The Committee on International Trade under the European Parliament approved the free trade and investment protection agreements between the EU and Vietnam on Tuesday, paving the way for almost all tariffs to be gradually eliminated over the course of ten years.
“The committee gave its consent to the free trade agreement by 29 votes, six votes against, and five abstentions and recommends that EP Plenary should do the same,” a press release posted on the Parliament’s website the same day reads.
“The agreement will remove virtually all tariffs between the two parties in ten years.”
The European Parliament will cast its final vote in February before the deal can enter into force.
It will protect emblematic European products, and allow Europe access the Vietnamese public procurement market.
The agreement is also an instrument to protect the environment and further social progress in Vietnam, including in labor rights, according to the resolution accompanying the consent decision.
The trade committee’s demands from Vietnam, including on labor rights as well as on the mechanism ensuring the enforceability of the sustainability clauses, was adopted by 29 votes for, nine against and two abstentions.
When in effect, the free trade accord will render 65 percent of EU exports to Vietnam immediately duty-free, with the rest – including motorcycles, cars, pharmaceuticals, chemicals, wines, chicken, and pork – gradually liberalized over ten years.
Seventy-one percent of Vietnamese exports to the EU will be duty-free on day one, with the rest catching up in seven years.
Duty-free Vietnamese exports of sensitive agricultural products, such as rice, garlic or eggs, will be limited.
Non-tariff barriers will be eliminated in the automotive sector, export and import licensing, and customs procedures.
Vietnam aleady accepted the ‘Made in EU’ marking, beyond national markings of origin, for non-agricultural products.
As for geographical indications, 169 emblematic EU products such as Parmigiano Reggiano cheese, Champagne, or Rioja wine, will enjoy protection in Vietnam, as will 39 Vietnamese products in the EU.
EU companies will have improved access to business, environmental, postal and courier, banking, insurance and maritime transport services in Vietnam.
EU firms will be able to bid for public procurement contracts with Vietnamese ministries, state-owned enterprises, as well as with Hanoi and Ho Chi Minh City.
There are legally-binding rules on climate, labor, and human rights.
The agreement commits Vietnam to apply the Paris Agreement.
Vietnam scheduled the ratification of two remaining bills on the abolition of forced labor and on freedom of association by 2020 and 2023, respectively.
Separately, the trade committee also agreed by 26 votes for, seven against, and six abstentions to an investment protection agreement providing an investment court system with independent judges to settle disputes between investors and state.
The accompanying resolution passed by 27 votes for, seven against, and five abstentions.
“With the consent to this trade deal with Vietnam, the trade committee is giving a positive signal to the ASEAN region and the rest of the world at a time when trade tensions are rising,” Rapporteur Geert Bourgeois (ECR, BE) said.
“Besides its geopolitical and economic importance, I am convinced that this agreement will accelerate the reform process within Vietnam.
“The ratification will strengthen further progress on labor and environmental standards and the respect for human rights.”
The European Parliament is set to vote on the trade deal and the investment protection agreement at its February session in Strasbourg.
Once the Council of the European Union concludes the trade agreement, it can enter into force.
For the investment protection agreement to enter into force, the member states first need to ratify it.
Vietnam is the EU's second-largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €47.6 billion (US$52.9 billion) a year and €3.6 billion ($4 billion) when it comes to services.
EU exports to the country grow by 5-7 percent annually, yet the EU’s trade deficit with Vietnam was €27 billion ($30 billion) in 2018.
The main EU imports from Vietnam include telecommunications equipment, clothing, and food products.
The EU mainly exports goods such as machinery and transport equipment, chemicals, and agricultural products to Vietnam.
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