EVFTA and EVIPA bring great and balanced benefits to both Vietnam and EU

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Vu AnhQuang, Ambassador Extraordinary and Plenipotentiary of Vietnam to the Kingdom of Belgium, Grand Duchy of Luxembourg, Head of the Vietnamese Delegation to the European Union (EU).

Mr. Ambassador, how do you assess the relationship between Vietnam and the EU today, especially on trade and investment? Are those results commensurate with the potential of Vietnam and the EU?

Vietnam is one of the Asia-Pacific countries with extensive cooperation with the EU; is the second ASEAN country with a Comprehensive Partnership-Cooperation Agreement (PCA) with the EU; is the first ASEAN country to sign a Defence-Security Cooperation Agreement with the EU, a Partnership Agreement on Forest Law Enforcement, Forest Governance and Trade. Notably, Vietnam is the second ASEAN country to sign the new generation EVFTA and EVIPA on June 30, 2019.

Economics, trade and investment are always the focus of Vietnam - EU relations. Vietnam is the second largest trading partner of the EU in ASEAN and the EU is Vietnam's second export market. Two-way trade has increased every year; in 2018 it exceeded 54 billion euros (over US$60 billion). The EU is currently the fifth largest foreign investor in Vietnam with a total value of $44 billion. EU investors have a technological advantage, which has contributed to the creation of new high-tech industries in Vietnam.

However, the above-mentioned results of trade and investment cooperation are not commensurate with the potential of both EU and Vietnam and there is plenty of room for both sides to strengthen cooperation and connectivity. The economic and commodity structure of Vietnam and the EU is not competitive but complementary. The potential of EU market is very large with 512 million people, per capita income of $36,580/year, total GDP of $18,800 billion, accounting for 22 percent of the world economy and bigger than the market of 11 countries participating in the Comprehensive Partnership Agreement and the Trans-Pacific Strategy (CPTPP). EU enterprises still have plenty of room to exploit the potential of Vietnam's market with more than96.2 million people, economic and living standards of the people growing rapidly andthe socio-political situation is stable. The EU being the fifth foreign investor in Vietnam is still too modest.

Both Vietnam and the EU are looking forward to EVFTA and EVIPA. According to the National Assembly's Foreign Affairs Committee, two new generation agreements can be approved by the European Parliament in the first half of 2020. What do you evaluate in terms of the feasibility of the EVFTA and EVIPA agreements being approved in the first half of next year?

Right! The EVFTA and EVIPA are very important for both Vietnam and the EU, not only for trade and investment. Therefore, both sides want the two agreements to come into effect soon.

Following the process in the European Parliament (EP), the EP's International Trade Commission is processing the EVFTA - EVIPA dossier, which is expected to vote on the two agreements on January 21, 2020 and submit to the EP. The EP is expected to review and vote to ratify the 2 Agreements in February 2019. I hope the EP will complete the procedure for ratifying the two agreements in the first quarter of 2020. I understand the National Assembly of Vietnam is also planning to ratify EVFTA and EVIPA agreements at the May 2020 meeting.

After taking effect, which opportunities will EVFTA and EVIPA bring to Vietnam, especially in terms of promoting exports ofgoods and attracting investment?

The EVFTA and EVIPA will bring great and balanced benefits for both Vietnam and the EU, not only economically but also in politics, society and environment; not only for enterprises but also for workers and consumers. Of course, the benefits of trade and investment are huge, because Vietnamese and EU economic products are complementary. The EVFTA, with the removal of 99 percent of tariff barriers, will create new opportunities and advantages for Vietnamese goods to increase access to the EU market, which is our second largest export market now.

The EVIPA will make EU enterprises reassuredto increase investment in Vietnam, especially strong EU industries such as high technology, clean energy, automation, finance-banking, transportation-ports, infrastructure andlogistics. The two agreements will help Vietnam promote economic restructuring, change the growth model, increase competitiveness, and create conditions for Vietnamese enterprises to participate more deeply in global value chains.

The EU is a "strict" market and the EVFTA and EVIPA are new generation deals, with many strict terms that Vietnam must overcome. Could you please evaluate the preparations of Vietnam and recommendations for policy makers and the Vietnamese business community to make best use of the opportunities provided by these agreements?

The World Trade Organization and the EU assess them as "new generation, comprehensive" agreements, linked to "social, labour and environmental standards". The EVFTA has a high level of commitment compared to the FTAs that we have signed, such as rules of origin of goods and customs, food safety, intellectual property, legal-institutional issues andsustainability.

Ministries, branches and business associations have researched and organized many workshops to inform and exchange about the opportunities and challenges of the EVFTA and EVIPA. Following the EU commitment, the National Assembly passed the revised Labor Code in November 2019, acceded to the International Labor Organization (ILO) Convention in June 2019, offered a roadmap for accession two basic conventions on remaining labour.

The EVFTA and EVIPA are two new generation comprehensive agreements, so to make good use of opportunities, policy makers should integrate their implementation into Vietnam's Socio-Economic Development Strategy in the 2021-2030 period, the socio-economic development programme in the 2021-2025 period, associated with the policy of restructuring the economy towards inclusive development, bringing benefits to enterprises and workers (such as creating more jobs, increasing income and improving working conditions), so that people are the main beneficiaries of the EVFTA and EVIPA agreements.

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In addition to policy making, creating a favourable business environment by the State, the role of business associations is very important, such as supporting access to information on markets, industries, investment and supporting connect, helping Vietnamese enterprises reduce costs, especially small and medium enterprises. Besides taking the initiative to seize opportunities, Vietnamese enterprises should be aware that to export goods to the EU market, with product quality, enterprises need to fulfill their social responsibilities, ensure labour standards and environmental protection as the EVFTA has prescribed.