On February 1, 2016, the European Commission published the text of the Free Trade Agreement (FTA) between the EU and Vietnam. Please find an update below.
EU - Vietnam FTA
The FTA will reduce trade barriers for goods and services, provide for stringent controls for the protection of intellectual property and facilitate a mutual economic relationship for the participating countries. The greater part (99%) of goods covered under the FTA will benefit from a full reduction in customs duties. It is expected that the EU – Vietnam FTA will enter into force by the end of 2017 / early 2018.
Following the conclusion of the negotiating process in December 2015, the text of the FTA will now be subject to legal review and will – after translation into all EU languages – be presented to the Council and the European Parliament for ratification.
Until the FTA enters into force, imports from Vietnam will most likely continue to benefit from preferential status under the EU Generalized System of Preferences (GSP).
Duty free EU imports of Vietnamese goods
The majority of goods exported from Vietnam to the EU will be subject to duty free rates as of the date the EU – Vietnam FTA enters into force. For example, certain plastics, footwear and ceramic tableware will see an immediate tariff elimination. Currently, certain articles of plastic attract an import duty rate of 6.5%, while footwear and ceramic tableware may be subject to import duty rates of 17% and 6% respectively.
The elimination of import duties, however, will not be an open door for Chinese products to flood the EU market: to benefit from the preferential access, strict rules of origin will apply. The EU will also eliminate duties with longer phase-in periods (up to 7 years) for some sensitive products, such as in the automotive, food and apparel industry.
EU imports into Vietnam
Even though there are many goods which can be imported into Vietnam against a 0% duty rate as of the date the FTA enters into force, the majority of the duties will be reduced in stages (up to 11 years). As Vietnam is a fast-growing economy of more than 90 million consumers with a growing middle class and a young and dynamic workforce, its market offers numerous opportunities for EU companies.
How can Meijburg & Co be of service?
Over the years Meijburg & Co’s trade and customs lawyers have gained extensive experience in relation to trade issues regarding the impact of Free Trade Agreements and can assist your company in evaluating and implementing savings and compliance-related opportunities.