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EU-Vietnam Free Trade Agreement (EVFTA) is a new generation FTA between Vietnam and 28 European Union member states. EVFTA and Trans-Pacific Partnership (TPP) are two of the largest new generation free trade agreements that Vietnam's largest ever negotiated.
On December 1st, 2015, the negotiation rounds of EVFTA was officially announced to be concluded, and its official full text was published on February 1st, 2016. On 26 June 2018, EVFTA was divided into two Agreements in terms of trade and investment. At the same time, the legal review of Investment Protection Agreement (IPA) and EVFTA’s final text was formally concluded.
Both Agreements were signed on 30 June 2019. EVFTA and EVIPA were ratified by the European Parliament on February 12, 2020, and approved by the Vietnamese National Assembly on June 8, 2020.
For EVFTA, after ratification, this Agreement has came into force on August 1, 2020. For EVIPA, on the EU side, the Agreement will still need to be further ratified by the Parliament of all 27 EU member states (after the UK completes Brexit) to take effect.
Vietnam and the EU both apply a common import tariff on originating goods of the other party when imported into each other's territory. Basically, tariff reductions under EVFTA are divided into the following groups:
Commitment to import duties of the EU
As committed, as soon as the Agreement comes into effect, the EU will eliminate import duties on 85.6% of tariff lines, equivalent to 70.3% of Vietnam's export turnover to the EU.
After 07 years, the EU will eliminate import tax on 99.2% of tariff lines, equivalent to 99.7% of our export turnover.
For the remaining 0.3% of Vietnam's exports, the EU offers us a tariff rate quota (TRQ) with a import tax in the quota of 0%.
Thus, it can be said that 100% of Vietnam's export turnover to the EU will be eliminated from the import tax after a short journey. So far, this is the highest level of commitment a partner gives us in the FTAs has been signed. This benefit is especially meaningful when the EU is continuously one of the two largest export markets of Vietnam at the moment.
Import tax commitments of Vietnam
Vietnam commits to abolish import duties on 48.5% of tariff lines, equivalent to 64.5% of EU exports as soon as the Agreement comes into effect.
Then, after 7 years, 91.8% of tariff lines equivalent to 97.1% of export turnover from the EU was abolished by Vietnam. After 10 years, this elimination is 98.3% of tariff lines and 99.8% of EU exports respectively.
About 1.7% of the remaining EU tariff lines apply the tariff elimination schedule longer than 10 years or apply TRQ under WTO commitments.
Export tax
In principle, Vietnam and the EU undertake not to impose export tax on goods when they are exported from the territory of one party to the other. The reason for the commitment to cut export taxes is that many countries around the world consider the export taxation as a form of indirect subsidy that causes unfair competition between countries' goods.
In EVFTA, Vietnam has reserved the right to impose export taxes on 526 tariff lines, including important products such as crude oil, coal (except coal for coking and coking coal). For tariff lines with relatively high current export tax rates, Vietnam has committed to a ceiling export tax of 20% for a maximum period of 5 years (only manganese ore has a ceiling of 10%). For other products, Vietnam commits to eliminate export tax according to a maximum schedule of 16 years.
Refurbished goods
Under the EVFTA Agreement, refurbished goods are goods classified in Chapters 84, 85, 87, 90 and 9402, except goods listed in Schedule 2-A-5 to the Agreement (Exclusion List for with refurbished goods), according to which refurbished goods:
(I) Constructed entirely or partially from parts of a product that have been previously used;
(II) Similar in performance and working conditions and longevity to the original new product, and warranted as new.
The two sides pledge to treat the refurbished goods as similar new products. This means that Vietnam allows the import of refurbished EU origin with the same import duties, taxes and fees as new products of the same category. This commitment does not preclude a party from being required to label the refurbished goods in order to avoid confusion for the consumer. Vietnam has a transition period of 3 years from the date of entry into force of the Agreement to implement this obligation.
Full Text of EU – Viet Nam Trade Agreement
Chapter 1: Objective and General Definitions
Chapter 2: National Treatment and Market Access for Goods
Annex 2-A: Reduction or Elimination of Customs Duties
Appendix 2-A-1: Tariff Schedule of the Union
Appendix 2-A-2: Tariff Schedule of Vietnam
Appendix 2-A-3: Exports Duties Schedule of Vietnam
Appendix 2-A-4: Specific Measures by Vietnam Governing the Importation and Exportation of Goods
Appendix 2-A-5: Goods Excluded from the Definition of Remanufactured Goods
Annex 2-B: Motor Vehicles and Motor Vehicles Parts and Equipment
Annex 2-C: Pharmaceutical/Medical Products and Medical Devices
Chapter 4: Customs and Trade Facilitation
Chapter 5: Technical Barriers to Trade
Chapter 6: Sanitary and Phytosanitary Measures
Annex 6: Requirements and Procedures for Approval of Establishments for Products
Chapter 7: Non-Tariff Barriers to Trade and Investment in Renewable Energy Generation
Annex 7: List of Tariff Headings
Chapter 8: Liberalisation of Investment, Trade in Services and Electronic Commerce
Annex 8-A: The Union’s Schedule of Specific Commitments
Annex 8-B: Vietnam's Schedule of Specific Commitments
Annex 8-C: Exemption for Vietnam on National Treatment
Chapter 9: Government Procurement
Annex 9-A: Coverage of Government Procurement for the Union
Annex 9-B: Coverage of Government Procurement for Vietnam
Chapter 10: Competition Policy
Chapter 12: Intellectual Property
Chapter 13: Trade and Sustainable Development
Chapter 15: Dispute Settlement
Annex 15-A: Rules of Procedure
Annex 15-B: Code of Conduct for Arbitrators and Mediators
Annex 15-C: Mediation Mechanism
Chapter 16: Cooperation and Capacity Building
Chapter 17: Institutional, General and Final Provisions
Protocol 2: On Mutual Administrative Assistance in Customs Matters
Understanding Concerning Specific Commitments on Distribution Services for Wines and Spirits
In addition to import duties, Vietnam and the EU also impose tariff rate quotas (HNTQ) on a few goods originating from the other Party. The content of this commitment is specified in Part B - Tariff-rate quotas, Annex 2-A of the EVFTA Agreement, including the main principles, specific commitments by each item, together with regulations and requirements. corresponding to the issue of recognition test.
Commitment to the EU's international judgment
Mechanism of management and allocation of cognitive activities
The EU will manage non-compliance in accordance with EU law, with the aim of facilitating trade between the Parties in the direction of making the most of the amount of non-compliance.
The products of origin imported into the EU within the above quota will be exempt from import tax. For the above quota, import duties will be applied according to the levels in the EU schedule of commitments specified in Annex 2A1 to the EVFTA Agreement.
Commitment to the recognition of Vietnam
Vietnam still maintains the application of IR under WTO commitments with regard to quotas, management methods and other terms and conditions related to the distribution of IR. Quota rates on goods imported from the EU will be gradually eliminated in 11 years from the date of entry into force of EVFTA.
Chapter 1: Objectives and General Definitions
Chapter 2: Investment Protection
Chapter 4: Institutional, General and Final Provisions
Annex 1: Competent Authorities
Annex 2: Exemption for Vietnam on National Treatment
Annex 3: Understanding on Treatment of Investment
Annex 4: Understanding on Expropriation
Annex 6: List of Investment Agreements
Annex 8: Code of Conduct for Arbitrators and Mediators
Annex 10: Mediation Mechanism for Disputes between Investors and Parties
Annex 11: Code of Conduct for Members of the Tribunal, the Appeal Tribunal and Mediators
The EVFTA Agreement provides three methods to determine the origin of a good, including:
In addition, the aggregation rule allows Vietnam and the EU countries to treat the raw materials of one or more other member countries as their own when using that material to produce a good. Origin EVFTA.
In addition, the two sides have agreed on some new contents as follows:
Mechanism of self-certification:
In addition to the traditional system of issuing Certificate of Origin (C / O), the two sides agreed to allow exporters to self-certify their origin. This is the mechanism by which exporters self-declare origin of products in documents and submit them to the customs authorities of the importing country instead of having to apply for certificates of origin from the authorities.
For goods exported from the EU:
For consignments valued at less than 6,000 EUR, any exporter can self-certify the origin.
For consignments valued at over EUR 6,000, only an Approved exporter will be able to self-certify the origin.
Currently, the EU is building a system of Registered exporters - a system that allows exporters only need to register with a competent authority to self-certify the origin. When this system is completed and applied, the EU will notify Vietnam before implementation.
For goods exported from Vietnam:
Currently, Vietnam has not officially implemented a self-certification mechanism. In the coming time, when it can officially apply this mechanism, Vietnam will issue relevant domestic regulations and notify the EU before implementing it.
It is expected that the exporter will self-certify the origin on an invoice, delivery note or any other commercial document describing the product concerned with enough information to identify the product. Self-certification documents do not have to show origin criteria and HS codes of goods but must bear the signature of the exporter. In the event that the eligible exporter has registered with the competent authority of the exporting country to take full responsibility for the self-certification of origin issued by them, no signature is required. .
In addition, self-certification may be carried out after the export of goods provided that the proof of origin is presented to the importing Party no later than 2 years or the period specified. set in the importing Party's law, from the time the good is imported into the territory of that Party.
Product specific rules (PSR):
Product-specific rules are the rules of determining origin for each item (at the 8-digit HS code level). PSR lists are developed by Vietnam and the EU based on the following main criteria:
Commitments of Vietnam and the EU on trade in investment services are aimed at creating an open investment environment, favorable for the operation of the enterprises of the two sides.
In the service sectors, Vietnam's commitments go further than WTO commitments. The EU's commitments are higher than the commitments in the WTO and equivalent to the highest level of EU commitments in the recent EU agreements for Vietnam.
Areas in which Vietnam commits to be favorable to EU investors include a number of specialized services, financial services, telecommunications services, transportation services, distribution services.
General obligations on trade in services and investment
Market Access: For sectors and sub-sectors listed in the Schedule of Specific Commitments, except where there are reservations specified in the Schedule, the two parties undertake not to apply restrictions related to: (i) number of businesses enterprises are allowed to participate in the market, (ii) transaction value, (iii) number of operations, (iv) foreign capital contribution, (v) form of legal entity, (vi) number of natural persons recruitment.
National Treatment: For the sectors/ subsectors listed in the Schedule of Specific Commitments, the two parties commit to each other's service provider and investor treatment no less favorable than the treatment accorded to each other. similar service providers and investors, unless otherwise specified in the Schedule. With respect to investor enterprises of one Party already operating in the territory of the other Party, the Parties undertake to treat their investors' enterprises, except for the exceptions specified in the Schedule and a number of other specific exceptions.
Most favored nation treatment: The two parties committed to each other's investor investment that were licensed with treatment no less favorable than the treatment afforded to the investment of a third-party investor. The fields of communication, culture, sports and entertainment, air transport and commercial rights, fisheries and aquaculture, forestry and hunting, mining and oil and gas are not subject to pressure. use these obligations.
Performance requirements: For the sectors/ sub-sectors listed in the Schedule of specific Commitments, the two parties undertake not to apply operational requirements such as: prescribing a certain percentage or level of exports for goods or services, and a certain rate or level of localization, which binds the quantity or value of imports to the quantity or value of exports or the source of foreign currency income associated with an investment ...
Structure of the Government Procurement Chapter
Commitment in the field of Government Procurement that Vietnam and the EU agreed to enhance transparency and efficiency of public procurement and ensure efficient spending of the State budget. Accordingly, the Government Procurement Chapter in the EVFTA Agreement consists of two main parts:
Main contents of Government Procurement Chapter
General principles for all bidding packages covered by EVFTA:
Principles of open bidding procedures:
Group of principles for selected bidding procedures:
Procurement packages Vietnam committed to open to EU contractors
According to EVFTA, Vietnam commits to allow EU contractors to participate in bidding packages that satisfy all of the three conditions stated in Appendix 9C: Package value; Procurement Agency; Goods and services that need to be procured. In addition, there are some exceptions in which bidding packages are not subject to the provisions of the Chapter which can be divided into groups:
Public procurement packages that the EU has committed to open to Vietnam
The conditions on public procurement packages that the EU commits to open to Vietnamese contractors, goods and services are stated in Appendix 9B, Chapter 9 of the EVFTA Agreement, which also includes 03 groups of concurrent conditions procurement authority, on the type of goods / services procured and on the threshold of value).
In addition, the EU also reserves a number of exceptions, even though the procurement package conditions mentioned above have been met but are still exempt from the scope of the EVFTA commitments relating to procurement. public. Examples are: Procurement package for agricultural products in the program to promote agricultural support or provide / aid food for people; Procurement, development and production packages for television programs and broadcast contracts ...
The EVFTA Agreement's intellectual property commitments include commitments on copyrights, inventions, inventions, commitments relating to pharmaceuticals and geographical indications, etc. Basically, commitments on intellectual property Vietnam's intellectual property is in accordance with the provisions of current law.
Copyright and related rights
Vietnam committed to accede to the Copyright Agreement (WCT) and the Treaty on Performances and Phonograms (WPPT) of the World Intellectual Property Organization (WIPO) within 3 years from the date of the Agreement. EVFTA is in effect. The EVFTA Agreement provides for a period of protection lasting at least 50 years and exclusive protection of performers in the reproduction, distribution, publication, and broadcasting of a fixed performance to the public.
Trademark
The two Parties undertake to apply a favorable and transparent registration procedure, including establishing a public electronic database of trademark registration dossiers, and allowing revocation of the registered trademark. but not in actual use for at least 5 years.
Industrial Designs
Vietnam commits to accede to the La-or Agreement on International Registration of Industrial Designs (1990) within 2 years from the entry into force of the EVFTA Agreement and will protect the industrial design for a period of at least 15. year.
Enforcement
The Agreement has provisions on border control if it is found that the exported goods have signs of infringement of intellectual property rights.
Geographical Indications (GI)
Since the EU Members have a tradition of mass production of agricultural products and foods of specific regional quality such as Bordeaux wine, Mozzarella cheese, Parma ham, etc., the EU has a high degree of protection. GI and attaches great importance to the content in negotiating FTAs. Vietnam also has legal provisions on protection of geographical indications and some geographical indications are protected, giving higher value to agricultural and food producers in some regions. Phuong.
When the Agreement comes into force, Vietnam will protect more than 169 geographical indications of the EU (including 28 members) (mainly wine and food). The EU will protect 39 geographical indications of Vietnam. All geographical indications of Vietnam are related to famous agricultural products and foods with high export potential such as Moc Chau tea, Buon Ma Thuot coffee, etc., creating conditions for a number of agricultural products of Vietnam. building and asserting its brand in the EU market.
Most Favored Nation Treatment (MFN) Commitment
Other than treating preferences in trade in goods and services under FTAs as exceptions to the MFN principle (members in an FTA can grant each other preferences in the areas of goods and services. cases which are not considered to be in violation of WTO MFN principles), under the WTO TRIPS Agreement, with respect to intellectual property rights, if a WTO member affords any advantage, preference, priority or exemption. Any subject holding nationality of another WTO member country must also grant such treatment to nationals of all WTO member countries. As such, the high level commitments on intellectual property (with respect to the obligations under the TRIPS Agreement) under the EVFTA Agreement will apply to all WTO members and vice versa.
The chapter on Trade and Sustainable Development in the EVFTA Agreement includes 17 articles with main contents including: Biodiversity, Climate change, Forest resource management and forest product trade, Sustainable management of natural resources. marine biology and aquaculture products, Labor and Transparency, as follows:
Biodiversity
The Parties recognize that states' sovereignty over natural resources and the right to determine whether access to genetic resources remains with each Party's Government and subject to domestic laws. The Parties shall endeavor to facilitate access to genetic resources for the right purpose, however, access to genetic resources shall be subject to the prior notice of the Supplier, unless otherwise specified by that Party.
In addition, the two sides will strengthen cooperation and exchange of information on strategies, initiatives, policies, programs, action plans and awareness campaigns of consumers to prevent the disappearance. biodiversity and reduce biodiversity stress.
Climate Change
The Parties undertake to implement and cooperate to achieve the goals related to climate change specified in a number of international environmental agreements, including the United Nations Framework Convention on Climate Change. 1992, the Kyoto Protocol relating to the UNFCCC Convention and the Paris Agreement. The Parties shall cooperate in key areas including:
Sustainable forest resource management and trade in forest products
Promote trade in forest products from sustainably managed forests, exchange information on measures to promote consumption of timber and timber products.
Sustainable management of marine resources and aquaculture products
Commitment to comply with international conventions on the Law of the Sea, agreements on the conservation of marine biological resources. In particular, the two sides emphasized actively participating in the fight against illegal fishing, promoting the development of the aquaculture industry in a sustainable way based on economic, social and environmental aspects.
Labor
Commitment to continue and sustain efforts to ratify core conventions of the International Labor Organization (ILO) and to consider adopting other conventions classified as relevant in the ILO as current, taking into account domestic conditions. In addition, the Parties reaffirm their commitment to the effective implementation of domestic laws and regulations and ratified ILO Conventions.
Transparency
The Parties shall make public and transparent matters including: the formulation and enforcement of laws, measures related to environmental protection that may affect trade and investment; dialogue, exchange and sharing of information related to the development and implementation of strategies, policies and legal regulations on multilateral agreements on environment, climate change and biodiversity , forestry, fisheries and marine resources; and ensuring the appropriate use of scientific information and evidence, international guidelines and standards in the development and implementation of environmental protection measures.
Regarding investment protection
The two sides undertake to grant national treatment and most favored nation treatment to the investment of the other Party's investors, with a number of exceptions, as well as fair, adequate, safe and adequate treatment. sufficient, permitting the freedom to transfer capital and profits from investment abroad, undertaking not to expropriate, nationalizing investors' assets without adequate compensation, undertaking to compensate for damages appropriately for The other party's investor is the same as a domestic investor or a third party in case of damage caused by war, riot, etc.
Regarding the dispute settlement mechanism between investors and the State
In the event of a dispute arising between a Party and an investor of the other Party, the two parties agree to prioritize the settlement of the dispute in good faith through negotiation and conciliation.
In case the dispute cannot be resolved through consultation and mediation, the dispute settlement mechanism specified in this Agreement can be used. Accordingly, Vietnam and the EU agreed to establish a permanent dispute settlement mechanism consisting of two levels, namely first instance (with 09 members) and appeals (with 06 members). Members of this investment dispute settlement mechanism are appointed by the EVFTA Trade Commission, operating for a regular term of 4 years and can be appointed for one additional term, enjoying maintenance fees by the Parties. Payment Agreement.
The judgment of the appellate body and the preliminary arbitral tribunal's ruling if not appealed within 90 days from the date of its issuance is considered the final verdict, the disputing parties no longer have the right to appeal. The two sides will recognize the final judgment with the same validity as their own court ruling. For Vietnam, this provision will take effect 5 years after the date of entry into force of the Agreement or a longer period agreed by the Trade Commission. Execution of the award is carried out in accordance with the laws of the country where the award is enforced.
The two sides agreed that if they both join in an Agreement establishing an investment multilateral dispute settlement mechanism or an investment multilateral appellate mechanism, the implementation of the system of dispute settlement agencies may be terminated. to accept bilateral investment under this Agreement.
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