Understanding Tariff Elimination Under EU-Vietnam Free Trade Agreement (EVFTA)

After years of negotiations, the European Union – Vietnam Free Trade Agreement (EVFTA) took effect on 1 August 2020, paving the way for increased trade between the EU and Vietnam. The EVFTA is the most comprehensive trade agreement the European Union has signed with a developing country in Asia, and aims to liberalise tariff and non-tariff barriers for key imports on both sides over a period of 10 years.

From Vietnam’s perspective, the EVFTA opens significant opportunities for investors who seek to leverage their resources and take advantage of the benefits of being located in a country with major preferential tariffs and growing exports and imports with the European Union. According to data form the Ministry of Industry and Trade of Vietnam, by 2025 exports to the EU are expected to increase over 40%, while imports from EU are expected to grow over 30%. The EVFTA is a major milestone and opportunity for both Vietnam and the EU to increase cross-border investments and trade, and also contribute to the GDP growth of both parties, modernising their economical, social and trade relationships as well.

In the following article we seek to delve into the specific product lines and goods which will benefit from tariff reductions and preferential duty treatments and delineate the specific commitments from both parties relating to import and export tariffs.

Vietnam is currently EU’s second largest trade partner in ASEAN, and 8^th largest partner of EU in Asia. Trade volumes between Vietnam and European Union are increasing in a consistent manner, enabling businesses to leverage the EVFTA to strengthen their trade relationships. The charts below are relevant in emphasising the current trade relations between Vietnam and EU, with quantifiable data on exports and imports.

Vietnam’s major imports from EU