Mr. Chris Humphrey, EU-ASEAN Business Council Executive Director, spoke with VET about the opportunities and challenges facing Vietnam after the EU - Vietnam Free Trade Agreement is signed this year, as expected.
The free trade agreement between the EU and Vietnam (EU-VN FTA) is expected to be signed this year. How will it impact on Vietnam’s economy in general and its exports to the EU in particular?
I expect the FTA to be finalized at some point in the third quarter of this year and I am confident that the document will be signed before the end of the year. Although there are still some issues to be solved by both sides, I believe that the agreement will be signed soon due to Vietnam’s openness and the clear political willingness on both sides. The conflicting issues will soon be resolved and the negotiation process will then, hopefully, move quickly on the both sides. Certainly, EU enterprises look forward to the EU-VN FTA being signed. Vietnam will be the second ASEAN country that the EU will sign an FTA with, and the agreement really is a great opportunity. It’s hopefully a way ahead in making the relationship between the EU and ASEAN closer in the future.
The EU-VN FTA will have a huge impact on the relationship between the EU and Vietnam, in particular having a major impact on Vietnam’s economy when the EU is its second-largest trading partner, after China. When the EU-VN FTA is signed it will strongly impact on Vietnam’s manufacturing industry, such as textiles, footwear, and agricultural products. Exports have recently increased by 20 per cent, so I’m confident that the agreement will make these items more easily exported to the EU. Besides Vietnam’s export of products, the FTA will hopefully make Vietnam more attractive for investments by European firms.
How has the trade relationship between Vietnam and the EU been in recent years?
Vietnam and the EU established diplomatic relation in 1990. Vietnam is a very important partner of the EU. The relationship is growing more and more strongly as Vietnam’s exports to the EU increased from 30 to 40 per cent while imports from the EU to Vietnam increased from 20 to 25 per cent. I believe that the signing of the FTA will make the relationship more deeply developed, with many goods from Vietnam being exported to Europe as well as, hopefully, more investment from the EU to Vietnam, which will take the relationship further ahead.
What will be Vietnam’s advantageous items exported to the EU when the FTA is signed?
Most items, especially agricultural products, telephone accessories, machinery, and electronics will be in a more favorable position when the FTA is signed. Many European companies will also invest in Vietnam as an ideal destination to produce goods and bring them back to Europe. I hope that all sectors will develop and lead to closer Vietnam-EU relations in the near future.
What are the challenges for Vietnamese enterprises after the EU-VN FTA is signed?
Often the biggest challenge is understanding what the FTA can actually do to help trade grow and therefore help businesses grow. This is especially true for SMEs. It is up to governments to ensure they communicate well on this point and get the message out to their businesses. The FTA should make it easier and cheaper for Vietnamese companies to trade with Europe, and equally easier for European businesses to trade with Vietnam. The ultimate winners in that will be consumers, who should get more choice and lower prices in the long run. For Vietnamese firms looking to expand into the European market, they may have to invest in raising standards or product development to meet European consumer expectations and regulations concerning things such as safety.
Vietnam has signed the Vietnam-South Korea FTA, the Vietnam- Eurasian Economic Union FTA, and will soon will join the ASEAN Economic Community (AEC) and sign the Trans-Pacific Partnership (TPP). Could you comment on the impact of FTAs on Vietnam’s economy in the future?
Vietnam is a smart game player due to participating in many FTAs with other countries. With the agreements, Vietnam will be a center that will attract investments from these countries. Moreover, this will also be an opportunity for Vietnam to take unique advantage of each agreement to develop. It is important that Vietnam implement its commitments in each FTA.
- EU-VN FTA
- Vietnam's economy