The European Parliament formally ratified the Vietnam-EU Free Trade Agreement (EVFTA) and the Vietnam-EU Investment Protection Agreement (EVIPA) at a meeting held in Strasbourg, France on the afternoon of February 12. According to reports, the European Parliament adopted the Vietnam-EU Investment Protection Agreement with 407 votes in favor, 188 votes against, and 53 abstentions, and passed the EVFTA vote with 401 votes, 192 votes, and 40 abstentions. This is the first new-generation free trade agreement to be approved by the new EU Parliament.
According to the agreement, when the EFTFA comes into effect, the EU will eliminate 85.6% tariffs on Vietnamese products, which is equivalent to 70.3% of Vietnam ’s exports to the EU. Seven years after the agreement enters into force, 99.2% of tariffs will be eliminated, which is equivalent to 99.7% of Vietnam's exports to the EU. Vietnam will reduce its tariffs by 48.5%, which is equivalent to 64.5% of imports from the European Union, and reduce its tariffs by 98.3% within 10 years, which is equivalent to 99.8% of imports from the European Union.
With the Parliament's adoption, the Council can now conclude the trade agreement. Once the Vietnamese National Assembly also ratifies the trade agreement, it can enter into force, most likely in early summer 2020. The investment protection agreement with Vietnam will still need to be ratified by all Member States according to their respective internal procedures. Once ratified, it will replace the bilateral investment agreements that 21 EU Members States currently have in place with Vietnam.
Vietnam is the EU's second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €49.3 billion a year and trade in services of €4.1 billion. According to the results of the study by the Ministry of Planning and Investment of Vietnam, EFTTA and EVIPA are expected to contribute to a 4.6% increase in Vietnam ’s gross domestic product (GDP) growth rate, and a 42.7% increase in the total exports to the EU by 2025. The European Commission predicts that by 2035, the EU's GDP growth rate will increase by 29.5 billion US dollars and the growth rate of total exports to Vietnam will increase by 29%.
EU Commissioner for Trade, Phil Hogan, commented: "The EU-Vietnam agreement has a huge economic potential, a win for consumers, workers, farmers and businesses. And it goes well beyond economic benefits. It proves that trade policy can be a force for good. Vietnam has already made great efforts to improve its labor rights record thanks to our trade talks. Once in force, these agreements will further enhance our potential to promote and monitor reforms in Vietnam.”