Europe

EU-Vietnam deal paves way for major trade boost

Street in Hanoi - file pic Image copyright AFP
Image caption Hanoi: Western exporters and investors are impressed by Vietnam's economic growth

The EU and Vietnam have reached a free trade agreement - the second such EU deal with a South-East Asian nation.

The deal will remove nearly all tariffs on goods traded between the EU and Vietnam. Their annual trade is worth about €28bn (£20bn; $30bn).

Communist-run Vietnam exported €22bn of goods to the EU in 2014, including consumer electronics and textiles.

The deal is expected to take effect in late 2017 or early 2018. The EU has a similar free trade deal with Singapore.

The European Commission says Vietnam's major exports to the EU include telephones, electronic goods, footwear, clothing, coffee, rice, seafood and furniture.

EU exports to Vietnam are dominated by electrical machinery, aircraft, vehicles and pharmaceuticals.

Vietnam agreed to liberalise 65% of import duties on EU exports from the day the deal takes effect, and gradually eliminate the rest over a 10-year period.

Image copyright AFP
Image caption Textile worker in Hanoi: The EU is applying strict country of origin rules for imported garments

Market transition period

EU duties will be eliminated over a seven-year period. Some EU foods and beverages will only enter the Vietnamese market tariff-free after seven years.

The transition period to allow Vietnam to adapt to market liberalisation "breaks new ground compared to other EU agreements with developing countries", the Commission said.

EU Trade Commissioner Cecilia Malmstroem said the deal also contained clauses to protect workers' rights and ensure sustainable management of natural resources.

The deal includes strict rules of origin for garments, requiring the use of fabrics made in Vietnam, to prevent the deal becoming a back door for Chinese products to flood the EU market.

"Over 31 million jobs in Europe depend on exports, so having easier access to a growing and fast developing market like Vietnam, with its 90 million consumers, is great news," Ms Malmstroem said.

"And Vietnam's exporters will now get much easier access to the EU for their products, giving an important boost to the Vietnamese economy."

Elsewhere in Asia, the EU has a free trade deal with South Korea and is negotiating similar deals with Japan and Malaysia.

Vietnam is the second country after Singapore in the Association of South East Asian Nations (Asean) to reach such a deal with the EU.

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