decision.

According to experts, if signed, CEPA would be Vietnam's first free trade agreement with an Arab country in the Middle East and Africa. Therefore, CEPA is expected to be a new "boost" for trade relations between Vietnam and the UAE.

Experts believe that CEPA will boost Vietnam's exports to the UAE and encourage UAE investment in Vietnam. Furthermore, this agreement could help expand cooperation between the two countries into other potential areas such as innovation, renewable energy, investment, logistics, technology, tourism, and agriculture.

Explaining the above assessment, experts said that in the UAE's economic structure, agriculture accounts for only 0.9% (mainly livestock farming and date cultivation), while industry accounts for 49.8% (mainly crude oil extraction and processing). Therefore, the UAE is almost entirely dependent on external sources to meet domestic demand for agricultural products, seafood, processed foods, textiles, footwear, machinery, equipment, tools, spare parts, telephones, electronic products, etc. Meanwhile, these are products in which Vietnam has a competitive advantage.

Conversely, the UAE possesses many strengths in the energy sector thanks to its large oil and gas reserves, a developed oil and gas extraction and processing industry, and its important position and role in the global energy industry. If signed, the CEPA would provide a legal basis for the two countries to strengthen cooperation in oil and gas exploration and production, exchange technical expertise, and train high-quality human resources in this important field.

Deputy Minister Nguyen Sinh Nhat Tan stated that the UAE is located at the gateway to trade between three continents—Asia, Europe, and Africa—and is one of the world's commercial and financial centers. Thanks to its open policies and favorable business environment, the UAE is becoming an important international transit market via sea and air.

Therefore, according to Deputy Minister Nguyen Sinh Nhat Tan, along with its role as an important export market for Vietnam in the Middle East and its strategic position as a leading re-export center in the region, the UAE will act as a transit hub for goods, helping to bring Vietnamese export products to other markets in the Middle East and Africa.

Trong Kien