The European Union (EU) and Vietnam have completed trade negotiations on a new trade agreement!
The EU-Vietnam Free Trade Agreement (EVFTA) marks a milestone in a strong and long-lasting relationship between the EU member states and Vietnam. The EU Parliament already approved the agreement in February 2020. Ratification by the Vietnamese National Assembly took place on 8 June 2020.
Trade liberalization
For several years now, Vietnam has been the second biggest trade partner among the Association of Southeast Asian Nations (ASEAN) after Singapore. It represents a great opportunity for European exporters, as Vietnam is a market with huge potential for the EU’s agricultural, industrial and services exports.
Improved market access is one of the key objectives of the EVFTA. Therefore, the trade agreement aims at eliminating 99% of customs duties on exports in both directions within the coming years. However, it is planned to liberalize 65% of EU exports to Vietnam and 71% of Vietnamese exports to the EU from day one.
Depending on the industry, certain exporters will benefit sooner or later from duty exemption. For European exporters, all products will be duty free after a period of ten years, while for Vietnamese producers all exported products will be liberalized within seven years. For example, while almost all EU exports of machinery and appliances will be fully liberalized at entry into force of the FTA, all cars will be duty free after ten years. In contrary, EU duties on Vietnamese textile apparel have dismantling periods from five to seven years for the more sensitive items and three years at entry into force for less sensitive goods. Moreover, EU offered mostly duty-free tariff rate quotas for Vietnamese rice exports.
Rules of origin
Preferential rules of origin (RoO) have become trade policy instruments used to enhance or to limit market access for preferential partners. For the first time in an FTA, 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.
In order to fully benefit from advantages like the EU-Vietnam agreement, the implementation of a professional customs and trade compliance software solution is necessary. MIC’s Origin Calculation System (MIC OCS) supports you! The software module provides the necessary tools for an optimized free trade agreement management along the entire process for a multitude of FTAs worldwide, such as the EU-Vietnam Free Trade Agreement (EVFTA). The automated solicitation of supplier declarations as well as the optimized calculation of the origin of goods can be easily handled with our software solution. MIC OCS ensures your business to enjoy all benefits offered by EU-Vietnam trade agreement.
About MIC:
MIC is the world leader in providing global customs and trade compliance software solutions. The MIC group currently employs 400+ professionals around the world. More than 700 international customers rely on MIC software products for their global customs and trade compliance management solutions.
For more information about MIC and how we could help your operations, please contact us via sales@mic-cust.com.