Without any doubt Vietnam has become a major success story in terms of goods export over the last 10 years, from $57.1 billion to $264.1 worth of exports in 2019. That’s almost a 5 times increase and it may only be the beginning!
Indeed Vietnam is involved in numerous Free Trade Agreement and the biggest of all is just now coming into effect with the EVFTA (European Union – Vietnam Free Trade Agreement) ratified last June by the Vietnamese government and taking effect on the 1st of August 2020. Both the European and the Vietnamese Parliament have now ratified the agreement. Implementation is set for the 1st of August 2020.
What is the EVFTA (European Union – Vietnam Free Trade Agreement)?
This FTA almost completely eliminate all customs duties between the two blocks (99% of them). 65% of duties on EU exports to Vietnam will disappear as soon as the FTA enters into force, while the remainder will be phased out gradually over a period of up to 10 years. Regarding Vietnamese exports to the EU, 71% of duties will disappear upon entry into force, the remainder being phased out over a period of up to 7 years.
How does it impact me and my company? Are my products included in this Free-Trade agreement?
Let’s say you are already importing consumer goods (furniture, textile or electronic) or planning to import from Vietnam (this is probably the reason why you are now reading us J). Let’s see how you can benefit from this agreement and it can push you importing from Vietnam.
Importers looking to take advantage of the recently ratified EVFTA must understand and comply with rule of origin guidelines. Products will benefit from the tariff preferences under the EVFTA rules of origin provided that they can prove that they are “originating” from there. Products are considered originating under the agreement if they meet one of the following requirements:
- Wholly obtained and manufactured in Vietnam with spare parts or raw material from Vietnam.
- Or products produced in Vietnam with materials that have undergone sufficient working or processing within Vietnam.
You can check the full lists of products imported from Vietnam to EU with 0% tariff thanks to the list published in the Official Journal of the European Union on the 12th of June 2020. Click here for the link to the full article. You can then search your product with the HS code.
As you can see consumer goods are already affected by the EVFTA without any restrictions. From furniture products to home decorations, garment, footwear and electronic consumer goods.
Is it only related to tariff?
No, this agreement goes further than any previous trade agreements of which Vietnam is a signatory. For example the agreement also include 2 major aspects that will foster the relationships between the 2 regions:
- The EU-Vietnam trade deal also contains important provisions on intellectual property protection, labor rights and sustainable development. The FTA includes commitments to implement International Labor Organization core standards and UN conventions relating for example to the fight against climate change or the protection of biodiversity.
- The agreement is also completed with the EVIPA (Vietnam Investment Protection Agreement), also it still requires further ratification by all EU member states (but it should now be a matter of months). The EVIPA includes investment protection prohibiting discriminatory treatment and expropriation without compensation. The EVIPA will introduce a new Investor-State dispute settlement mechanism that will replace those mechanisms under existing Bilateral Investment Treaties (BITs) between Vietnam and individual EU member states.
V-Trust Inspection Service is an independent third-party inspection company founded in 2006 with a sound inspection network covering China, Vietnam, Cambodia, Malaysia, India and Bangladesh. Our 310+ full-time inspectors are well trained, reliable and experienced in inspection for a wide product range. In 2019, more than 3,100 importers and buyers all over the world benefited from V-Trust inspection services, and we conducted over 6200 inspections per month.
As in any other countries where V-Trust operate, all our V-Trust Vietnam inspectors are our full time inspectors only, hired by us, trained by us and working for us only. V-Trust also has a local office based in Ho-Chi-Minh city, happy to welcome you for a meeting!