Opening to Southeast Asia: Free trade with Vietnam creates new opportunities for European companies

The European Parliament approved the Free Trade and Investment Protection Agreements with Vietnam on today’s plenary session in Strasbourg. Following the vote, Fidesz MEP Enikő Győri highlighted that the agreement opens up a great opportunity for EU, and for Hungarian companies. It grants access to the markets of nearly 100 million of the fastest developing country in Southeast Asia and ensures an increased level of protection of the investments.

MEP Enikő Győri, Member of the Committee on International Trade (INTA) pointed out: “Our job is to create better opportunities for the European companies that also benefit our citizens. However, more trade also gives the Vietnamese people a chance to develop and to fully embrace their freedom by following our standards. It is a misconception that the Union should lecture countries, rather than approaching them with respect and seeking good relations. Only dialogue and monitoring of commitments will contribute to the development of human rights, labour law and the protection of environment in Vietnam, not turning our back on it”.

The Free Trade Agreement (FTA) will also help to deepen trade relations between Hungary and Vietnam by removing the present high tariff and non-tariff barriers. The current tariff of 78% for European vehicles, 50% for wine, 48% for spirits (including Hungarian pálinka) will be duty-free, therefore making European products more competitive. The agreement also provides adequate protection for 169 European geographical indications, including Hungarian Tokaji wine, salami of Szeged, Hungarian pálinka and the so-called törköly pálinka. And the list is expandable for the future.

MEP Győri emphasized that the agreement gives EU companies access to the Vietnamese services and public procurement markets. “Opponents of the agreement are actually denying our companies the access to public procurement markets in Hanoi or Ho Chi Minh City while leaving the market-distorting measures untouched in Vietnam”, noted MEP Győri.

Thanks to an amendment tabled by Enikő Győri, the decision adopted today includes the notice that the Commission should monitor the proper and faithful implementation of the rules of origin, with special attention to national content, and step up its action against all forms of manipulation and abuse. The aim of the proposal is to prevent facilitated enter of products from third countries to the EU market, for example via a simple repackaging.

The Fidesz MEP also asked the Commission to “provide user-friendly and up-to-date practical information for European SMEs to help them fully embrace the numerous opportunities offered by the Free Trade and Investment Protection Agreements”.

Background: Free trade negotiations between the EU and Vietnam were launched in June 2012, were closed on the 2nd of December 2015 and officially signed on the 30th of June 2019.

The FTA falls within the exclusive competence of the Union, therefore it is decided by the EU institutions. The Council is likely to approve the agreement by the summer, after which it will come into force. From then on, 99% of the goods could flow free of duty and free of quantitative restrictions between the EU and Vietnam.

Enforcement of the investment protection agreement is more complex as it covers areas of shared competence. In this case, following the approval of the European Parliament, it needs to be ratified by all Member States, thus making the process longer. The Hungarian Parliament was the first to ratify the EU-Vietnam Investment Protection Agreement on the 3rd of December, 2019.

Thanks to the EU-Vietnam Investment Protection Agreement, investment relations will receive new legal guarantees: the Vietnamese investment environment will be more secure for EU investors, including Hungarian firms. The agreement replaces the existing bilateral investment protection agreements between Vietnam and twenty EU Member States, including Hungary.