As it is known, on  February 2016  was published the text of the Free Trade Agreement (FTA) between European Union and Vietnam. Since it is estimated that the FTA shall enter into force in early 2018, after the ratifications will be done, we believe it could be useful to recall and further deepen the most important aspects of this Agreement.

In the first place, the increase of the safeguard on the fundamental labor rights and on the environmental protection, as well as the fact the Trade Policy is an exclusive competence of the EU, could be considered the distinguishing features of the FTA.

Another important aspect is that, on a hand, the European exporters will be put on a par with exporters from many other countries, such as Australia, New Zealand, Japan, China, India, which already take advantage of Free Trade Agreements with Vietnam; on the other hand, Vietnam will take the same advantages which some nations such as South Korea and Singapore already take, signing the FTA with EU

It is also worth pointing out that the main purpose of a FTA is to obtain a preferential treatment for goods and services produced or provided by a Party in the country which the agreement is signed with.

Indeed, at the entry into force, the 65% of EU exports to Vietnam and the 71% of imports from Vietnam will come in duty-free. In order to guarantee to the consumers a better price for imported goods and to let the  exporters be more competitive in the market, the custom duties shall be removed after a maximum period of 7 years  for the Vietnamese products and of 10 years for the EU products.

Another fundamental point is that the FTA bans the adoption of acts which state limitations or prohibitions to the import/export of any type of good between the countries out of the limits already provided. For example, Vietnam reserves the right of establishing limits for the importation of some items stated in a list that includes the used consumer goods; for this reason, it shall be worth emphasizing the concept of  the re-manufactured  goods, which allows the products to be considered as new, guaranteeing the same treatment of favor, and which empowers the aforementioned scope of safeguard of the environment.

Moreover, this is the first time when a FTA introduces the possibility of using the geographical indication  of “Made in EU” not limited to agricultural goods; anyhow, the marking of origin of “Made in State Members” continues to be accepted.

In conclusion, the FTA provides also the rules to consider a good as originated in the EU; such regulations state that it is necessary that the product shall be sufficiently transformed in the EU, that it shall have a proper certificate of origin and that it shall satisfy specific requirements, such as the non-alteration principle. This principle indicates that a good passing through a third country shall be only preserved and not modified or altered.

To know more about the FTA EU-Vietnam, write to us via info@dandreapartners.com