On Sunday, 30 June, 2019, Vietnam and the European Union signed a free trade deal that will play an important role in facilitating trade between the two trading partners and open up new trade flows.
The impact of the tariff reduction depends on the industry and product. To give some examples, according to a press release from the European Commission:
- Almost all machinery and appliances exports from the EU will be fully tariff-free at entry into force, and the rest after 5 years. Current duties are up to 35%.
- All textile fabric exports will see their duties removed at entry into force (currently with a tariff of 12%).
- Motorcycles with engines larger than 150 cc will see tariffs fully removed after 7 years (current duty is 75%) and cars after 10 years (down from 78%)
The EU offers many opportunities for Vietnamese businesses who wish to export goods. Likewise, Vietnam with its strong GDP and growing middle class, offers plenty of opportunities for our European customers. The EU is Vietnam’s second-largest export market after the United States. In 2018, Vietnam exported $42.5 billion worth of goods and services to the EU. The value of imports from the region reached $13.8 billion. According to the European Commission, Vietnam is currently the EU’s 16th largest trade partner and the second-largest trading partner among Southeast Asian countries.
The Vietnamese government said that EVFTA would increase EU exports to Vietnam by 15.28% and those from Vietnam to the EU by 20.0% by 2020. The free trade agreement will come into effect as soon as it’s approved by the European Parliament.
To take advantage of the EVFTA and to prepare your business before the trade agreement enters into force, please contact the DB Schenker team in Vietnam. We are happy to answer any questions about the new Free Trade Agreement and your Vietnam – EU supply chain.
If you have questions, please get in touch with the Vietnam Sales team (email: sales.vn@dbschenker.com).