EVFTA Agreement – leverage for domestic businesses

The EVFTA Agreement is expected to support Vietnam and the EU to step up efforts to revive the economy severely damaged by the unpredictable epidemic of acute respiratory infections COVID-19.

The European Union (EU) -Vietnam Free Trade Agreement (EVFTA) officially took effect from August 1, when both sides determined their maximum efforts to accompany businesses to declare Large market waterfall with more than 450 million people of the EU and take advantage of the market attractiveness of 95 million Vietnamese consumers.

The agreement is expected to support Vietnam and the EU to step up efforts to revive the economy severely damaged by the highly unpredictable epidemic of respiratory infections COVID-19.

Just before the agreement was put into effect, on July 27, Prime Minister Nguyen Xuan Phuc had a phone call with the President of the European Commission Ursula von der Leyen.

This is a particularly important moment of the comprehensive Vietnam-EU cooperation partnership, opening up great opportunities and prospects to bring the bilateral relationship to new heights, and at the same time a significant event. when taking place right on the occasion of the 30th anniversary of Vietnam-EU establishing diplomatic relations (1990-2020).

During the conversation, the two leaders emphasized the importance and pledged to continue to work closely to effectively implement EVFTA, maximize the benefits that the agreement can bring to both sides. contribute to promoting trade liberalization, cooperation and association in the Asia-Pacific region, contributing to a growth recovery after the profound effects of the COVID-19 pandemic.

EVFTA is expected to create a strong impetus for Vietnam-EU trade relations. Brussels is currently Vietnam’s fourth largest trading partner, second export market and fifth investor.

The Agreement is a golden opportunity to help both sides promote cooperation and mutual development.

Immediately after EVFTA comes into effect, 84% of tariff lines, accounting for 71% of Vietnam’s exports to the EU, will be reduced to 0%.

After 7 years, 99.2% of tariff lines, accounting for 99.7% of Vietnam’s exports to the EU, will be eliminated. This is the highest level of commitment that a partner gives to Vietnam.

On the other hand, Vietnamese consumers will benefit when 65% of EU exports to Vietnam will be exempt from import tax right after the agreement takes effect. The rest will be phased out according to 10-year roadmap …

Right at the time EVFTA came into effect after more than 9 years of efforts to negotiate and ratify the agreement, the COVID-19 pandemic is still going very complicated and unpredictable.

The global economy is in a sharp decline, and Europe and Vietnam are not out of this trend.

International trade is among the most vulnerable of the pandemic. In the coming months, the world may experience a continuous decline in the volume of international trade.

The supply and demand of the global economy is severely disrupted due to the closure of the manufacturing facilities, a breakdown in the supply chain, and the decrease in demand for some products. Consumers around the globe are more likely to save than consume.

According to a recent assessment of the United Nations Conference on Trade and Development (UNCTAD), the COVID-19 epidemic will lead to a reduction of global foreign direct investment by 5 to 15% by 2020.

Despite unfavorable circumstances, officials from both sides of Vietnam and the EU in Europe share the same view that, facing the challenges of this particularly difficult time, EVFTA is an important boost to the economy. sacrifice of both sides.

Head of the EU negotiating team, Deputy Director General of European Trade Helena Konig, expressed confidence that in these difficult times, open rules-based trade can contribute to the social economy rapidly. and sustainability, helping to restore and strengthen competitiveness in the post-COVID-19 environment.

According to her, EVFTA – the most comprehensive trade agreement that the EU has ever signed with a developing country – plays a very important role in that context.

Ms. Konig said that the agreement is in line with Vietnam’s development strategy and economic agenda, equipping the country with additional tools to promote growth and create jobs.

With the aim that Vietnamese and EU companies can take advantage of the benefits of EVFTA, the EU side has worked closely with the Vietnamese authorities in preparing for implementation by providing technical assistance.

Ms. Konig said that the EU has actively supported to improve the business and investment environment in Vietnam, which is also beneficial for EU companies that want to penetrate the market of nearly 100 million Vietnamese consumers.

The EU side wants to ensure that European businesses are aware of the opportunities offered by EVFTA and have participated in many outreach activities to promote the agreement in many EU member states and in Vietnam, this is a series of seminars that are organized online.

The website of the European Commission also introduces a wealth of documents and information about EVFTA, including specific instructions explained in simple and clear language so that both EU and Vietnamese businesses can have can be prepared.

For his part, the Vietnamese Ambassador to the Kingdom of Belgium, Chief Representative of the Vietnamese delegation to the EU Vu Anh Quang said that the COVID-19 epidemic certainly delayed the implementation of some relevant contents of the agreement. But these negative effects are short-term only.

The economic recession in both the EU and Vietnam due to the impact of the pandemic will make the “economic benefits” that EVFTA bring in the first phase of implementation will not be as expected because the enterprises of the two sides cannot. Utilizing all incentives due to supply chain disruption, circulation disruption and the demand of the two sides economies is still weak.

However, in the long term, once the epidemic is under control and the stimulus packages of both sides come into play, the two sides’ trade will explode again, by which time we can see more clearly. huge impacts of EVFTA on Vietnam-EU trade relations.

Ambassador Vu Anh Quang said that the Vietnamese Representative was particularly interested in promoting the EU’s technical assistance to help Vietnam improve its EVFTA implementation capacity and work together in strengthening deep communication. both business and people about the importance and content of the Agreement.

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