The past few years, the EU has been a significant trade partner for Vietnam. In 2019 Vietnamese exports to the EU reached €2.16 billion and EU exports to Vietnam €1.14 billion. Key EU markets for Vietnamese exports include the Netherlands, Germany, and England.
The EU-Vietnam Free Trade Agreement (EVFTA) signed on June 30, 2019, has opened doors for enhanced trade relations. The agreement foresees an elimination of 99 % of all tariffs over a period of ten years; the rest will be partly removed through limited zero-duty quotas. Before the ratification the EVFTA, import duties were up to 50 % on EU exports of agri-food products and up to 78 % on industrial goods. Since its entry into force, 65 % of customs duties have been eliminated.
In this article, we will go through these parts:
- Regulatory Framework for the process of exportation of goods from EU to Vietnam
- Benefits of EVFTA
- Particularities of the market of interest for EU SMEs
Regulatory Framework for the process of exportation of goods from EU to Vietnam
For a product to qualify for a lower or zero tariff under EVFTA, it must originate in the European Union or Vietnam.
Origin in this sense means:
- A product is wholly obtained in the EU or Vietnam; or
- It’s produced exclusively from materials originating in the EU or Vietnam; or
- It is produced in the EU or Vietnam using non-originating materials provided that such materials have undergone sufficient working or processing by fulfilling the product specific rules set out in Annex II of EVFTA.
The Origin must be proven either by a Certificate of Origin issued by the authorized agency or a Declaration of Origin which allows exporters to certify the origin of their products themselves on any commercial document. European exporters registered in the Registered Exporter System (REX) are only required to provide a Declaration of Origin, independently on the value of the shipment. However, Vietnamese exporters can only self-declare if the total value of the shipment does not exceed €6,000.
Benefits of EVFTA
Vietnam’s revenue from exports to the EU has increased significantly with the ratification of the EFVTA particularly the agricultural sector which has been one of the biggest beneficiaries of the agreement so far. Indeed, agrifood products benefit, among others, from a reduction and elimination of custom duties according to tariff schedules as stipulated in EVFTA (Appendices 2-A-1 and 2-A-2 of Annex 2-A).
Benefits of the EVFTA for European exporters
- Progressive elimination of customs duties for a range of products (e.g. agri-food products, machinery).
- Streamlined customs procedures and better market access.
- Faster clearance at Vietnamese ports enhance efficiency for European shipments.
- For approved categories of products, import will be automatically allowed without prior individual inspections.
- Reduced bureaucracy and administrative hurdles.
- Enforceability of the regulations: formal state-to-state dispute resolution mechanism.
- Quality standards alignments and protection of geographical indications.
- Promotion of foreign direct investment (FDI) in Vietnam, European companies can explore joint ventures or establish production facilities in Vietnam.
Benefits of EVFTA in the agrifood sector
- Preferential tax rates for certain products.
- Key Vietnamese products (e.g. rice, mushrooms, sugar products) benefit from significant access to the EU market via Tariff Rate Quotas, allowing them to be imported into the EU with zero duties.
- Rules on origin and protection of geographical indications provide Vietnamese agricultural and aquatic products opportunities to increase their product value on the EU market.
- Legal protection against counterfeiting of certain products: 169 geographical indications (GI) so far are recognized as protected European products by the Vietnamese market.
Benefits of EVFTA in the agri-food sector as seen in the example of European dairy farmers and wine exporters
Since all tariffs will be abolished in a maximum of five years after entry into force (August 2025) with some quicker reductions after three years for most cheeses, milk powder and liquid milk, European dairy farmers now have the opportunity to increase exportation to Vietnam, expand their customer base and increase revenue.
The past few years, Vietnam experienced a specific growing demand for high-quality European wines. Since the EVFTA, a European wine producer can enter the Vietnamese market with reduced import duties and will be subject to zero import duties after August 2027. Furthermore, the brand value and prestige of certain European wines are now protected as a Geographical indication. These measures propelled European wine to become more competitively priced in Vietnam compared to wines from non-EU countries.
Particularities of the market of interest for EU SMEs
Small to Medium Enterprises represent approximately 80 % of all EU exporters and more than one-third of the value of all exports from the EU to Vietnam. SMEs can benefit from services available at no costs concerning the regulatory framework of EFVTA.
For instance, the Southeast Asia IPR Helpdesk provides information and services on Intellectual Property rights (training materials and online resources). The Market Access Data Base platform operated by the European Commission also provides information free of charge about import conditions in Vietnam to companies exporting from the EU and provides an interactive tool (“ROSA”) to assess whether a product fulfils the rules of origin and how to prepare the correct documents.
Since continued collaboration and compliance are crucial for exporters, we recommend working with a reputable legal firm that has experience with the EVFTA regulatory framework.
