Vietnam - EU Free Trade Agreement (EVFTA): New momentum for trade

New momentum for Vietnam - EU trade

The Vietnam - EU Free Trade Agreement (EVFTA), the "highway" connecting Vietnam with the market of 27 EU countries since August 2020, has brought about rapid changes in two-way trade in goods. If in 2019, Vietnam - EU import and export reached 49.8 billion USD, by the end of 2024, this figure will have increased to 68.4 billion USD.

EVFTA tạo sức bật mới cho thương mại Việt - EU

After the EVFTA took effect, many Vietnamese agricultural products quickly appeared and expanded their markets in the EU. Photo: Duc Thanh

A positive sign is that Vietnamese exports to the EU have improved significantly. In 2019, exports only reached 35.7 billion USD, but by the end of 2024, exports to the EU will increase to nearly 52 billion USD, an increase of 18.5% compared to 2023.

In the first four months of this year, the EU continued to choose Vietnam as a reliable supplier of goods, importing 18.5 billion USD from Vietnam, an increase of nearly 13% over the same period last year.

Despite the decline in EU import demand in 2024, exports to the bloc are still increasing strongly. This confirms the advantages that EVFTA brings to Vietnamese goods. Thanks to that, the EU maintains its position as Vietnam's fourth largest trading partner, after China, the US and South Korea.

Just a few days after the EVFTA came into effect, Vina T&T Group , a major producer and exporter of fruits and agricultural products, exported fresh coconuts, dragon fruits, and green-skinned grapefruits to the EU. Since then, the company’s export orders to the EU have grown at double-digit rates each year thanks to its ability to meet and comply. All fresh fruit shipments that Vina T&T exports from Vietnam to the EU are subject to tariff incentives under the EVFTA.

Chairman of Vina T&T Group, Mr. Nguyen Dinh Tung said that the free trade agreement (FTA) that Vietnam signed with the EU has helped businesses open up the market, bringing many tropical agricultural products to the EU market.

Along with that, major export industries such as electronics, textiles, footwear, agriculture, forestry, and fishery products are accessing the 27 EU markets more effectively, increasing by several billion USD each year. This can be clearly seen when looking at the growth of some major industries last year. Of which, exports of computers, electronic products and components reached 10.76 billion USD, up 66.9% (equivalent to an increase of 4.31 billion USD); machinery, equipment, tools, and other spare parts reached 8.72 billion USD, up 24.9% (equivalent to an increase of 1.74 billion USD); phones of all kinds and components reached 7.38 billion USD...

But the benefits do not only come to Vietnamese businesses. Thanks to the bilateral FTA, the benefits to European businesses are also significant. The results of the Business Confidence Index (BCI) survey by the European Chamber of Commerce in Vietnam (EuroCham) show that more than half of the European businesses surveyed said they received benefits from the EVFTA at different levels, the most being tariff reductions and increased competitiveness in the market.

The implementation of EVFTA is a lever for European businesses to access the Vietnamese consumer market with over 100 million people and a rapidly growing middle class.

According to the European Statistical Office (Eurostat) and the United Nations Conference on Trade and Development (UNCTAD), Vietnam is currently the EU's 15th largest trading partner in goods, surpassing many other emerging economies .

Positive investment and trade prospects

EuroCham's BCI Index survey for the fourth quarter of 2024 on business prospects for the next 5 years shows that 58% of EU businesses are relatively optimistic, 17% are very optimistic.

BCI is considered a "measure" of business sentiment of European companies operating in Vietnam.

“The optimism about the outlook for the next five years reflects a growing awareness of Vietnam’s potential as a stable and attractive environment for long-term growth of European businesses,” the EuroCham survey results stated.

Vietnam holds many advantages that not every country has. These include a strategic location, large reserves of rare earths, abundant natural resources, an abundant labor force, and a government that always accompanies businesses on every step of their development. The ability to adapt, attract investment, and maintain growth momentum will be key factors in shaping Vietnam’s long-term future.

Mr. Bruno Jaspaert, Chairman of EuroCham

In addition, 75% of European business leaders in Vietnam believe that Vietnam will continue to be a priority choice for investment projects. This positive sentiment is reinforced by Vietnam’s continuous efforts to improve the business environment, despite facing many challenges.

Among the 27 EU member states, the countries that trade the most with Vietnam are Germany, the Netherlands, Italy, France, etc. Of which, bilateral trade between Germany and Vietnam in 2024 will reach 11.62 billion USD.

Ms. Helga Margarete Barth, Ambassador of the Federal Republic of Germany to Vietnam, said that Vietnam has developed into an important investment center for German businesses in ASEAN, attracting investment in traditional sectors such as manufacturing and chemicals, as well as in future-oriented sectors such as electronics, finance and information technology.

“From 2025 onwards, trade and investment cooperation between Germany and Vietnam promises great prospects. This partnership is not only important for the economic growth of both countries, but also serves as a strategic alliance in an increasingly complex geopolitical context. In a situation of increasing global instability, Germany and the EU are reliable partners alongside Vietnam,” Ambassador Helga Margarete Barth emphasized.

Investment flows from the EU to Vietnam continue to maintain a positive trend. The total registered capital of the EU in Vietnam reached over 35 billion USD, focusing on high technology, renewable energy, pharmaceuticals, and logistics. Some typical projects include Lego (1 billion USD), Bosch (340 million USD), BW Industrial (100 million USD) ...

EuroCham representative also said that Vietnam is one of two countries in ASEAN that has a bilateral FTA with the EU, thereby contributing to creating attractiveness for European businesses.

Vietnam’s location in ASEAN is considered a great advantage for European businesses when investing in factories. From Vietnam, their goods can easily access important Asian markets with large consumption such as China, Japan, Korea and ASEAN member countries, making supply chain management easier and reducing transportation costs in foreign trade transactions.

The driving force to attract capital flows from Europe and promote bilateral trade is policies to remove obstacles in business activities, which the Government attaches special importance to.

At the workshop within the framework of the recent EuroCham White Book 2025 launch ceremony, EuroCham Chairman Bruno Jaspaert affirmed that Vietnam is a strategic, stable and long-term partner of Europe.

“I believe that Vietnam’s economy will grow by 8% this year. On this growth momentum, European businesses in Vietnam will not retreat, but on the contrary, continue to step up their activities to take advantage of export opportunities,” said Chairman Bruno Jaspaert.

In particular, the EU-Vietnam Investment Protection Agreement (EVIPA) is moving closer to full ratification, with 18 out of 27 EU member states having ratified it. Once ratified, the agreement will officially take effect, opening a promising new chapter for trade and investment between Vietnam and the EU.

At this time, with a series of new EU standards that have been and are about to be implemented, Vietnam's manufacturing industries are focusing on investment activities to transform production to meet EU regulations on sustainable development, such as the European Green Deal, the Carbon Border Adjustment Mechanism (CBAM), and the Circular Economy Action Plan.

Implementing green and sustainable production strategies requires investment in finance, resources and time, but will bring many advantages to businesses, helping to improve competitiveness, better commercialize products, and exploit the EU market more sustainably.

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Source: https://congthuong.vn/hiep-dinh-thuong-mai-tu-do-viet-nam-eu-evfta-suc-bat-moi-cho-thuong-mai-391256.html