The road is long, let's continue together...

EVFTA has gone through many "headwinds" with Vietnam and the European Union (EU) such as the Covid-19 pandemic or geopolitical changes.

To date, the EVFTA has basically achieved its set goals in promoting the overall relationship between the two sides. (Source: VGP)

On August 1, 2020, the EU-Vietnam Free Trade Agreement (EVFTA) officially came into effect. This is a new generation, high-standard and most comprehensive free trade agreement (FTA) that the EU has signed with a developing country in the Asia-Pacific region.

After 4 years of implementation (2020-2024), EVFTA, together with Vietnam and the EU, have experienced many "headwinds" such as the Covid-19 pandemic severely affecting the global supply chain or geopolitical changes. However, the trade achievements in recent times have become a highlight in the economic cooperation between the two sides.

To date, the EVFTA has basically achieved its set goals in promoting the overall relationship between the two sides. The EU has become Vietnam’s fourth largest trading partner and vice versa, Vietnam has become the country with the largest market share compared to other ASEAN countries exporting to the EU.

The biggest "halo"

According to the Department of Multilateral Trade Policy (Ministry of Industry and Trade), among the new generation FTAs ​​that Vietnam has participated in, EVFTA is the agreement that has brought the most positive results.

After 4 years of EVFTA taking effect, trade is considered a big "halo" between the two sides. In 4 years, Vietnam's export turnover to the 27-member bloc is estimated to reach about 200 billion USD, growing from 12% to 15%.

In July 2024 alone, Vietnam's trade surplus with the EU is estimated at 20.1 billion USD, up 19.4% over the same period in 2023; export turnover increased by 15.8%; import increased by 8.7%. The 27-member bloc is among the top 6 largest import and export markets of Vietnam.

Latest data from the General Department of Customs shows that in the first half of 2024, exports to most key markets in the EU increased compared to the same period in 2023.

Of which, the Netherlands is the largest export market, reaching more than 6.14 billion USD, accounting for 24.88% of total export turnover of goods to the EU, up 27.12% over the same period in 2023. Next is the German market reaching nearly 3.82 billion USD, accounting for 15.46%, up 3.27%; Italy reaching nearly 2.53 billion USD, accounting for 10.23%, up 9.23%...

On the other hand, thanks to the EVFTA "highway", Vietnamese consumers have more and more opportunities to access diverse and high-quality products from Europe at more reasonable prices. Import tariffs for many products from Europe to Vietnam are being reduced to 0% according to the Agreement's commitment.

Vietnamese lychees are sold at Carrefour Tongres supermarket in Brussels. (Source: VNA)

More than commercial benefits...

With the EVFTA, Vietnam becomes one of only two ASEAN countries (along with Singapore) to have a free trade agreement with the EU.

More than just trade benefits, the Agreement contributes to strengthening Vietnam's position as an attractive investment destination for European countries, contributing to creating a breakthrough in foreign direct investment (FDI) in Vietnam.

The Vietnam-EU Investment Protection Agreement (EVIPA), signed at the same time as the EVFTA, is still in the process of ratification and has not been implemented yet, but FDI flows from the EU to Vietnam have accelerated significantly in recent years.

According to the Ministry of Planning and Investment, as of August 20, 2021, the EU had 2,240 valid projects with a total registered capital of 22.25 billion USD, accounting for 5.55% of the total registered FDI capital in Vietnam. The average project size of the EU in Vietnam is 9.9 million USD/project, lower than the average project size of 11.7 million USD/project.

EVFTA has contributed to bringing the EU to the 6th position among the largest FDI investors in Vietnam with 28 billion Euros in 2,450 projects.

Notably, Vietnam has "won" the trust of EU businesses in its economy and attracted more than 800 million Euros in investment in the first 9 months of 2023 in the context of a global FDI decline.

Accumulated to the end of the first half of 2024, the Netherlands is the country with the largest investment capital among EU countries in Vietnam with 14.56 billion USD for 441 projects.

In the more distant future, with the Vietnamese Government's increasingly open and comprehensive business policies, European businesses are showing increasing confidence in the Southeast Asian country's economy and investment environment.

On the EVFTA "highway", both Vietnam and the EU still have many issues that need improvement. Illustrative photo. (Source: Moit.gov)

Together we overcome difficulties!

Despite reaping so many "sweet fruits", it cannot be denied that on the EVFTA "highway", both Vietnam and the EU still have many issues that need to be improved. For example, the export rate is still low, Vietnamese goods only account for more than 2% of the EU market. The rate of businesses taking advantage of incentives is only over 20%.

Mr. Luong Hoang Thai, Director of the Multilateral Trade Policy Department, also acknowledged that businesses face many difficulties in accessing the EU market due to many strict standards related to product quality.

In addition, apart from foreign-invested enterprises, most Vietnamese enterprises have not yet built their own brands or have appropriate strategies to enhance their recognition in the EU market. Some enterprises are not fully aware of the opportunities and advantages that EVFTA brings. These limitations affect the ability of Vietnamese enterprises to take advantage of EVFTA incentives to develop and expand their markets in Europe.

Meanwhile, the 27-member bloc is developing a raft of new labor and environmental regulations to meet growing consumer demands, a process that will have an impact on goods imported into the EU.

"In addition, the agreement will only be successful if Vietnam and the EU can establish new supply chains and have closer ties between businesses on both sides. EVIPA is a component of EVFTA, then separated for separate ratification, but so far some EU countries are still in the process of completing domestic procedures and have not been able to put it into effect," said Mr. Luong Hoang Thai.

Vietnamese Trade Counselor in the Kingdom of Belgium and the EU Tran Ngoc Quan commented that the 27-member bloc is currently experiencing a strong transformation trend with strict regulations related to climate change prevention, green transformation, and deforestation prevention...

To overcome the above challenges, Mr. Luong Hoang Thai proposed solutions such as:

Firstly, Vietnam is determined to continue improving the business environment through implementing amendments and supplements to domestic legal regulations and perfecting institutions to build a transparent and favorable business environment in line with international standards and practices.

Second, maintain and expand propaganda and dissemination activities about EVFTA through forms such as organizing seminars, talks, propaganda through books, magazines, publications and electronic information pages to improve businesses' understanding and awareness of EVFTA.

Third, Vietnam coordinates with the EU to help businesses meet new regulations on labor, environment, and food safety issued by the EU.

Fourth, the key point is to support businesses, including small and medium-sized enterprises, to improve technology and enhance competitiveness.

Sharing the same view, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) Nguyen Cam Trang recommended that enterprises need to proactively plan production, business and delivery; proactively innovate production and business methods, innovate technology, create quality products, and better meet the requirements of the EU market.

As the EVFTA enters its fifth year of implementation, difficulties and challenges still lie ahead for the Government and businesses of both sides to "overcome". At the same time, there is still great room for both sides to fully exploit the benefits and reap the "sweet fruit" from this historic agreement.

Source: https://baoquocte.vn/nhin-lai-4-nam-thuc-thi-evfta-duong-con-dai-hay-cung-nhau-buoc-tiep-282289.html