The lifting of tariffs on other products will be phased in over a period of up to seven years for Vietnamese products and up to ten years for European products, as shown in a timetable established in the agreement itself. This will allow European companies to export to Vietnam at lower prices and with greater opportunities through preferential treatment for which they must be registered in the REX register. This situation thus improves price competition with Japanese, Korean and American producers and also allows companies based there to export to Europe virtually duty-free. Vietnam can also take advantage of institutional reforms and bilateral cooperation mechanisms and reaffirm to investors that it is the regional investment centre for improving technology, human resources and labour productivity. The Vietnamese Ministry of Commerce considered that the signing of these agreements would create opportunities to participate in the restructuring of new supply chains, amid the consequences of the coronavirus pandemic. In February 2020, the European Parliament ratified a free trade agreement (FTA) and an Investment Protection Agreement (PPI) with Vietnam. MEPs (ENPs) voted in favour of the agreements in Strasbourg. The agreement allows EU companies to award public contracts, among others, with Vietnamese ministries, including for infrastructure such as roads and ports, major state-owned enterprises such as the electricity supplier and the national rail operator, public hospitals and the two largest Vietnamese cities of Hanoi and ho Chi Min. Finally, the new agreement is a good opportunity for Spanish companies based in other countries who wish to relocate their factories to export to Europe without tariffs. “It`s a relocation process that`s been going on for several years because the cost of labor in Vietnam is about half what it is in China, and now it`s going to accelerate,” Says Fernandez-Cuervo. The EU`s bilateral trade and investment agreements with Vietnam in March 2020 and the trade agreement are expected to enter into force this summer, following Vietnam`s final ratification. The agreements with Vietnam are the second (after those with Singapore) between the EU and a South-East Asian country and are springboards for stronger engagement between the EU and the region.
Vietnam has free trade agreements with many countries in the region, such as Japan, South Korea, etc. Another important free trade agreement in which Vietnam participates is the Trans-Pacific Partnership. It covers countries bordering the Pacific Ocean, such as Japan, Chile, Canada and Australia. With the United States withdrawing from the negotiations, the remaining 11 countries continued negotiations and agreed on the new comprehensive and progressive agreement for the Trans-Pacific Partnership (PPAC).