Illustrative photo (Source: VNA)Rome(VNA) - The European Union (EU)-Vietnam Free Trade Agreement (EVFTA) is expected to trigger high-qualityFDI flows from Europe to the Southeast Asian country, Vietnamese Trade Counsellorin Italy Nguyen Duc Thanh has told the Vietnam News Agency (VNA).
Slated to comeinto effect on August 1, 2020, the agreement will also help Vietnam improve itsposition in global supply chains and create more added value, he said.
Under the deal, heexpects Vietnam’s GDP to increase 2-3 percent in the first five years ofimplementation, 4.5-5.3 percent in the subsequent five years, and 7.0-7.7percent in the five years to follow.
The Ministry ofPlanning and Investment estimated prior to the COVID-19 outbreak that, thanksto the EVFTA, Vietnam’s export revenue to the EU would expand about 20 percent thisyear, 42.7 percent in 2025, and 44.37 percent in 2030, primarily vehicles andtransportation equipment, machinery, spare parts, phones and electronic components,pharmaceuticals, garments and textiles, and leather and footwear.
However, he added,figures from the General Department of Vietnam Customs show that exports to the EU from January to May were down 9.68 percent year-on-year.
Export value may thereforerise just 5 percent this year but higher levels will be posted from 2021onwards.
The EU hascommitted to providing Vietnam with the highest-ever tax incentives, Thanhsaid, with up to 85 percent of tariff lines on Vietnamese goods cut to zeropercent as soon as the agreement takes effect, with tariffs on most of theremaining goods eliminated after seven years.
New added valuewill be created for any party aware of new global trends post-COVID-19, putsforth business strategies, and develops its economy sustainably, the Trade Counselloremphasised.
He also pointed tothe challenges ahead, such as strict regulations, standards, and technicalbarriers set by the EU, and suggested Vietnamese companies satisfy the demandof European consumers in taste, packaging, and food safety while scaling upproduction, stepping up cooperation, and ensuring transparency.
He said Vietnamneeds to act fast to optimise the opportunities generated by the agreement, as theEU is yet to conclude negotiations over FTAs with Thailand and Indonesia.
Thanh also warnedof changes in the post-COVID-19 period when major Western European countries restoredomestic supply chains to ease reliance on goods from Asia.
Given this, Vietnamneeds to find its own path, he said, suggesting it cut the processing of low valueadded goods.
According to theTrade Counsellor, Vietnam can optimise the agreement to promote the export of certainproducts to Italy, such as electronic motors, phones and spare parts, honey,footwear, garments and textiles, face masks, pharmaceuticals, machinery,equipment, wooden items, and agro-fishery products, especially rice.
He affirmed thatthe commercial affairs office of the Vietnamese Embassy in Italy stands ready toact as a bridge for trade between the two countries./.
VNA
