EVFTA AND IPA WILL SIGN ON 06/30/2020

Date post :25/06/2020 - 8:36 AM

The EVFTA and IPA agreements were started and ended in the context of the bilateral development of Vietnam-EU bilateral relations, especially in the field of economics and trade. EVFTA is a comprehensive, high-quality, and guaranteed benefit agreement for both Vietnam and the EU, which also takes into account the development gap between the two sides.

 

If implemented, EVFTA will be a huge boost for Vietnam's exports, helping to diversify markets and exports, especially agricultural and aquatic products as well as Vietnamese products. inherently has many competitive advantages. Commitments for fair, equal, safe, and adequate protection of each other's investments and investors in the IPA will also contribute positively to the development of the legal and regulatory environment. From the perspective of transparency, Vietnam will then attract more investors from the EU and other countries.

 

Strategically, the negotiation and implementation of these Agreements also sent a positive message about Vietnam's determination to promote deep integration into the world economy in the context of the current economic situation. The geopolitical situation is more complicated and unpredictable.

 

The main milestones

October 2010: The Prime Minister of Vietnam and the EU President agreed to start negotiations on the EVFTA Agreement.

June 2012: Minister of Industry and Trade of Vietnam and EU Trade Commissioner officially announced the start of negotiations for the EVFTA Agreement.

 

December 2015: Finish negotiations and start the process of legal review to prepare for the signing of the Agreement.

 

June 2017: Complete the legal review at the technical level

 

September 2017: The EU officially asked Vietnam to separate the content of investment protection and the dispute settlement mechanism between the State and investors (ISDS) from EVFTA Agreement into a separate agreement due to arise some new issues concerning the authority to ratify free trade agreements of the EU or individual member states. Under this proposal, EVFTA will be separated into two separate agreements, including:

- The Free Trade Agreement is all EVFTA at present, but the investment will only include the liberalization of foreign direct investment. With this Agreement, the EU has the right to ratify and put it into practice temporarily.

- The investment protection agreement covers investment protection and investment dispute settlement (IPA Agreement). This IPA must be ratified by both the European Parliament and the Member States Parliament before it can be implemented.

 

June 2018: Vietnam and the EU officially agreed to separate EVFTA into two agreements: Vietnam - EU Free Trade Agreement (EVFTA) and Investment Protection Agreement (IPA); officially ending the whole process of legal review EVFTA Agreement; and agreed on all contents of the IPA Agreement.

 

August 2018: Complete the legal review of the IPA Agreement.

 

October 17, 2018: The European Commission has officially adopted EVFTA and IPA.

 

June 25, 2019: Council of Europe approved to sign the Agreements.

 

Some key contents of EVFTA and IPA Agreement

EVFTA is a comprehensive, high quality, balanced agreement of interests for both Vietnam and the EU, at the same time compliant with the provisions of the World Trade Organization (WTO).

The Agreement consists of 17 Chapters, 2 Protocols and some memorandum of understanding attached to the main contents: trade in goods (including general provisions and market-opening commitments), rules of origin, customs and trade facilitation, food safety and hygiene measures (SPS), technical barriers to trade (TBT), trade in services (including general provisions and market access commitments) ) investment, trade remedies, competition, state-owned enterprises, government procurement, intellectual property, trade and Sustainable Development, cooperation and capacity building, legal issues physical-institutional.

 

Trade-in goods

For Vietnamese exports, as soon as the Agreement comes into effect, the EU will eliminate import duties on about 85.6% of tariff lines, equivalent to 70.3% of Vietnam's exports to the EU. After 07 years from the date of entry into force of the Agreement, the EU will eliminate import duties on 99.2% of tariff lines, equivalent to 99.7% of Vietnam's exports. For the remaining 0.3% of exports, the EU commits to giving Vietnam tariff quotas with import duties within the quota of 0%.

Thus, it can be said that nearly 100% of Vietnam's exports to the EU will be eliminated import tax after a short journey. So far, this is the highest level of commitment a partner gives us in the signed FTAs. This benefit is especially meaningful when the EU is continuously one of the two largest export markets of our country today.

 

For EU exports, Vietnam committed to eliminating tariffs as soon as the Agreement comes into effect with 48.5% of tariff lines (accounting for 64.5% of import turnover). Then, after 7 years, 91.8% of tariff lines equivalent to 97.1% of EU exports were removed from Vietnam by import taxes. After 10 years, the tariff elimination rate is about 98.3% of the tariff lines (accounting for 99.8% of import turnover). For about 1.7% of the remaining EU tariff lines, we apply the roadmap to eliminate import duties longer than 10 years or apply tariff quotas by WTO commitments.

Other issues related to trade in goods: Vietnam and EU also agreed on contents related to customs procedures, SPS, TBT, trade remedies, etc., creating a legal framework for the two sides to cooperate. cooperating with and facilitating export and import of enterprises.

 

Trade-in services and investment

Vietnam's and EU's commitment to trade in investment services aims to create an open and favorable investment environment for businesses of the two sides. Vietnam's commitments go beyond its WTO commitments. The EU commitment is higher than the WTO commitment and is equivalent to the highest EU commitment under the recent EU FTAs.

The sectors that Vietnam committed to facilitating EU investors include many specialized services, financial services, telecommunications services, transportation services, distribution services. The two sides also made commitments on national treatment in the field of investment and discussed the content of dispute resolution between investors and the state.

 

Government Procurement

Vietnam and the EU have agreed on contents similar to the Government's Procurement Agreement (GPA) of the WTO. With some obligations such as online bidding, setting up an electronic portal to post bidding information, etc., Vietnam has a roadmap to perform. The EU also pledges to provide technical assistance to Vietnam to fulfill these obligations.

Vietnam reserves the right to reserve a certain proportion of the value of bidding packages for contractors, goods, services, and domestic workers.

 

Intellectual Property

Commitments the intellectual property include commitments on copyright, inventions, inventions, commitments related to pharmaceuticals and geographical indications, etc Vietnam's commitments on the intellectual property comply with current law provisions.

Regarding geographical indications, when the Agreement comes into effect, Vietnam will protect over 160 geographical indications of the EU (including 28 members) and the EU will protect 39 geographical indications of Vietnam. Vietnam's geographical indications are related to agricultural products and foodstuffs, creating conditions for several of Vietnam's agricultural products to build and affirm its brand in the EU market.

 

Other contents of EVFTA Agreement

EVFTA also includes chapters related to competition, state-owned enterprises, sustainable development, cooperation and capacity building, legal and institutional. These contents are consistent with Vietnam's legal system, creating a legal framework for the two sides to strengthen cooperation, promote the development of trade and investment between the two sides.

 

IPA Agreement

The two sides pledged to accord national treatment and most favored nation treatment to the investments of investors of the other Party, with some exceptions, as well as a fair, satisfactory, safe, and full treatment. sufficient, allow the free transfer of capital and profits from investment abroad, undertaking not to confiscate, nationalize the property of investors without adequate compensation, pledges to compensate appropriate damages for investors of the other party are similar to domestic investors or third parties in case of damage caused by war, riot, etc.

In the event of a dispute arising between a Party and an investor of the other Party, the two parties agree to give priority to resolving the dispute in good faith through negotiation and conciliation. In cases where it is impossible to resolve disputes through consultation and mediation, the dispute settlement mechanism specified in this Agreement shall be used.

 

Impacts of EVFTA and IPA on the Vietnamese economy

First of all, the strong commitment to open markets in the EVFTA Agreement will certainly boost Vietnam - EU trade relations, helping to further expand the market for Vietnam's exports. With the commitment to eliminate import taxes up to nearly 100% of the tariff and trade value agreed by both sides, the opportunity to increase exports for Vietnam's advantageous products such as textiles, footwear, agriculture fisheries (including rice, sugar, honey, vegetables), furniture, etc. is very significant. The level of commitment in EVFTA can be considered as the highest level of commitment that Vietnam has achieved in FTAs ​​that have been signed so far. This makes sense when currently, just over 42% of Vietnam's exports to the EU enjoy 0% tax rate under the Universal Preferential Tariff (GSP).

According to research by the Ministry of Planning and Investment, EVFTA will help Vietnam's export turnover to the EU increase by about 20% by 2020; 42.7% in 2025, and 44.37% in 2030 compared to no Agreement. At the same time, imports from the EU have increased but at a slower rate than exports, namely about 15.28% in 2020; 33.06% in 2025, and 36.7% in 2030. On the macro side, EVFTA contributes to the increase of Vietnam's GDP by an average of 2.18-3.25% (2019-2023); 4.57-5.30% (the year 2024-2028) and 7.07-7.72% (the year 2029-2033).

Also, commitments on services - investment, government procurement as well as specific provisions on market opening and technical measures in specific areas will also create opportunities for businesses, EU products and services have better access to the market of nearly 100 million people in Vietnam, and help Vietnamese consumers to access the supply of high-quality products and services from the EU. sectors such as pharmaceuticals, health care, infrastructure construction, and public transportation ...

Besides, the commitments of state management will ensure a stable and open business and legal environment for investors of both sides in general and businesses and investors from the EU in particular.

 

Through EVFTA and IPA, EU investors will also have the opportunity to access markets of countries that have signed FTAs ​​with Vietnam with more preferential treatment. This agreement also helps to promote relations between the EU with each ASEAN country in particular and the ASEAN as a whole, creating a premise towards the discussion of an FTA between the EU and ASEAN in the future.

Minister of Industry and Trade Tran Tuan Anh said that it is expected that the free trade agreement and investment protection agreement between Vietnam and the European Union will be signed on June 30, 2019.

 

Source: Ministry of Industry and Trade

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