EVFTA fuels Vietnam’s imports from EU
Since the EU - Vietnam Free Trade Agreement (EVFTA) took effect, the country’s imports from the EU have been rising sharply, with many commodities posting import value of billions of US dollars.
The EVFTA, which took effect on August 1 last year, has given an impulse to bilateral exportation and importation, with Vietnam currently recording trade surplus with the EU.
In the first half of 2021, the country’s exports to the EU stood at US$19.3 billion while imports from this bloc grew 17.2% from a year earlier to US$8.14 billion. The import turnover was US$14.65 billion in 2020, up 4.3% year on year.
The largest EU exporters to Vietnam consist of Germany, Italy, France, the Netherlands, Spain, Belgium, Sweden, and Ireland, which accounted for 85% of the country’s total imports from the EU last year.
Computers, electronic products and components; machinery, equipment, tools, and spare parts; along with pharmaceutical products are the main groups of items with billions-of-USD imports from the EU. They saw respective import turnover of US$4.1 billion, US$3.1 billion, and US$1.75 billion last year, according to the General Department of Vietnam Customs.
The importation of meat and dairy products is also expected to increase strongly in the time ahead thanks to the EVFTA.
The Ministry of Industry and Trade said under the deal, Vietnam eliminated import duties on 48.5% of the tariff lines, equivalent to 64.5% of the EU’s exports to the country, as soon as the agreement took effect.
After that, 91.8% of the tariff lines, equivalent to 97.1% of the bloc’s exports, will have their import duties removed in seven years. For the remaining 1.7% of the tariff lines, Vietnam will gradually lift duties in more than 10 years or apply the tariff-rate quota regime under the World Trade Organisation (WTO) commitments.
At present, agricultural and aquatic products, consumer goods, processed food, milk, and dairy products from the EU have yet to benefit from zero-percent tariffs in Vietnam. As livestock products hailing from the EU are still subject to the tax rate ranging 10 - 40%, imports of these commodities have grown but not at a fast pace.
However, import duties on the EU’s frozen pork, other types of pork, and chicken will be slashed to zero percent in seven, nine, and 10 years, respectively, since the EVFTA enforcement. Beef will enjoy this tax rate, from 20 - 30% at present, in the next three years.
Vietnam currently ranks 17th among trading partners of and 11th among exporters to the EU.