The EU-Vietnam Free Trade Agreement (EVFTA) was officially signed in Hanoi in the afternoon of June 30 2019. The agreement provides a cooperation framework between the two nations, helping to simplify customs regulations, eliminate or reduce import tariffs, build mechanisms and boost trade.
The agreement has welcomed technical support from the EU for Vietnam in sanitary and phytosanitary measures, including food safety issues. Also, once the deal becomes effective, likely to be ratified in 2020, trading of major Vietnamese commodities such as nuts, coffee, tea and seafood will improve.
The EU-Vietnam FTA agrees to give a full tax exemption on dairy exports into Vietnam. This would give EU dairy exporters the platform to compete with New Zealand dairy producers and will give a competitive advantage over US rivals. Before the trade deal, EU dairy exports were taxed up to 20% for entry into Vietnam. Vietnam already ranks in the top 10 importers of EU powdered milk products, such as whole milk powder (WMP), skimmed milk powder (SMP) and whey powder. The volumes exported by the EU are likely to rise once the deal becomes ratified in 2020.
In the nuts industry, Vietnam is the top global processor and exporter of cashews. In 2018, the EU bought 25% of Vietnam’s global cashew exports worth USD 820 million. Similarly to the dairy, once the deal takes effect, the exports of cashews from Vietnam to the EU are expected to experience a boost.
The bi-lateral pact has been increasing European investments in Vietnam as well, helping raise the country’s trade value and strengthening economic ties between the EU and Vietnam.