The newly signed Vietnam-UAE Comprehensive Economic Partnership Agreement (CEPA) has been widely welcomed by experts and businesses for its potential to deliver significant benefits across trade and various economic sectors. This article explores the CEPA’s key impacts and its implications for fostering broader cooperation between the Middle East and ASEAN.
As Vietnam’s first free trade agreement with an Arab country, the CEPA sets the stage for enhanced cooperation across various sectors between the two nations. It is also anticipated to facilitate Vietnam’s access to Arab markets and the UAE’s entry into ASEAN markets.
The agreement comprises 18 chapters, 15 annexes, and 2 bilateral letters, covering key areas such as:
- Trade in goods
- Services and investment
- Rules of origin
- Technical barriers to trade (TBT)
- Sanitary and phytosanitary measures (SPS)
- Customs
- Trade defense
- Government procurement
- Intellectual property
- Legal and institutional frameworks
Vietnam’s Minister of Industry and Trade Nguyen Hong Dien highlighted that the CEPA will enhance the competitiveness of Vietnamese products in the UAE, creating valuable opportunities for Vietnamese businesses to rival and potentially surpass other exporters in the region.
According to data from the General Department of Vietnam Customs (GDC), bilateral trade from 2018 to 2023 averaged approximately US$5 billion annually, with Vietnam enjoying a trade surplus of US$3-4 billion each year. In 2023, two-way trade reached nearly US$4.7 billion, reflecting a 5.9 percent increase year-on-year. Trade during the first eight months of 2024 exceeded US$4.47 billion, representing a 45 percent surge compared to the same period in 2023.
Vietnam’s key exports to the UAE:
- Mobile devices, computers, and electronic components
- Electrical and household electronics
- Pepper and aquatic products
- Footwear and garments
- Plastics and furniture
UAE’s key exports to Vietnam:
- Raw plastics and petroleum-based products
- Liquefied petroleum gas (LPG)
- Animal feed ingredients
- Common metals and chemicals
In the first eight months of 2024, Vietnam’s exports to the UAE rose by 47.5 percent to US$3.85 billion, while UAE imports to Vietnam increased by 32.5 percent to US$623.5 million, highlighting robust trade momentum.
Vietnam – a promising market for UAE businesses
The signing of the CEPA between the UAE and Vietnam has garnered praise from UAE officials, who emphasize the various opportunities this agreement offers for UAE businesses.
Securing supply chains through ASEAN linkages
The UAE government expects the CEPA to bolster industrial exports to Vietnam and the broader ASEAN region, which had an estimated population of 673.02 million in 2022.
UAE Minister of State Ahmed bin Ali Al-Sayegh emphasized that the agreement aligns with the UAE’s foreign trade strategy, which focuses on mutual interest and growth. “Our agreement with Vietnam marks another important milestone in the UAE’s foreign trade strategy, as Vietnam’s robust export economy—especially in textiles and agriculture—aligns with our global connectivity to secure supply chains between East and West. By strengthening relations with Vietnam, we also enhance our connections with ASEAN, a high-growth region that offers numerous opportunities for the private sectors of both countries,” said the minister.
Investment opportunities in energy and infrastructure
The CEPA opens new avenues for investment in critical sectors like energy and infrastructure. Vietnam’s expanding renewable energy sector presents significant opportunities for UAE expertise and investment. In 2023, Vietnam produced 69 percent of ASEAN’s total solar and wind energy, indicating its outsized role in the region’s energy transition efforts.
Sustainable agriculture collaboration
Vietnam and the UAE have committed to joint efforts on climate change, food security, and environmental sustainability. Vietnam’s strong agricultural sector, especially in rice, cashews, coconuts, spices, and dairy, combined with the UAE’s global trade network, strengthens both nations’ efforts to promote sustainable agriculture, optimize food supply chains, and mitigate climate change impacts.
Non-oil exports
The UAE aims to increase its non-oil exports to over AED 800 billion (approx. US$217 billion) by 2031. The CEPA solidifies Vietnam’s position as the UAE’s largest non-oil trading partner in ASEAN, unlocking new opportunities for collaboration in sectors such as food production, apparel, textiles, machinery, and metals. Non-oil bilateral trade surged by 8.7 percent to US$6.1 billion in the first half of 2024, with non-oil exports rising by 58.4 percent compared to the previous year.
Conclusion
The Vietnam-UAE CEPA marks a key juncture in the economic ties between the two nations, offering significant opportunities for collaboration across various sectors. By reducing tariffs and eliminating trade barriers, the CEPA is poised to stimulate robust bilateral trade, while also enhancing market access for both countries. The agreement lays a strong foundation for deepening investment exchanges and fostering cooperation in key areas, such as tourism, manufacturing, and energy development.
As trade relations continue to strengthen, the Vietnam-UAE CEPA presents a strategic opportunity for investors and businesses to accelerate their engagement. By leveraging this agreement, companies can position themselves to gain a competitive advantage and capitalize on the expanding economic landscape between Vietnam and the UAE.
