Vietnam and EU to sign sweeping trade accord

The agreement – Vietnam European Union Free Trade Agreement (VEFTA) – contains a legally binding link to the Partnership and Cooperation Agreement (PCA) that governs the overall relationship between the EU and Vietnam.

A VOV reporter recently caught up with Ambassador Vuong Thua Phong who headed the Vietnamese delegation to the European Union (EU) and he agreed to sit down for an interview and provide his insights into the importance of the monumental trade pact.

Following are key translated excerpts capturing the gist of the interview.

VOV: After three years and 14 rounds of negotiations, Vietnam and the EU recently announced that negotiations have essentially been concluded. Exactly how are we to interpret this?

Ambassador Phong: First of all, this is a massive new generation free trade agreement covering a wide range of fields and one of the most comprehensive that Vietnam has negotiated with a foreign nation to date.

It is very spacious – covering everything from trade, procurement services, protection of intellectual property and labour rights to the problems associated with ensuring a sustainable and clean environment.

Ambassador Phong and EC President

In addition, it is unifying two dynamic economies – the EU comprised of 28 developed countries with advanced technologies and Vietnam, still emerging yet one of the most energetic economies in Asia.

Lastly, Vietnam has its work cut out to meet the formidable challenges needing action on many fronts such as bringing its environmental standards into compliance with the higher requirements of the EU.

The terms of the accord provide for a transitional period over many years for Vietnam to work through these thorny and difficult problems and get on par with the tougher requirements of the EU.

It also contains provisions for Vietnam to phase in tariff reductions on substantially all trade over a period of 10 years so the government isn’t immediately deprived of a vital revenue source and has time to adjust its budget.

Meanwhile the EU will phase in its tariff reductions on trade over a period of seven years, which sets the stage for Vietnamese businesses to modify their long term strategies and approach the market in a more competitive manner.

VOV: What remains to be done before the agreement is signed and the parties begin implementing it?

Ambassador Phong: All that remains are a few relatively minor technical issues along with reviewing and editing the text to insure the wording is sufficiently precise and captures the true intent of the parties.

I expect it will be signed prior to the end of the year. Since we are celebrating the 25th anniversary of Vietnam-EU diplomatic ties in 2015, it would be befitting if it were signed yet this year.

The ratification process is expected to be quite lengthy due to the number of parties in the EU and the breadth of the agreement, especially taking into consideration the sensitive areas related to the European Council and the European Parliament.

VOV: How should the Vietnam business community start preparing to meet the demands and opportunities presented by the trade pact?

Ambassador Phong: The agreement brings about tremendous possibilities for economic and trade advances for Vietnam. However, no deal benefits just one side. As the EU High Commissioner has said – the agreement is mutually beneficial.

There is no doubt that Vietnam will face more formidable competition and if Vietnamese businesses fail to improve the quality of products or their competitiveness they will lose out in the marketplace, even on the home front for agricultural products and food.

Lastly, the deal imposes exacting requirements for Vietnam to revise policies and regulations for sensitive fields like democracy, human rights, labour rights and environment that pose hurdles the government will have to tackle.

Thank you very much.