The EVFTA Agreement not only eliminates more than 99% of customs duties on goods, but also opens the Vietnamese services market to EU companies and protects EU investments in Vietnam. So what is EVFTA? What are the basic contents of the EVFTA agreement? How does this agreement impact Vietnam’s economy? All will be answered by Gia Huy Logistics Joint Stock Company in the following article.

What is EVFTA?
EVFTA (European-Vietnam Free Trade Agreement) is a free trade agreement between the European Union and Vietnam. This agreement was signed on June 30, 2019 and officially took effect on August 1, 2020 after being approved by both parties and completing internal approval processes.

EVFTA aims to promote trade and investment relationships between the EU and Vietnam. The agreement provides many benefits to both sides, including reducing tariffs and trade barriers, creating favorable conditions for businesses and consumers. It also includes commitments to labor rights, human rights and environmental protection.

The impacts of EVFTA on the economy
Two-way trade and investment from the EU into Vietnam after the EVFTA Agreement took effect have grown significantly, positively contributing to economic development and reducing unemployment. In particular, state budget revenue is expected to improve and grow in the medium and long term.

In addition to the overall impacts on different aspects of the economy, the EVFTA Agreement will also have separate impacts on each industry due to different levels of openness, competitive advantages and capacities. In addition, the indirect impact through pressure on institutional reform will also bring positive impacts to the economy. So what is the impact of the EVFTA agreement?

Impact on economic growth
According to research by the Ministry of Planning and Investment, if EVFTA commitments on tariff and non-tariff reductions are seriously implemented, combined with a number of external factors such as trade war, Brexit ( UK leaves the EU) and changes in policies of other countries, Vietnam’s economic growth will improve. The EVFTA Agreement is expected to contribute to an average increase in GDP from 2.18% to 3.25% (in the first 5 years of implementation), 4.57-5.30% (in the next 5 years) and 7.07-7.72% (in the following 5 years).

Impact on trade (export – import)
EVFTA is expected to have a strong impact on Vietnam’s import and export turnover. It is expected to help increase about 42.7% of Vietnam’s export turnover to the European market (EU) in 2025 and 44.37% in 2030 compared to without the Agreement. When considering Vietnam’s total export turnover to the world, it is expected that Vietnam’s turnover will increase on average from 5.21% to 8.17% (in the first 5 years of implementation), 11,12-15, 27% (in the next 5 years) and 17.98-21.95% (in the next 5 years).

A number of export industries to the EU market are forecast to increase sharply, including: agricultural products such as rice (up 65% by 2025), livestock and poultry meat (4%), pork (4%) ), sugar (8%), forest products (3%), and beverages and tobacco (5%). Manufacturing industries such as textiles (67%), footwear (99%), and garments (81%) are also forecast to grow. This also affects Vietnam’s imports from the EU, which are expected to increase sharply by about 33.06% in 2025 and 36.7% in 2030.

Impact on the state budget
Tariff reductions under the EVFTA Agreement will have a two-way impact on state budget revenue, including reducing import and export taxes as well as increasing revenue from economic growth. It is expected that the total state budget tax reduction from tax reduction according to the roadmap of the EVFTA Agreement is VND 2,537 billion.

On the other hand, state budget revenue will increase due to domestic revenue from the positive impact of economic growth under the influence of EVFTA, estimated at about VND 7,000 billion in the period from 2020-2030. This revenue will gradually increase according to the level of impact of the Agreement on growth. Therefore, the benefits of the EVFTA Agreement on budget revenue can be better utilized in the medium and long term.

Impact on FDI
When the EVFTA Agreement is implemented, Vietnam expects to see many improvements and changes in institutions and the investment environment, creating an attractive investment environment for EU investors. The investment commitments of the Agreement will help Vietnam continue to improve its economic structure, perfect our country’s institutions and business environment, and create favorable conditions for EU investors to participate in business. business in Vietnam.

In addition, commitments on investment facilitation and opening up Vietnam’s service industry to EU service providers will also increase, which is expected to promote FDI capital flows from the EU into Vietnam in the future. hybrid.

The EVFTA Agreement also opens up opportunities to improve the quality of investment from development partners as Vietnam creates favorable conditions for new investment areas and expands goods and services markets. This will bring new motivation for FDI into Vietnam, as well as changes in the structure of investment sectors and increased investment in potential areas such as clean and renewable energy.

Impact on laws, institutions and business environment
The Agreement provides an opportunity for Vietnam to continue reforming its laws and institutions towards international standards. This helps improve the business environment, create a more transparent environment, and promote domestic and foreign investment. As well as other business activities, including cross-border transactions and cross-border service provision.

Adjusting and amending legal regulations to comply with the EVFTA Agreement in areas such as intellectual property will also bring benefits to businesses, protecting investment results in creative fields. This motivates businesses to continue investing in technological innovation and attract technology transfer from abroad to improve the quality of Vietnamese products.

Through the above sharing, readers can better understand this agreement. Next, we will learn what the main contents of EVFTA are.

Main content of EVFTA
Commodity trade

For exports, after the EVFTA Agreement takes effect, the EU commits to reducing import taxes on about 85.6% of goods, equivalent to 70.3% of Vietnam’s total export value to the EU. Within 7 years, the EU will eliminate import taxes on 99.2% of goods, equivalent to 99.7% of Vietnam’s total export value.
For the remainder, about 0.3% of total export value, the EU commits to limiting tariffs for Vietnam to 0%. For the transportation of goods exported from the EU to Vietnam, Vietnam commits to eliminating tariffs as soon as the Agreement takes effect for 48.5% of goods (accounting for 64.5% of total import value). ).
After 7 years, 91.8% of goods, equivalent to 97.1% of the total export value from the EU, will have import taxes removed from Vietnam. After 10 years, more than 98.3% of goods (accounting for 99.8% of total import value) will no longer have tariffs. For the remaining 1.7% of EU goods, Vietnam will apply a roadmap longer than 10 years or comply with WTO commitments on tariff quotas.

Trade in services and investment

The Agreement provides commitments on trade in services and investment to create an open and favorable investment environment for businesses on both sides.

Government Procurement

Vietnam and the EU agree on regulations similar to the WTO’s GPA Agreement, including regulations on online bidding and establishing an electronic portal to publish bidding information. Vietnam will implement a roadmap to implement these commitments and the EU commits to providing technical support to Vietnam in implementing this obligation.

Intellectual Property

Intellectual property commitments include copyrights, inventions, inventions, commitments related to pharmaceuticals and geographical indications. Vietnam’s commitments on intellectual property are consistent with current law.

Other contain

The EVFTA Agreement also includes chapters on competition, state-owned enterprises, sustainable development, cooperation and capacity building as well as legal and institutional aspects. These contents are compatible with Vietnam’s legal system and provide a legal framework to enhance cooperation and promote trade development between both parties.

The above article shares what the EVFTA agreement is and information related to the agreement. Hope this will be useful information for you. Please contact Gia Huy Logistics Joint Stock Company today to update more about the field of international transportation.