The EU’s free trade agreement with Vietnam will boost European growth and job creation in the retail sector, as well as the development of Vietnam, according to EU trade negotiators, experts and business leaders.
EU retailers currently import 8 percent of fast-moving consumer goods from Vietnam, a figure still well behind the 50 percent imported from China, but growing fast and set to get a boost from the elimination of tariffs under the FTA, which would lower costs for importers and European consumers.
Among key export items, garments and textiles witnessed an increased turnover of $15.5 billion, up 4.2 percent year-on-year in the first eight months of 2016, and footwear ($8.6 billion, up 8.1 percent). Even without the FTA, EU clothing imports from Vietnam increased by 3.2 percent in 2015. Given the sensitivity of the sector, the full elimination of the tariffs will be staged over seven years. Rules of origin conditions for garments will require the use of fabrics produced in Vietnam, with the only exception being of fabrics produced in South Korea.
The agreement is also expected to boost Vietnam’s development, already considered an exceptional success story, with per capita income rocketing from $100 in 1986 to $2,100 in 2015. “Development has been driven by economic growth and economic growth has been driven by exports.
The first comprehensive trade agreement the EU concludes with a developing country, the FTA includes a strong chapter on sustainability.