TPP and EVFTA Trade Agreements to Bolster Vietnam’s Manufacturing

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TPP and EVFTA Trade Agreements to Bolster Vietnam’s Manufacturing

Vietnam’s manufacturing landscape will significantly benefit from the numerous trade agreements it has in store for the economy.

Apart from the already hyped Trans-Pacific Partnership (TPP) trade agreement soon to be ratified, the EU-Vietnam Free Trade Agreement (EVFTA) will further open up Vietnam to markets in the EU, enabling the flow of high-quality investments into the country, as well as enhancing investment policies and policy transparency among member countries.

Anticipated to come into force from 2018, the EVFTA will connect Vietnam, one of ASEAN’s most dynamic manufacturing hubs, with the European Union. The EU is among one of the world’s biggest markets with GDP of over USD 18 trillion, accounting for 22% of the world’s total GDP and a population of more than 500 million people.

“Just like the TPP, the EVFTA will drive the development of Vietnam’s manufacturing sector and accelerate market access to key industries in countries across the European Union”, said Michael Sieburg, Associate Partner at Solidiance Vietnam, an Asia-focused management consulting firm.

A white paper titled “Trans-Pacific Partnership (TPP): A Boost for Vietnam’s Manufacturing Growth” provides an in-depth analysis of opportunities within Vietnam’s manufacturing sector with respect to the much anticipated TPP agreement.

About 900 European enterprises have already invested in Vietnam, showing that the EVFTA will indeed benefit large European businesses entering Vietnam’s market potential in manufacturing. The EU is currently Vietnam’s second biggest export market and Vietnam is EU’s 11th biggest source of import.

The EU’s import duties of 85.6% will be slashed on Vietnamese products once the EVFTA agreement goes into effect. After seven years, 99% of the EU tariffs will be eliminated for Vietnamese products. Goods such as textiles, footwear, and seafood products (except for canned tuna and fish balls) in Vietnam will incur no import duties within seven years after the agreement is implemented.

For Vietnam, 65% of its import duties on EU items will be removed. The country has drawn up a roadmap to eliminate tariffs as much as over 99% over 10 years, while remaining export items will be offered tariff quotas with zero percent on import duties.

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