Members of the European Parliament (MEPs) gave their consent to the EU-Vietnam free trade agreement (EVFTA) by 401 votes, 192 votes against and 40 abstentions.
Separately, the Parliament agreed by 407 votes for, 188 against and 53 abstentions to an investment protection agreement (IPA) providing an investment court system with independent judges to settle disputes between investors and state.
Once Council formally concludes the trade agreement and the parties notify each other that their procedures are closed, it can enter into force. For the investment protection agreement to enter into force, EU member states’ parliaments first need to ratify it. Vietnam’s National Assembly is expected to vote on the trade pact in May.
EVFTA, the most modern, comprehensive and ambitious agreement ever concluded between the EU and a developing country will contribute to setting high standards in the region and could lead to a future region-to-region trade and investment agreement, said the Parliament.
The agreement is “a strong signal in favour of free, fair and reciprocal trade, in times of growing protectionist tendencies and serious challenges to multilateral rules-based trade”, MEPs stressed.
The EVFTA is expected to help increase Vietnam’s GDP by 2.18-3.25 per cent in the 2019-2023 period, and 4.57%-5.03 per cent in the following five years. The Vietnamese Ministry of Planning and Investment estimated that Vietnam’s export to the European Union is projected to grow by 20 per cent by 2020; about 43 per cent by 2025; and over 44 per cent by 2030.
The agreement will remove virtually all tariffs between the two parties in ten years, protect emblematic European products and allow Europe to access the Vietnamese public procurement market.
Regarding customs duties, 65 per cent of EU exports to Vietnam will be immediately duty free, with the rest, including motorcycles, cars, pharmaceuticals, chemicals, wines, chicken and pork, gradually liberalised over ten years.
Meanwhile, 71 per cent of Vietnamese exports to the EU will be duty free on day one, with the rest catching up in seven years.
On geographical indications, 169 emblematic EU products such as Parmigiano Reggiano cheese, Champagne, or Rioja wine, will enjoy protection in Vietnam, as will 39 Vietnamese products in the EU.
For services, EU companies will have improved access to business, environmental, postal and courier, banking, insurance and maritime transport services in Vietnam.
Vietnam is the EU's second largest trading partner in the Association of Southeast Asian Nations after Singapore, with trade in goods worth €47.6 billion a year and €3.6 billion when it comes to services.