In the EVFTA, the two sides commit to eliminating 99 percent of import tariffs on each other’s goods within seven years in the EU and 10 years in Vietnam (Photo: VNA)Brussels (VNA) - Quality standards,rules of origin, and legal aspects are said to be among the barriers Vietnamesebusinesses will have to overcome to gain a foothold in the European marketunder the EU-Vietnam Free Trade Agreement (EVFTA).
The European Parliament ratified the EVFTA onFebruary 12 and Vietnam’s National Assembly did likewise on June 8. The pact isexpected to take effect in August.
Following the agreement being ratified inVietnam, EU Trade Commissioner Phil Hogan wrote on Twitter: “This deal willincrease opportunities & cooperation between us, create jobs, driveinvestment & improve standards. With the right rules, trade can benefiteveryone.”
The two sides commit to eliminating 99 percentof import tariffs on each other’s goods within seven years in the EU and 10 yearsin Vietnam.
The Southeast Asian country pledges to remove48.5 percent of tariff lines on EU goods immediately when the deal comes into force,58.7 percent within three years, 79.6 percent within five years, 91.8 percent withinseven years, and 98.3 percent within 10 years. It is also set to abolish themajority of tariffs on exports to the EU within 15 years.
Despite considerable opportunities, an array ofchallenges is also awaiting Vietnamese goods on the road to the EU.
Quality standards are among such challenges.
The EU will cut tariffs under the EVFTA but itstechnical standards remain unchanged, so Vietnamese products must meet these standardsbefore entering the market.
EU countries have recently been in dire need of medicalsupplies, including face masks, to cope with the COVID-19 pandemic. Many Vietnameseenterprises are capable of producing a large quantity but their products arestill unable to enter the EU since they only meet Vietnamese standards.
Talking about agricultural exports, Nguyen CanhCuong, former Trade Counsellor of Vietnam in Belgium, said Europe has strictand regularly-updated regulations on the use of pesticides, and the rules oftenoutpace research by chemical companies.
Whenever the EU revises its regulations,exporters must also change the pesticide types they use, thus raising productioncosts. If businesses do not comply with these regulations, their exports to theEU will be cancelled or returned if violations are detected, he noted.
Pierre Groning from the German Chemical IndustryAssociation said rules of origin may also be a challenge for small- andmedium-sized enterprises in Vietnam.
They should proactively learn about and adhereto EU regulations so as to have their products’ origin certified in line withthe EVFTA’s rules of origin, he recommended, noting that this could force themto make changes to both production processes and input materials.
Nonetheless, he went on, the agreement will alsobring them rare opportunities to enhance their competitiveness and be innovative.
According to the Belgium-Vietnam Chamber ofCommerce, companies will have to compete with one another not only in product qualityand price but also in their understanding of the European market, especiallytechnical and legal issues.
Chamber Chairman Huynh Trang Long pointed outthat there are major differences between Vietnam and European countries in theuse of commercial techniques.
He took payment methods as an example, sayingthat many Vietnamese businesses, both exporters and importers, make payments bytelegraphic transfer, as this method is quite simple. Risks from this method maybe negligible for Vietnamese enterprises in general but not for importers, as itmay lead to disputes.
European enterprises often prioritise letters ofcredit for making payments, he said, suggesting Vietnamese companies consider doinglikewise.
Long also recommended that local enterprises equipthemselves with preventive measures, since international trade always features unpredictablerisks relating to geographical distance, transportation, and law.
Meanwhile, Cuong warned that companies that donot have sufficient risk assessment capacity could be coerced by partners,which may subsequently cause financial losses.
Without experts on EU law, he said, the risk ofloss is quite high./.
VNA
