EU-Vietnam trade and investment agreements

VIETNAM | Brussels, 24 September 2018

EU-Vietnam trade and investment agreements (authentic text as of August 2018)


Disclaimer
: The text of the EU-Vietnam trade agreement presented in this webpage is the text at the end of the negotiation conducted by the European Commission and is made public solely for information purposes. The agreement presented in this document is not binding under international law and will only become so after completion of the ratification process by each Party according to its internal legal procedures.

PREAMBLE: Preamble

CHAPTER 1: Objectives and General Definitions

CHAPTER 2: National Treatment and Market Access for Goods

CHAPTER 3: Trade Remedies

CHAPTER 4: Customs and Trade Facilitation

CHAPTER 5: Technical Barriers to Trade

CHAPTER 6: Sanitary and Phytosanitary Measures

CHAPTER 7: Non-Tariff Barriers to Trade and Investment in Renewable Energy Generation

CHAPTER 8: Liberalisation of Investment, Trade in Services and Electronic Commerce

CHAPTER 9: Government Procurement

CHAPTER 10: Competition Policy

CHAPTER 11: State-Owned Enterprises, Enterprises Granted Special Rights or Privileges, and Designated Monopolies

CHAPTER 12: Intellectual Property

CHAPTER 13: Trade and Sustainable Development

CHAPTER 14: Transparency

CHAPTER 15: Dispute Settlement

CHAPTER 16: Cooperation and Capacity Building

CHAPTER 17: Institutional, General and Final Provisions

Protocol 1: Concerning the Definition of the Concept of “Originating Products” and Methods of Administrative Cooperation, and its Annexes
Protocol 2: On Mutual Administrative Assistance in Customs Matters

Understanding: Concerning Specific Commitments on Distribution Services for Wines and Spirits
Understanding: Concerning Bank Equity

Joint Declaration: Concerning the Principality of Andorra
Joint Declaration: Concerning the Republic of San Marino
Joint Declaration: Regarding the Revision of the Rules of Origin Contained in Protocol 1
Joint Declaration: Concerning Customs Unions


EU-Vietnam Investment Protection Agreement

Disclaimer: The text of the EU-Vietnam investment protection agreement presented in this webpage is the text at the end of the negotiation conducted by the European Commission and is made public solely for information purposes. The agreement presented in this document is not binding under international law and will only become so after completion of the ratification process by each Party according to its internal legal procedures.

PREAMBLE: Preamble

CHAPTER 1: Objectives and General Definitions

CHAPTER 2: Investment Protection

CHAPTER 3: Dispute Settlement

CHAPTER 4: Institutional, General and Final Provisions

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GUIDE TO THE EU-VIETNAM FREE TRADE AGREEMENT

Cover for the guide EU-Vietnam Free Trade Agreement

INTRODUCTION

The purpose of this publication is to provide first-hand information to business about all the different areas covered by the EU-Vietnam Free Trade Agree (FTA). It has been drafted to help business to help businesses better understand what the main outcomes and achievements of the negotiations are.

This Guide is divided in three parts. The first part provides an overview of the bilateral trade and investment relations between the EU and Vietnam. The second part provides a more detailed explanation on what is actually in the FTA. Finally, the last part outlines useful information and tools for making the most of the opportunities offered by the FTA.

The texts of the FTA can be found on the website of the European Commission’s Directorate-General for Trade (1) as well as on the website of the Ministry of Industry and Trade of the Socialist Republic of Vietnam (2). At this stage, it is made public exclusively for information purposes. The text presented on the website is the text at the end of the negotiations conducted by the European Commission. It is currently subject to legal revision by the legal experts. It will then be sent to the Council of the European Union and to the European Parliament for ratification. The text presented in so binding under international law and will only become so after it has been ratified.

Please click here to download the GUIDE TO THE EU-VIETNAM FREE TRADE AGREEMENT

_____________

VIETNAM | Brussels, 17 October 2018

Commission presents EU-Vietnam trade and investment agreements for signature and conclusion

The European Commission today adopted the EU-Vietnam trade and investment agreements, paving the way for their signature and conclusion. Through this adoption, the Commission is demonstrating its commitment to putting these agreements in place as soon as possible.

The trade agreement will eliminate virtually all tariffs on goods traded between the two sides. The agreement also includes a strong, legally binding commitment to sustainable development, including the respect of human rights, labour rights, environmental protection and the fight against climate change, with an explicit reference to the Paris Agreement.

President of the European Commission Jean-Claude Juncker said: “The trade and investment agreements with Vietnam are exemplary of Europe’s trade policy. They bring unprecedented advantages and benefits for European and Vietnamese companies, workers and consumers. They take fully into account the economic differences between the two sides. They promote a rules- and values-based trade policy with strong and clear commitments on sustainable development and human rights. By adopting them a few hours before welcoming the participants in the ASEM-EU Summit in Brussels, the Commission shows its commitment to open trade and engagement with Asia. I now expect the European Parliament and EU Member States to do the necessary for the agreements to enter into force as soon as possible”.

Commissioner for Trade Cecilia Malmström said: “The Commission has now delivered two valuable and progressive agreements with Vietnam that I am convinced the European Parliament and EU Member States can support. Vietnam has massive potential for EU exporters and investors to do business, both now and in the future. It is one of the fastest-growing economies in Southeast Asia, with a vibrant market of more than 95 million consumers, an emerging middle class and a young, dynamic workforce. Through our agreements, we also help spread European high standards and create possibilities for in-depth discussions on human rights and the protection of citizens. I hope the Council and the European Parliament will approve the agreements swiftly to allow businesses, workers, farmers and consumers to reap the benefits as soon as possible.”

The trade agreement will eliminate over 99% of customs duties on goods traded between the two sides. Vietnam will remove 65% of import duties on EU exports from entry into force of the agreement, with the remainder of duties being gradually eliminated over a 10-year period, to take into account that Vietnam is a developing country. The agreement also contains specific provisions to address non-tariff barriers in the automotive sector, and will provide protection for 169 traditional European food and drink products in Vietnam, the so-called Geographical Indications, like Rioja wine or Roquefort cheese. Through the agreement, EU companies will be able to participate on an equal footing with domestic companies in bids for procurement tenders with Vietnamese authorities and state-owned enterprises.

Besides offering significant economic opportunities, the trade agreement also ensures that trade, investment and sustainable development go hand in hand, by setting the highest standards of labour, safety, environmental and consumer protection, ensuring that there is no ‘race to the bottom’ to attract trade and investment. The agreement commits the two parties to respect and effectively implement the principles of the International Labour Organisation (ILO) concerning fundamental rights at work; and to implement international environmental agreements, such as the Paris Agreement; to act in favour of the conservation and sustainable management of wildlife, biodiversity, forestry and fisheries; and to involve civil society in the monitoring the implementation of these commitments by both sides.

The trade agreement includes an institutional and legal link to the EU-Vietnam Partnership and Cooperation Agreement, allowing appropriate action in the case of breaches of human rights.

The investment protection agreement, meanwhile, includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved. It will replace the bilateral investment agreements that 21 EU Members States currently have in place with Vietnam.

Alongside the agreement recently reached with Singapore, this agreement will make further strides towards setting high standards and rules in the ASEAN region, helping to pave the way for a future region-to-region trade and investment agreement.

Background

Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €47.6 billion a year and €3.6 billion as it comes to services. While EU investment stock in Vietnam remains modest standing at €8.3 billion in 2016, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and agricultural products.

Next steps

The Commission is now submitting to the Council the proposals for signature and conclusion of both agreements. Once authorised by the Council, the agreements will be signed and presented to the European Parliament for consent. Once the European Parliament has given its consent, the trade agreement can then be concluded by the Council and enter into force. The investment protection agreement with Vietnam will be ratified by Member States according to their respective internal procedures.

For more information

Memo: The EU-Vietnam trade and investment agreements

Factsheets: benefits of the EU-Vietnam trade agreement, agriculture, sustainable development.

Examples of small European companies from Denmark, Spain and Sweden doing business with Vietnam today.

More on the agreement

_____________________

VIETNAM | Brussels, 17 October 2018

EU-Vietnam Trade Agreement – memo

Creating economic opportunities – defending values.

1. Eliminating customs duties

The EU-Vietnam trade agreement will eliminate over 99% of all tariffs, and partly remove the rest through limited zero-duty quotas, known as Tariff Rate Quotas (TRQs).

65% of duties on EU exports to Vietnam will be eliminated at entry into force, with the remainder gradually removed over a 10-year period. EU duties on imports from Vietnam will be eliminated progressively over a 7-year period. This asymmetric approach takes into account the fact that Vietnam is a developing country.

The agreement will remove tariffs on a range of key EU export products:

  • Almost all machinery and appliances will be fully tariff-free at entry into force, and the rest after 5 years. Current duties are up to 35%.
  • Motorcycles with engines larger than 150 cc will see tariffs fully removed after 7 years (current duty is 75%) and cars after 10 years (down from 78%)
  • Car parts will be duty free after 7 years (current duties are up to 32%).
  • Roughly half of EU pharmaceuticals exports will be duty free at entry into force and the rest after 7 years (currently facing duties of up to 8%).
  • All textile fabric exports will see their duties removed at entry into force (currently with a tariff of 12%).
  • Close to 70% of EU chemicals exports will be duty free at entry into force (current duties up to 5%) and the rest after 3, 5 or, respectively, 7 years (current tariffs up to 25%).
  • Wines and spirits will be fully tariff-free after 7 years (down from tariffs of 50% and 48% respectively)
  • Frozen pork meat will be duty free after 7 years, beef after 3 years, dairy products after a maximum of 5 years and food preparations after a maximum of 7 years.
  • Tariffs on chicken will be progressively reduced to 0% in the next 10 years.

For sensitive agricultural products, the EU will not open its market up to Vietnamese imports completely. Quotas will limit the quantity that can enter the EU duty-free. This includes rice, sweet corn, garlic, mushrooms, eggs, sugar and high-sugar-containing products, manioc starch, other modified starches, ethanol, surimi and canned tuna.

The elimination of duties on imports of some Vietnamese products (for instance in the textile apparel and footwear sectors) will be subject to longer transition periods of up to 7 years. In order to benefit from the preferential access, negotiated rules of origin will require the use of fabrics produced in the EU, Vietnam or in South Korea, another partner with whom the EU has a trade agreement. This will ensure that products from other countries with which the EU does not have a trade agreement do not gain unfair access to the EU through Vietnam.

Besides eliminating tariffs, Vietnam will also do away with its existing export duties in its bilateral trade with the EU, and has agreed not to increase the few that will exceptionally remain in force.

2. Protecting European Geographical Indications

169 distinctive European food and drinks products from a specific geographical origin will be protected from imitation on the Vietnamese market. The use of geographical indications (GIs) such as Champagne, Parmigiano Reggiano cheese, Rioja wine or Feta cheese will be reserved in Vietnam for products imported from the EU regions where they traditionally come from. This will benefit European farmers and small businesses producing these traditional products.

Vietnamese GIs will also be recognised and protected in the EU, further promoting imports of quality products such as Mộc Châu tea or Buôn Ma Thuột coffee.

The agreement will allow new GIs to be added in the future to the list of protected GIs.

3. Reducing non-tariff barriers to European exports

The EU and Vietnam have agreed to go beyond the rules set out in the WTO Technical Barriers to Trade agreement. In particular, Vietnam has committed to increasing the use of international standards when drafting its regulations. The agreement also contains a chapter on sanitary and phytosanitary measures, to make trade in plant and animal products easier. Importantly, Vietnam will recognise the EU as a single entity for the purposes of authorising our animal and plant exports.

The agreement also contains a specific annex with far-reaching provisions to address non-tariff barriers in the automotive sector, including the recognition of the EU whole vehicle certificate of conformity five years after the entry into force of the agreement.
Also, to account for the increasing EU market integration, Vietnam accepted the marking of origin “Made in EU” for non-agricultural goods (with the exception of pharmaceuticals, which are still to a great extent subject to national approvals in the EU). Member State-specific markings of origin will continue to be accepted as well.

Provisions on import and export licensing, customs procedures, trade in plant and animal products, will also facilitate access of EU goods to the Vietnamese market.

4. Public procurement

Thanks to the agreement, EU companies will benefit from a level of access to Vietnamese procurement markets that companies from no other country do.

  • EU companies will be able to bid for public contracts with Vietnamese ministries and important state-owned enterprises, as well as the two biggest Vietnamese cities, Hanoi and Ho Chi Minh City.

The agreement is fully in line with the rules of the WTO Government Procurement Agreement, thus achieving a degree of transparency and procedural fairness comparable to other EU trade agreements with developed countries and more advanced developing countries.

5. Safeguarding social and environmental protection standards

The EU and Vietnam have agreed on a robust and comprehensive chapter on trade and sustainable development, with an extensive list of commitments. These include the following:

  • To implement effectively the core labour standards and Conventions of the International Labour Organisation (ILO), the Multilateral Environmental Agreements that the EU and Vietnam have ratified, along with an assurance to ratify fundamental ILO Conventions not yet ratified.
  • To effectively implement international environmental agreements, such as the Paris Agreement.
  • To prevent a race to the bottom: no undermining of domestic labour and environmental laws in order to attract trade and investment.
  • Actions in sectors of specific relevance in Vietnam such as the conservation and sustainable management of wildlife, biodiversity, forestry and fisheries.
  • Involvement of civil society in the monitoring and giving advice on the implementation of the Trade and Sustainable Development chapter on both sides.
  • Tailor-made dispute settlement for the Trade and Sustainable Development chapter.

6. Promoting democracy and respect for human rights

There is an institutional and legal link between the Free Trade Agreement and the EU-Vietnam Partnership and Cooperation Agreement. This link allows measures considered as appropriate in the case of breaches of human rights, including the suspension of the Trade Agreement.

7. Creating a level playing field for EU companies and innovative products

The EU-Vietnam Trade Agreement will level the playing field between state-owned enterprises and private enterprises when state-owned enterprises are engaged in commercial activities. There are also rules on transparency, and consultations on domestic subsidies. These are the most ambitious rules that Vietnam has ever agreed to in an international agreement.

On intellectual property rights, Vietnam has committed to a high level of protection that goes beyond the standards of WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. With this agreement, EU innovations, artworks and brands will be better protected against being unlawfully copied, including through stronger enforcement provisions.

The EU pharmaceutical sector in particular will benefit from improved protection of test data and from the possibility to get an extension of the term of the patent up to two years if there are delays in the marketing authorisation. Vietnam has also taken ambitious commitments concerning the procurement of pharmaceutical products, for instance allowing companies with European capital to import and sell medicines to distributors and wholesalers within the country.

8. Opening the Vietnamese market for EU services providers

Vietnam has committed to substantially improve the access for EU companies to a broad range of services sectors, including:

  • business services
  • environmental services
  • postal and courier services
  • banking
  • insurance
  • maritime transport

Moreover, the agreement will contain a clause allowing the best results of other trade agreements being negotiated at the moment to be incorporated in the EU-Vietnam trade agreement.

9. Promoting bilateral investment

Vietnam has committed to open up to investments in manufacturing in key sectors:

  • food products and beverages
  • fertilisers and nitrogen composites
  • tyres and tubes
  • gloves and plastic products
  • ceramics
  • construction materials

10. More effective dispute resolution

The dispute resolution mechanism set up by the agreement is faster and more efficient than the dispute settlement mechanism in the WTO framework.

It applies to most areas of the agreement and is intended as a last resort, should the EU and Vietnam fail to find a solution by other means. The agreement provides for the possibility of formal consultations and for voluntary mediation to tackle measures that adversely affect bilateral trade and investment.


Read the related press release

 

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