Vietnam’s textile, garment and footwear to benefit the most from EVFTA
The agreement will increase an average of 0.1% in annual real GDP of Vietnam purely due to trade impacts, HSBC estimated.
![](https://media.hanoitimes.vn/2021/05/14/logo_hntimes.png)
![]() Illustrative photo.
|
These tariffs will be eliminated within three years or right after the EVFTA coming into force for less sensitive products, Hai said.
Additionally, the strong commitment to an open, fair and rules-based trade of the agreement will further widen export markets for Vietnam, especially in textile and garment, agriculture and fishery, and wood furniture.
The European Commission considers the agreement the most ambitious one that EU has signed with a developing country, reflecting the strong position of Vietnam being the second largest trade partner in ASEAN of EU, only after Singapore, Hai suggested.
The bilateral trade of the two sides has increased 20 times over the past two decades with annual trade value reaching EUR50 billion, making Europe the second largest export market of Vietnam, following the US.
Under the agreement, EVFTA will remove 99% of the tariffs between the two sides, in which 65% of export tariff from EU to Vietnam would be eliminated right after the agreement comes into force. The remaining tariff would be phased out in 10 years. 71% of export tariff from Vietnam to EU would also be eliminated and the remaining to be reduced within 7 years.
Being a modern agreement, EVFTA includes content relating to intellectual property protection, freedom of investment and sustainable development.
“We expect the agreement will increase an average of 0.1% (with range of 0,0 – 0,3%) in annual real GDP of Vietnam purely due to trade impacts,” Hai said.
Upon complete effect, the high standards of EVFTA will accelerate Vietnam’s pace of reforms and global integration. The European Commission estimates that exports from Vietnam to Europe will increase at around 18%, hence widening Vietnam’s trade surplus with the bloc.
The agreement is also expected to bolster foreign direct investment flow from Europe to Vietnam, which would accelerate the development of Vietnam. The average investment from EU to Vietnam reached around US$800 million in the period from 2010 to 2017.
Challenges ahead
Besides benefits, there are still many things to do so that Vietnam can fully gain from the agreement, Hai continued.
According to the CEO, Vietnam needs to build a strong domestic textile and garment industry with lower import components to be able to capture all the benefits.
“Strict requirements on certificate of origin towards all apparels imported to Europe can lower the benefits for Vietnam when a majority of main materials are imported from other markets,” he stated.
At the moment there are some companies with large production scales and FDI businesses that have capabilities to ensure a strong domestic ratio of materials and accessories compliant to certificate of origin required by the agreement.
Apart from organic growth of enterprises which should be a priority, guidance and initiatives of the government to provide knowledge and improve awareness of businesses are necessary.
Some good examples include projects to develop supporting industries, guidance on Vietnam’s commitments to members of EVFTA, what companies need to do, commitment to the environment, intellectual property protection, certificate of origin, among others.
Moreover, thorough administrative reforms to simplify im-export procedures and improve legal frameworks to meet the requirements of international and European standards about labour conditions, intellectual property should be also a priority.
“EVFTA is one of the most expecting agreements of Vietnam and I believe Vietnam will take actions to capture most of the benefits while tackling challenges to further boost the development of the country in a sustainable way,” he concluded.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/26/online_shopping.jpg)
13:57, 2024/07/26
Vietnamese consumers spend US$32 million daily on online shopping
E-commerce in Vietnam continues to thrive and stands out in the overall economic landscape.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/23/production.jpeg)
20:11, 2024/07/23
Vietnam targets US$7,500 GDP per capita by 2030
By the end of this decade, Vietnam is expected to be among the top three Southeast Asian countries in terms of industrial competitiveness.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/20/oil_and_gas.jpg)
16:07, 2024/07/20
Gov’t mulls creation of oil and gas trading exchange
Such a platform would help minimize price manipulation, ensure a flexible pricing mechanism, and improve the distribution and circulation of oil and gas.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/17/booth_at_the_safety_event.jpg)
21:59, 2024/07/19
Hanoi promotes women's role in safe agri-food trade
The city will focus on strengthening enforcement of food safety regulations in food production and trade facilities.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/17/stock_market_vn.jpeg)
16:17, 2024/07/17
Vietnam’s stock market set for strong year-end growth
The projected P/E ratio for the VN-Index this year is 11.5, below the 5-year average of 13.4, potential for the benchmark to rise in the second half of the year and 2025.
![](https://media.hanoitimes.vn/thumb_x138x92/2024/07/16/Food_safety_in_supermarket.jpg)
09:56, 2024/07/17
Hanoi ramps up food safety inspections, identifying and rectifying violations
The city's health department will continue to carry out regular, specialized and random inspections.
- Vietnam under pressure to achieve high growth in 2024-2025
- Early warnings help Vietnam mitigate trade probe impacts
- Hanoi's key industries in high recruitment demand
- Continued political trust building between Vietnam and Cambodia
- Hanoi district to turn Hoang Cau Lake into culinary hub
- Hanoi welcomes investment from China’s Greater Bay Area