EU and Indo-Pacific: natural partners
Guide to the EU-Vietnam free trade agreement
The European Union and Vietnam signed a Trade Agreement and an Investment Protection Agreement on 30 June 2019. The European Parliament subsequently gave its consent to both Agreements on 12 February 2020 and the Free Trade Agreement was concluded by Council on 30 March 2020.
The Trade Agreement entered into force on 1 August 2020.
The Investment Protection Agreement will enter into force when it is ratified by all EU Member States. As of September 2021, 8 EU Member States have ratified it.
- Vietnam is the EU’s 15th trade in goods partner and the EU’s largest trading partner in the Association of Southeast Asian Nations (ASEAN) in 2020.
- The EU’s main exports to Vietnam are high tech products, including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products.
- Vietnam’s main exports to the EU are telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, seafood, and furniture.
- With a total foreign direct investment outward stock of €6.1 billion (2019), the EU is one of the largest foreign investors in Vietnam. The largest sector of investment by the EU is industrial processing and manufacturing.
EU and Vietnam
The trade agreement between the EU and Vietnam entered into force on 1 August 2020. The Investment Protection Agreement will enter into force after ratification by all EU Member States. The agreements with Vietnam are the second (following those with Singapore) to have been concluded between the EU and a Southeast Asian country, and represent stepping-stones to a greater engagement between the EU and the region.
The trade and investment agreements develop the commercial dimension of bilateral relations between the EU and Vietnam that find their foundation and are governed by the EU-Vietnam Framework Agreement on Partnership and Cooperation (PCA) that entered into force in October 2016.
Vietnam and ASEAN
Vietnam is one of the 10 members of the Association of Southeast Asian Nations (ASEAN) and has become the EU’s second most important trading partner in the region after Singapore. An increasing number of European companies are establishing in the country to set up a hub to serve the Mekong region.
Taken as a whole, ASEAN is the EU’s third largest trading partner outside Europe (after the US and China). Ensuring better access for EU exporters to the dynamic ASEAN market is a priority for the EU. Negotiations for a region-to-region trade and investment agreement between the EU and ASEAN were launched in 2007 and paused by mutual agreement in 2009 to give way to a bilateral format of negotiations. These bilateral trade and investment agreements were conceived as building blocks towards a future region-to-region agreement.
Committees and Dialogues
The EU and Vietnam meet regularly to discuss issues and best practices when implementing the EU-Vietnam Free Trade Agreement.
The European Union and Vietnam signed a Trade Agreement and an Investment Protection Agreement on 30 June 2019.
Once in force, the agreements will provide opportunities to increase trade and support jobs and growth on both sides, through
- Eliminating 99% of all tariffs
- Reducing regulatory barriers and overlapping red tape
- Ensuring protection of geographical indications
- Opening up services and public procurement markets
- Making sure the agreed rules are enforceable
Following the signatures, the agreements will be presented on the Vietnamese side to the National Assembly for ratification and on the EU side to the European Parliament for its consent, as well as to the respective national parliaments of EU Member States in the case of the Investment Protection Agreement.
Germany and Viet Nam: Bilateral relations
Since 2011, Germany and Viet Nam have had a “strategic partnership” involving cooperation projects at all levels and in numerous policy fields. Relations are shaped by the many different intersocietal contacts. Germany and Viet Nam regard themselves as partners in endeavours to uphold the rules-based order, respect for international law, multilateralism, global free trade and investment, and environmental and climate protection.
With a trade volume of around 13.3 billion euro, Germany is Viet Nam’s most important trading partner in the EU (2020). Over 370 German companies are currently represented in Viet Nam. Total investment amounts to more than 2.3 billion US dollar. This investment has created around 50,000 jobs in Viet Nam.
Germany and Viet Nam expect the free trade and investment protection agreements signed by Viet Nam and the EU in mid-2019 to give a further boost to bilateral economic relations as well. The free trade agreement entered into force on 1 August 2020. The investment protection agreement still has to be ratified by the individual EU member states.
Development cooperation focusing on the 2030 Agenda and the Paris Climate Agreement is another important element in relations between Germany and Viet Nam. The Federal Ministry for Economic Cooperation and Development’s new 2030 reform strategy defines Viet Nam as a global partner country, with a focus on key issues based on the country’s Green Growth strategy (sustainable growth, climate/energy, environmental protection /resources, health/ One Health and peace/ societal cooperation).
Bilateral cultural relations are developing well. Many cultural, academic and scientific institutions (including the German Academic Exchange Service (DAAD), the Goethe-Institut, the Vietnamese-German University and the Federal Office of Administration – Central Agency for Schools Abroad (ZfA)) are active in Viet Nam. The more than 100,000 Vietnamese who have worked or studied in Germany form a unique bridge between the two countries, sustaining and increasing mutual interest.