Vietnam signs significant trade deal with the EU

Vietnam on Monday ratified a significant trade deal with the European Union, which is expected to boost the country’s manufacturing sector and exports, as it recovers from a dip caused by the coronavirus pandemic. Lawmakers approved the agreement as they met in the National Assembly for the first time since the pandemic began. The deal was signed in Hanoi last June and was ratified by the European Parliament in February.

When it takes effect next month, the EU will lift 85% of its tariffs on Vietnamese goods, gradually cutting the rest over the next seven years. Vietnam will lift 49% of its import duties on EU exports and phase out the rest over 10 years. Following the trend of manufacturing shifting from China to other countries, accelerated first by the China-US trade war then COVID-19, the agreement is expected to raise Vietnam’s competitiveness in attracting investors. Vietnam is the EU’s second-largest trading partner in Southeast Asia, with the trade turnover reaching $56 billion last year, according to the national general statistics office. With Singapore being the only other country in Southeast Asia holding a free-trade agreement with the EU, Vietnam will have an edge regionally.

Lawmakers also ratified a second pact that protects investors. They had been negotiated since 2012 and give EU companies equal treatment with domestic bidders in competing for public contracts in Vietnam. They also commit Vietnam to standards for sustainable development, including improving its human rights record, protecting labor rights and upholding its pledges to deal with climate change under the Paris accord.