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Vietnam’s National Assembly ratifies EVFTA and EVIPA

08/06/2020

At this morning's meeting (June 8), Vietnam’s National Assembly approved the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA).

In particular, EVFTA agreement was approved at a rate of nearly 95%, equivalent to 100% of the delegates present at the consensus session. The EVIPA Agreement was ratified at a rate of more than 95%, representation with 461/462 voting delegates, 1 non-voting delegate.

According to the agreement between Vietnam and the European Union (EU), EVFTA Agreement takes effect from the first day of the second month, after the two sides complete the ratification, which is the next August 1. Meanwhile, EVIPA will have to wait for the approval of the Parliament of each EU member state. This process can last for at least 3 years.

Reportedly, this afternoon, Minister of Industry and Trade Tran Tuan Anh will talk with the EU Trade Commissioner, this is the first phone call between the two sides after the EVFTA agreement was ratified and approved.

The ratification of the EVFTA agreement and the EVIPA agreement is considered to bring Vietnam many benefits, promoting two-way trade between the two sides, participating in global supply chain, mutually reinforcing, increasing the export scale of some of Vietnam's strong industries.

Specifically, the EVFTA agreement helps diversify our country's market so that it does not depend on a limited number of markets, and at the same time it acts as a lever to stimulate other partners to strengthen trade - investment relations with Vietnam.

The EVFTA Agreement is expected to increase Vietnam's GDP by an average of 2.18 to 3.25% (for the first 5-year period), 4.57-5.30% (for the next 5-year period) and 7.07-7.72% (for a period of 5 years thereafter).

Besides, the EU is the second largest import market in the world and is currently Vietnam’s second largest export market (after the U.S.). Through this agreement, Vietnam can access a potential market with a population of over 500 million people, GDP of about USD 15,000 billion, accounting for 22% of global GDP.

Regarding imports, it is expected that imports from the EU will increase by about 33.06% in 2025 and 36.7% in 2030, focusing on a number of items such as vehicles and transport equipment, machinery and spare parts, telephones and electronic components, and pharmaceutical products.

Regarding investment, the EVFTA is an opportunity for Vietnam to attract more investors from the EU in areas such as manufacturing and processing industries using high technology, clean energy, renewable energy, and services.

The EVFTA Agreement is expected to add an additional 146,000 jobs each year. Regarding the budget revenue, it is expected that the total reduction from export tax and import tax revenue will be over VND 2,500 billion, but the increase in domestic revenue under the impact of investment, trade and economic growth will be about VND 7,000 billion in the 2020-2030 period.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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