HCMC – The Vietnam-EU free trade agreement (FTA) negotiations will be held from September 22 to 26 in Vietnam’s coastal city of Da Nang. It is hoped that the agreement will allow Vietnam to further penetrate the EU market, as well as attracting further FDI into the Southeast Asian country.
According to the WTO Center, the FTA has “the ambition of negotiating a comprehensive agreement that includes not only market opening commitments but also other related trade ones like investment, environment, competition, sustainable development, etc., EU-Vietnam FTA once concluded may have great impacts on each industry and the whole Vietnam economy.”
The EU currently accounts for a significant portion (20 percent) of Vietnam’s exports, however, 60 percent of these are taxed or not eligible for low tax duties. When completed, the FTA will cut at least 90 percent of the tariff lines on Vietnamese exports.
Speaking at the recent EU-Vietnam Business Network (EVBN) business luncheon held on September 11, Ambassador Franz Jessen, the Head of the Delegation of the European Union to Vietnam, stated that the FTA negotiations were on track, but could give no specific date for their conclusion.
The Ambassador said that he expected the negotiations in Da Nang to focus on dealing with the remaining differences between the two parties and ensuring that a mechanism is in place to ensure trade compliance on both sides. The Ambassador placed particular emphasis on the need to ensure that any products exported from Vietnam were in fact created from materials sourced within the country and not simply assembled from imported products. This means that in order to qualify for the FTA’s preferential tariff rates in the EU market, the products must be made from materials sourced in Vietnam or the EU.
The Ambassador provided a number of examples of how certain industries could benefit from the conclusion of the FTA, these included:
- Vietnamese producers could save 150 million euros for footwear
- Textile producers could save 180 million euros for their products.
- European pharmaceutical producers could save 60 million euros for their exports to Vietnam
A growing number of analysts expect that the FTA negotiations will be concluded by the end of this year.
Vietnam is also currently negotiating two other important FTAs, these are the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.
An Introduction to Doing Business in Vietnam 2014 (Second Edition)
An Introduction to Doing Business in Vietnam 2014 (Second Edition) provides readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in the country.