Version: 1.0.20.21 (2020-10-12 14:45)

EU-Vietnam Free Trade Agreement

The agreement at a glance

The EU-Vietnam Free Trade Agreement entered into force on 1 August 2020.

The EU-Vietnam Investment Protection Agreement will enter into force after all EU Member States have given it their formal consent.

The trade agreement

  • removes customs duties, red tape and other obstacles that European firms face when exporting to Vietnam
  • makes it easier to trade in key goods like electronics, food products and pharmaceuticals
  • opens up Vietnam’s market for EU services exports, for example in transport and telecoms.

The investment agreement, once in force, will

  • further improve the investment climate
  • offer more certainty to European and Vietnamese investors.

What are the benefits for your business?

The trade agreement benefits businesses by

  • eliminating 99% of all tariffs and partially removing the remaining 1% through limited zero-duty quotas;
  • reducing regulatory barriers and overlapping red tape
  • protecting intellectual property rights, including geographical indications awarded to special regional food and drink products, such as Cognac, Rioja wines or Feta cheese
  • opening up services and public procurement markets
  • ensuring the agreed rules can be enforced.

Vietnam removed 65% of its duties on EU goods the day the agreement entered into force. It will gradually remove the remainder by 2030.

The EU will progressively remove its duties on imports from Vietnam by 2027.

This asymmetric approach takes into account the fact that Vietnam is a developing country.

The trade agreement removes tariffs on a range of key EU export products

  • most machinery and appliances no longer have to pay Vietnamese import duties of up to 35% – the rest will no longer do so by August 2025
  • motorcycles with engines larger than 150 cc will see Vietnamese import duties of 75% gradually fully removed by August 2027
  • most cars will see Vietnamese import duties of 78% gradually removed by August 2030
  • car parts will see Vietnamese import duties of up to 32% gradually removed by August 2027
  • about half of EU pharmaceuticals no longer have to pay Vietnamese import duties of up to 8% – the rest will no longer do so by August 2027 EU textile exports no longer have to pay Vietnamese import duties of 12%
  • nearly 70% of EU chemicals exports no longer have to pay Vietnamese import duties of up to 5% – the rest will be able to enter free of tariffs of up to 25% after three, five or seven years.

Besides eliminating tariffs, Vietnam has also agreed to

  • remove its existing export duties on its exports to the EU
  • not increase the few duties that will remain.

How will the trade agreement benefit the EU's farming communities?

European producers and exporters of agro-food products will benefit from the Vietnam's growing market and the progressive removal of tariffs.

 

Current Vietnamese
import duty

Import duty
gradually removed by

Beef and lamb

20%

August 2023

Frozen pork

15%

August 2027

Fresh pork, offal and hams

Up to 25%

August 2029

Poultry and offal

Up to 40%

August 2030

Dairy products

Up to 15%

August 2025

Most cheeses with a Geographical Indication

Up to 15%

August 2023

Wines and spirits

50% and 48% respectively

August 2027

Beer

35%

August2030

Food preparations

Up to 40%

August 2027

Bakery and pastries

Up to 40%

August 2025

Chocolate

30%

August 2027

Pasta

20-38%

August 2027

Certain pasta with meat filling

20-38%

August 2030

You can find a detailed description of the export conditions for agri-food products in this handbook. Handbook for exporters to Vietnam.

For the most sensitive products, the EU will only open its market to Vietnamese exports to a limited extent to prevent EU producers from being adversely affected.

The EU grants Vietnam zero-duty tariff quotas of fixed, limited volume with no annual increase for

  • dextrins and other modified starches
  • eggs and egg yolks
  • ethanol
  • garlic
  • manioc starch
  • mannitol
  • mushrooms
  • rice
  • sorbitol
  • sugar and products with high sugar content
  • sweetcorn.

The trade agreement recognises and protects Geographical Indications for wines, spirits, agricultural products and foodstuffs produced in the EU or Vietnam.

Sanitary and phyto-sanitary measures aim to protect human, animal and plant life and health. Such measures include

  • the recognition of low/free pest or disease areas
  • ensuring transparency and exchange of information
  • mechanisms for avoiding trade barriers.

More details are provided in the section below.

How big is the Vietnamese market? How much trade does the EU do with Vietnam?

With a population of over 97 million, Vietnam is a key EU export market in Asia.

For the EU, Vietnam is the 17th largest trade in goods partner in the world and the second biggest in Southeast Asia.

For the EU, Vietnam is an important source of raw materials and other inputs for goods.

In 2019, Vietnam had a positive balance in agri-food trade with the EU

  • Vietnamese exports to the EU – €2.16 billion
  • EU exports to Vietnam – €1.14 billion.

The trade agreement will likely see further growth in trade between the EU and Vietnam in this sector.

In 2018, the EU had a positive balance in services trade with Vietnam

  • EU services exports to Vietnam – €2.1 billion
  • Vietnamese services exports to the EU – €1.8 billion.

Tariffs

For exports to Vietnam

Before the trade agreement, Vietnamese applied import duties of up to 50% on EU exports of agri-food products and up to 78% on industrial goods, such as cars and machinery. Under the trade agreement, Vietnam is legally bound to progressively reduce its tariffs within three and 10 years after August 2020.

For imports into the EU

As of 1 August 2020, approximately 84% of EU imports from Vietnam enter duty-free.

Sectors that benefit from this include

• pharmaceuticals

• most petrochemicals (certain tariffs on petrochemicals will only be phased out after three years).

The EU will phase out nearly all the remaining customs duties applying to imports from Vietnam by November 2030.

The EU will continue to apply tariffs on a few products even after the end of the phase out period, including on some fish products (tilapia, skipjack tuna).

Tariff dismantling Annex 2-A of the trade agreement sets out in detail the stages for dismantling tariffs for different categories of goods over five years.

 

You can find a detailed tariff-dismantling schedule for your specific product in My Trade Assistant.

 

Rules of origin

This section introduces the main rules of origin and the origin procedures of the trade agreement.

Origin is the 'economic nationality' of traded goods. If you are new to the topic, you can find an introduction to the main concepts in the goods section.

To qualify for the preferential rate your product needs to comply with certain rules that prove its origin.

Where can I find the rules?

Rules of origin are set out in the Protocol concerning the definition of ‘originating products’ and method of administrative cooperation of the EU-Vietnam Free Trade Agreement.

Is my product 'originating' according to the EU-Vietnam Free Trade Agreement?

For your product to qualify for the lower or zero preferential tariff under the EU-Vietnam Free Trade Agreement, it must originate in the EU or Vietnam.

A product is considered to originate in the EU or in Vietnam if it is

 

Examples of the main types of product-specific rules in EU trade agreements

 

You can find the applicable product specific rules in My Trade Assistant.

 

Tips to help you comply with the product specific rules

There is additional flexibility to help you comply with product specific rules, such as tolerance or cumulation.

Tolerance

In the EU-Vietnam Free Trade Agreement, the tolerance rule allows the producer to use non-originating materials that are normally prohibited by the product specific rule as long as their net weight or value does not exceed

  • 10% of the weight of the product for agricultural and processed agricultural products falling within Chapters 2 and 4 to 24 of the Harmonized System, other than processed fishery products of Chapter 16
  • 10% of the ex-works price of the product for industrial products other than textiles and clothing.

Specific tolerances apply to textiles and clothing classified in Harmonized System Chapters 50 to 63, which are included in Note 6 and Note 7 of Annex A "Introductory notes to the list in Annex II".

This tolerance cannot be used to exceed any maximum-value threshold of non-originating materials listed in the product-specific rules.

Cumulation

The EU-Vietnam Free Trade Agreement provides for four ways of cumulating origin. Please note, however, that currently only the first one applies (bilateral cumulation)

  • bilateral cumulation: materials originating in Vietnam can be counted as originating in the EU (and vice versa) when used in the manufacture of a product in the EU
  • cumulation with an ASEAN country which has a preferential agreement with the EU, in which materials listed in Annex III can be counted as materials originating in Vietnam when further processed or incorporated into one of the products listed in Annex IV. Currently this cumulation does not apply
  • under certain conditions fabrics originating in the Republic of Korea can be considered as originating in Vietnam when further processed or incorporated into one of the products listed in Annex V obtained in Vietnam. Currently this cumulation does not apply.

At the request of a Party, under certain conditions fabrics originating in a country with which both the EU and Vietnam apply a preferential trade agreement can be considered as originating in the EU or Vietnam when further processed or incorporated into one of the products listed in Annex V to this Protocol obtained in that Party.

Currently this cumulation does not apply.

Other requirements

Your product must also meet all other applicable requirements of the Protocol (such as insufficient working or processing, or the non-alteration rule).

Non-alteration rule

Originating products must be transported from the EU to Vietnam (and vice-versa) without being further processed in a third country. Some operations can be conducted in a third country if the products remain under customs supervision, such as

  • adding or affixing marks, labels, seals or any documentation to ensure compliance with specific domestic requirements of the importing country
  • preserving products in good conditions
  • storage
  • splitting consignments.

The customs authorities may request evidence of compliance with the rule, such as

  • contractual transport documents such as bills of lading
  • factual or concrete evidence based on marking or numbering of packages
  • any evidence related to the goods themselves.
Duty drawback

Refunding of duties previously paid on non-originating materials used to produce a product that is exported under a preferential tariff is allowed under the EU-Vietnam Free Trade Agreement.

Origin procedures

How to claim a preferential tariff

Exporters and importers have to follow the origin procedures.

 

The procedures are set out in Section B of the Protocol on Rules of Origin of the agreement. They clarify, for example, how

  • to declare the origin of a product
  • to claim preferences or
  • the customs authorities can verify the origin of a product.

Please also see Guidance on Rules of Origin – EU-Vietnam Free Trade Agreement.

Importers can claim preferential tariff treatment based on an origin declaration provided by the exporter.

Proof of origin

Exporters from the EU can self-declare that their product originates in the EU by providing a statement on origin that can be completed by

For products originating in Vietnam, exporters can use the following proofs of origin

  • certificate of origin
  • an origin declaration made out by
  • any exporter provided that the total value of the products does not exceed €6,000
  • after Vietnam has notified such a system to the EU (this is not yet the case), an exporter approved or registered in accordance with the relevant legislation of Vietnam.

What should the proof of origin contain?

Statement on origin

The statement on origin should appear on an invoice or on any commercial document identifying the product.

The text of the origin declaration can be made out in any of the official languages of the EU and can be found in Annex IV of the Protocol on Rules of Origin of the agreement. The importing country may not require that the importer submit a translation of a statement on origin.

Submission and validity

The statement on origin remains valid for 12 months from the date it was made out Normally the statement on origin will be for one consignment but it may also cover multiple consignments of identical products during a period not exceeding 12 months.

EU-Vietnam FTA guidance on statement on origin for multiple shipments of identical products provides additional explanations.

Certificate of origin

A certificate of origin shall be issued by the competent authorities of Vietnam, by using the specimen of Annex VII.

Submission and validity

A certificate of origin shall be issued as soon as possible but not later than 3 working days after the date of export (the declared shipment date).

A certificate of origin can be issued retrospectively in specific situations

  • it was not issued at the time of export because of errors, involuntary omissions or other valid reasons
  • a certificate of origin was issued but was not accepted upon import for technical reasons, or
  • the final destination of the products concerned was not known at the time of export. It is possible to issue a duplicate of a certificate of origin in the case of, for example, theft, loss, destruction. It shall be valid for 12 months.
Verification of origin

The customs authorities may verify whether a product imported is indeed originating or fulfils other origin requirements.

The EU-Vietnam Free Trade Agreement is based on the following principles

  • verification is based on administrative cooperation between customs authorities of the importing and the exporting Party
  • checks on the origin of the products are done by local customs.

Visits of the importing Party to the exporter are not allowed. Once verification is concluded, the authorities of the exporting Party makes the final determination of origin and inform of the results the authorities of the importing Party.

Product requirements

Pharmaceutical products

For pharmaceutical/medicinal products and medical devices, the agreement ensures the use of international standards, practices and guidelines developed by the

  • World Health Organization
  • Organisation for Economic Co-operation and Development (OECD)
  • International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use
  • Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation Scheme
  • International Medical Device Regulators Forum.

Recognising these bodies as a benchmark for standard-setting is essential for increased regulatory cooperation between the EU and Vietnam. Under the agreement, Vietnam agrees to promptly publish or make available at an early appropriate stage its rules on pricing, reimbursement or regulation of pharmaceutical/medicinal products or medical devices. Vietnam will also simplify requirements for marketing authorisation. This will reduce delays and costs making products available in Vietnam and is of particular importance for research–based medicines.

Alcoholic beverages

Vietnam will

  • progressively remove its high tariffs on wine (50%) and spirits (48%) over seven years and for beer (35%) over 10 years
  • ease limitations on licenses for manufacturing of beverages and for distribution
  • protect EU Geographical Indications.

Health and safety requirements - Sanitary and Phytosanitary Rules

Both the EU and Vietnam have stringent laws on food safety, animal and plant health. The trade agreement aims to make it easier to export agricultural products, while safeguarding the necessary level of protection for human, animal and plant health. Increased dialogue and trade should in time lead to increased trust between the Parties. These are some of the main benefits of this part of the agreement.

EU as a single entity

The agreement’s provisions on Sanitary and Phytosanitary Rules and their implementation will capitalise on the added-value of the EU’s harmonised rules on sanitary matters. The agreement will facilitate a single and transparent framework for the approval of EU exports of food products to Vietnam. Vietnam commits itself to applying the same import requirements to like products coming from all EU Member States. This is an important step to accelerating the approval of EU export applications and to avoiding discriminatory treatment.

Pre-listing

Once Vietnam has approved a category of food products of animal origin and is confident that the competent authority of the Member State in question has the capacity to check and monitor compliance of the EU food safety requirements, Vietnam will automatically allow imports from all the establishments submitted by that EU Member State. This approval of establishments in the exporting Party without prior individual inspections is known as pre-listing. It will avoid cumbersome and costly inspections of individual EU establishments.

Exports of fruits and vegetables

The agreement contain provisions to make it easier to export or import fruit and vegetables.

When the EU or Vietnam carries out a pest risk analysis, they will do so without undue delay when they get the request from the exporting party. In the event of difficulties, the EU and Vietnam will agree on a schedule for carrying out the pest risk analysis.

 

Find the specific rules and requirements for your product in My Trade Assistant.

 

Technical Barriers to Trade (TBT)

Technical requirements affect most products we buy. These technical requirements can be created by mandatory technical regulations and voluntary standards that determine a product’s

  • size and shape
  • design
  • labelling, marking and packaging
  • function and performance.

The procedures to check whether a product complies with these requirements may also be a technical barrier to trade. These so-called 'conformity assessment procedures' can include product testing, inspection and certification.

 

Governments usually introduce such technical requirements in the public interest. For example, to protect

  •  human health and safety
  •  animal and plant life and health
  •  the environment
  • consumers from deceptive practices.

 

Even though the EU and Vietnam may share similar aims when they introduce their technical regulations, actual standards and procedures for checking products may differ, creating an obstacle to trade. The trade agreement aims to improve how the EU and Vietnam work together on technical requirements for products, reducing unnecessary costs and facilitating access to information on product requirements.

Technical Regulations

Vietnam has agreed to

  • assess alternatives to any proposed technical regulations and to do an impact assessment of them
  • base technical regulations on international standards
  • review current technical regulations to bring them in line with international standards.
Conformity assessment

Vietnam has agreed to

  • accept the Supplier’s Declaration of Conformity (SDoC) as showing conformity with domestic law
  • ensure businesses have a choice of conformity assessment facilities
  • ensure accreditation bodies and conformity assessment bodies are independent of each other and have no conflict of interests
  • consider joining or encourage testing, inspection and certification bodies to join international agreements or arrangements for harmonising and/or facilitating acceptance of conformity assessment results.
Standards

The agreement includes commitments to

  • encourage standardising bodies to participate in the preparation of international standards by international standardising bodies
  • use international standards as a basis for developing domestic standards
  • avoid duplication of, or overlap with, the work of international standardising bodies
  • regularly review national and regional standards not based on international standards, with a view to bringing them in line with international standards
  • notify technical regulations and conformity assessment procedures that make voluntary standards mandatory.
Transparency

The agreement contains commitments to

  • ensure all technical regulations and mandatory conformity assessment procedures are publicly available on official websites free of charge
  • allow businesses and other interested persons from the EU and Vietnam to participate in any public consultation on new technical regulations on an equal basis
  • reply to comments made by the other Party on proposed technical regulations.
Market surveillance

The trade agreement contains provisions to ensure no conflict of interest between:

  • the market surveillance function and the conformity assessment function
  • market surveillance bodies and businesses subject to control or supervision.

Report a trade barrier

Cars - Non-tariff barriers

Eliminating customs duties does not mean automatic access to the trade partner’s market: EU goods still have to comply with Vietnam’s rules regulating the car sector. The trade agreement contains an Annex devoted to addressing unnecessary non-tariff barriers in the car sector, which aims at facilitating trade. The Annex enters into effect in August 2023.

Customs clearance documents and procedures

The trade agreement improves customs procedures, making it easier and cheaper for businesses to clear customs.

To strengthen the security of the supply chain, the EU and Vietnam will enter into mutual recognition of trade partnership programmes, such as the EU ‘Authorised Economic Operators’ programme.

Documents

The step-by-step guides describe the different types of documents you should prepare for customs clearance of your products. Depending on your product, the customs authorities may require all or some of the elements below

  • commercial invoice (find the specific requirements regarding its form and content in My Trade Assistant)
  • packing list
  • import licences for certain goods
  • certificates showing your product complies with mandatory product regulations, such as health and safety requirements, labelling and packaging
  • proof of origin - origin declaration.

For more certainty, you may wish to apply for Binding Tariff Information and/or Binding Origin Information in advance.

 

For detailed information about the documents you need to present for customs clearance for your product, go to My Trade Assistant.

 

Procedures

To find out how to prove the origin of your products so you can benefit from a preferential tariff, please refer to the section on rules of origin above. General information on customs procedures.

Intellectual Property Rights and Geographical Indications

The trade agreement also contains rules to protect and enforce intellectual property rights.

Geographical Indications

Geographical Indications are signs used on traditional food and drink products that have special qualities or enjoy a particular reputation due to where they are produced. Examples are Roquefort cheese, Rioja wine and Parma ham. Geographical Indications let consumers know that the product is genuine and not fake.

Under the agreement, Vietnam has strengthened its existing arrangements for protecting Geographical Indications by setting up a system to register them in Vietnam. This makes it illegal to sell fake products under the same name as the genuine article.

As a result, 169 EU and 39 Vietnamese Geographical Indications for wines, spirits and certain agricultural products enjoy levels of protection from being copied in Vietnam comparable to those in the EU. Vietnamese consumers’ will be more aware of authentic quality EU food products, wines and spirits.

Full list of EU and Vietnamese Geographical Indications

Patents

Under the trade agreement, Vietnam has agreed to an effective mechanism to compensate owners of patents for shorter patent life resulting from unreasonable delays in the granting of the first marketing authorisation.

Copyright and related rights

The trade agreement brings Vietnam’s copyright laws into line with those of the EU and other countries so that broadcasters and organisers of public performance pay royalties to producers of sound recordings and performers.

Trademarks

The EU and Vietnam will protect well-known trademarks in line with recommendations set out by the

  • Paris Union for the Protection of Industrial Property
  • World Intellectual Property Organization.

Protecting test data

Data on pharmaceutical and agrochemical products will be protected for five years.

Industrial designs

Vietnam will join the Hague Agreement Concerning the International Registration of Industrial Designs and to protect designs for at least 15 years. Plant varieties Vietnam will protect plant variety rights in line with the International Convention for the Protection of New Varieties of Plants (UPOV). It means that new plant varieties, for example those that give better yields or are pest-resistant (such as certain rice varieties resistant to rot) will be protected.

Enforcement

The agreement improves the legal framework for enforcement at all levels. Vietnamese authorities and customs officers also gain more powers and better tools to address infringements.

Rights holders will be able to ask Vietnam’s customs authorities to seize and destroy goods that infringe intellectual property rights.

The Southeast Asia Intellectual Property Rights Helpdesk offers a Helpline service for direct support on intellectual property for small businesses.

Services

The trade agreement covers a wide range of services and provides additional market access for services providers and for investment in manufacturing.

EU and Vietnam have agreed to reduce or remove certain restrictions on

  • how many firms can supply services
  • the value of services transactions or assets
  • the number of services operations or quantity of services outputs
  • how many people may be employed
  • the type of foreign-owned subsidiary that can be set up locally
  • foreign shareholding/equity limits.

This applies to a wide range of sectors, including

  • telecommunications
  • financial
  • computer and related
  • transport
  • environmental
  • business, including professional services
  • postal
  • distribution.

The EU and Vietnam have also agreed to ensure that the same rules and regulations apply to domestic and foreign services providers in certain sectors so as to create a predictable business environment and a level playing field.

This applies to

  • postal services: dominant market players will not engage in anti-competitive practices; fair licensing procedures; independence of the regulator
  • telecommunication services: major suppliers must provide other operators access to specific network elements on terms and conditions that are reasonable and transparent; independence of the regulator; number portability
  • international maritime transport
  • computer services
  • domestic regulation: comprehensive provisions on licensing procedures and professional qualifications; investors applying for a licence to provide a service or to invest must be treated fairly and protected from arbitrary restrictions; right to appeal
  • international maritime transport services: clear definitions of the services committed; fair conditions for access to ports; and end to cargo sharing arrangements; provision of feedering and re-positioning of empty containers in certain ports.

 

EU

Vietnam

Professional services

  • architectural services
  • accounting
  • engineering and integrated engineering services
  • urban planning and landscape architectural services
  • management consulting services
  • international commercial arbitration services
  • legal services
  • accounting
  • taxation
  • architectural services
  • integrated engineering
  • urban planning and urban landscape
  • medical and dental services
  • veterinary services
  • nursing services, physiotherapists and para-medical personnel

Computer and related services

All related services in this field

All related services in this field

Research and Development

  • natural sciences and interdisciplinary sciences except for publicly funded research and development services
  • social sciences and humanities
  • natural sciences

Business services

  • real estate services advertising
  • rental/leasing services without operators
  • market research
  • management consulting services
  • advisory and consulting related to manufacturing
  • printing and publishing
  • convention services
  • translation
  • design services
  • interior design and other specialty design services
  • collection agency services
  • credit reporting services
  • duplicating services
  • telecommunications consulting services
  • telephone answering services
  • advertising
  • market research
  • management consulting services
  • technical testing and analysis services
  • services related to manufacturing

Postal services

All related postal and courier services

All postal services, excluding public services and reserved services

 

Telecommunication services

Services consisting of the transmission and reception of signals by electromagnetic means, excluding broadcasting

Services (excluding broadcasting), such as

  • basic and value added services, both facilities and non-facilities based (fixed, mobile satellite networks)

Construction services

 

All construction and related engineering services (listed in the W/120 Sectoral classification list)

  • All construction services (listed in the W/120 Sectoral classification list)

 

Distribution

services

  • commission agents' services
  • wholesale trade services
  • retailing services
  • franchising services
  • commission agents' services
  • wholesale trade services
  • retailing services
  • franchising services

Environmental services

  • waste water services
  • solid/hazardous waste management, excluding cross-border transport of hazardous waste
  • protection of ambient air and climate treatment and clean-up of soil and waters
  • remediation and clean-up of soil and waters
  • noise and vibration abatement
  • protection of biodiversity and landscape
  • other environmental and ancillary services
  • sewage services,
  • refuse disposal services,
  • refuse collection and disposal services, except landfill services
  • hazardous waste management
  • sanitation and similar services
  • cleaning services of exhaust gases
  • noise abatement services
  • nature and landscape protection services
  • environmental impact assessment services

Financial services

  • insurance and insurance-related services
  • banking and other financial services
  • insurance and insurance related services
  • banking and other financial services

 

 

  • hotel, restaurants and catering excluding catering in air transport services
  • travel agencies and tour operators services (including tour managers
  • tourist guide services
  • hotel and restaurant including lodging services, catering food and drinks services
  • food and beverage serving services, except meal serving services in eating facilities run by the government
  • travel agencies and tour operator services

Recreational, cultural and sporting services

 

  • entertainment services (including theatre, live bands, circus and discotheque services)
  • news and press agencies services
  • libraries, archives, museums and other cultural services
  • sporting services
  • recreation park and beach services
  • entertainment services(including theatre, live bands and circus services
  • electronic games business

Transport

  • maritime and maritime auxiliary services
  • internal waterways transport
  • air transport services
  • rail transport services
  • road transport
  • services auxiliary to all modes of transport
  • other modes of transport

Other transport services

  • maritime and maritime auxiliary services
  • internal waterways transport
  • air transport services
  • rail transport services
  • road transport
  • services auxiliary to all modes of transport

Manufacturing

  • food and beverages
  • clothing
  • footwear
  • machinery
  • paper products
  • computing and electrical machinery
  • food and beverages
  • clothing
  • paper products
  • chemicals
  • certain machinery equipment
  • computing and telecom equipment

E-commerce

The EU and Vietnam have agreed

  • not to impose custom duties on electronic transmissions
  • to promote the development of electronic commerce between them
  • to maintain a dialogue on regulatory issues raised by electronic commerce
  • E-commerce should not impair intellectual property rights
  • the development of e-commerce must be compatible with international standards of data protection.

Public Procurement

Under the agreement, public procurement will be as transparent and its procedures as fair that set out in trade agreements the EU has signed with developed and more advanced developing countries.

It covers

  • all Vietnamese ministries at central level, including for infrastructure such as roads and ports, plus the Committee on Ethnic Minority Affairs and the Government Inspectorate
  • public bodies in Hanoi and Ho Chi Minh City, which represent 50 % of Vietnam’s non-central government public procurement
  • branches of the national electricity operator Electricity of Vietnam (EVN) and Vietnam Railways (VNR);
  • 34 public hospitals controlled by the Ministry of Health
  • two major universities and two major research institutes
  • almost all construction services, including procurement under the Ministry of Transport, and dredging services.

Key issues

Vietnam is a developing country so under the agreement it will benefit from differentiated treatment and transitional measures.

It will have a transitional period of 15 years to progressively lower thresholds to a level comparable to those offered by other countries that are members of the international General Procurement Agreement. For instance, the initial threshold of 1.5 million Standard Drawing Rights (SDR) for goods and services for procurement done by central government entities shall be gradually reduced to 130 000 SDR.

Vietnam also agreed to develop a central web portal for advertising procurement contracts. It must be operational no later than August 2030.

Trade and Sustainable Development

Supporting economic growth, social development and environmental protection are three basic elements for achieving sustainable development. Trade policies can have wide-ranging effects on the economy, employment, labour standards, social cohesion and the environment. It the EU wants to ensure its trade policy supports sustainable development within the EU, in its partner countries and globally.

The main objectives are

  • promoting mutual supportiveness between trade and investment, labour, and environmental policies
  • ensuring increased trade and investment do not come at the expense of workers and environmental protection
  • ensuring that domestic levels of environmental and labour protection are consistent with core international standards and agreements.

Labour Standards

The EU and Vietnam commitment themselves to implement International Labour Organization (ILO) conventions they have ratified. Vietnam also commits itself to ratify ILO conventions on fundamental rights it has not yet signed, such as

  • the 2006 Ministerial Declaration of the United Nations Economic and Social Council on Generating Full and Productive Employment and Decent Work for All
  • the ILO Declaration on Fundamental Principles and Rights at Work
  • the fundamental ILO conventions.

Environment and Climate Change

The EU and Vietnam commit themselves to effectively implement multilateral environmental agreements they are party to, such as

  • the United Nations Convention on Biological Diversity
  • the United Nations Convention on International Trade in Endangered Species (CITES)
  • the United Nations Framework Convention on Climate Change (UNFCCC) Investment The EU and Vietnam agree to improve market access for investment in services sectors and non-services sectors, such as manufacturing. Greater access to the Vietnamese market should attract foreign investors and create opportunities for developing manufacturing in Vietnam.

Investment

The EU and Vietnam agree to improve market access for investment in services sectors and non-services sectors, such as manufacturing. Greater access to the Vietnamese market should attract foreign investors and create opportunities for developing manufacturing in Vietnam.

Restrictions on foreign investment have been eased in:

  • the food sector, such as processing of fish and aquaculture products
  • the fertiliser sector
  • ceramics
  • assembly of marine engines
  • services related to general purpose machinery
  • agricultural machinery
  • domestic appliances
  • bicycles
  • licenses for manufacturing soft drinks.

The EU and Vietnam have signed an Investment Protection Agreement. It will enter into force after all EU Member States have given it their formal consent.

Once in force, the investment agreement will further improve the investment climate and offer more certainty to investors. It will replace the 21 bilateral investment treaties in force between Vietnam and EU Member States.

The investment agreement will ensure investments have a high level of protection while preserving the EU’s and Vietnam’s right to regulate to pursue legitimate public policy objectives, such as the protection of health, public safety or the environment.

It will provide European and Vietnamese investors with basic guarantees that governments will respect certain fundamental principles of treatment foreign investors can rely on when making investment decisions.

These guarantees include

  • non-discrimination
  • no expropriation without prompt and adequate compensation
  • the possibility to transfer and repatriate funds relating to an investment
  • a general guarantee of fair and equitable treatment and physical security
  • a commitment that governments will respect their own written and legally binding contractual obligations towards an investor.

Under the investment agreement, investors will have the option of a modern and reformed way to resolve disputes involving investment – the Investment Court System.

The cornerstones of the new Investment Court System are

  • a permanent investment Tribunal of First Instance
  • an Appellate Tribunal for appeals.

The institutional nature of the Investment Court System and the possibility to appeal against decisions will ensure that the investment agreement is interpreted in a legally correct and predictable manner.

The investment agreement also makes disputes more cost-effective and faster for users, and, hence, also more accessible for smaller businesses. It provides for

  • judges’ salaries to be paid by the EU and Vietnam (the norm in international courts) and not by the parties to a dispute;
  • clear procedural deadlines
  • a voluntary mediation mechanism to solve disputes amicably and fast
  • the possibility to submit claims to a sole judge (instead of a division of three) where claims are brought by smaller businesses or the amount of damages is relatively small
  • the possibility to hold consultations by videoconference, particularly if a smaller business is involved, before the first formal steps of dispute settlement.

The investment agreement also includes a provision on the transition from the bilateral Investment Court System established under the agreement to a multilateral investment court as and when such a court comes into existence. Discussions on multilateral reform of investor-state dispute settlement, including on the creation of a multilateral investment court, are currently taking place at the United Nations Commission on International Trade Law (UNCITRAL).

Useful links and contacts

Vietnamese Ministry of Industry and Trade

Address: 54 Hai Ba Trung, Hoan Kiem, Ha Noi

Email: bbt@moit.gov.vn Tel: (+84) 24 2220 2108

Fax: (+84) 24 2220 2525

Delegation of the European Union to Vietnam

Address: 24th floor, West wing, Lotte Center Hanoi 54 Lieu Giai street, Ba Dinh district, Hanoi

Email: Delegation-vietnam@eeas.europa.eu

Tel: (+84) 24 3941 0099

Fax: (+84) 24 3946 1701

Further links:

Short description

 

The European Union and Vietnam have a Free Trade Agreement and an Investment Protection Agreement that entered into force on 1 August 2020.

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