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On June 30, 2019, the European Commission and the Vietnamese government signed two trade agreements in Hanoi, the capital of Vietnam, namely the Free Trade Agreement and the Investment Protection Agreement. In terms of trade in goods, the two sides plan to gradually reduce tariffs on 99% of goods in bilateral trade within 10 years after the agreement comes into effect, and the remaining small part will be liberalized in the form of quotas. In addition, the agreement also contains environmental, human rights and labor rights. Aspects. In the future, once the free trade agreement and investment protection agreement come into force, it will further promote and strengthen the trade and investment cooperation between Vietnam and the EU, and create new market opportunities for the development of both sides in various fields.

　　The two agreements signed by Europe and Vietnam are still pending ratification.

The negotiation of the EU-Vietnam Free Trade Agreement began in June 2012. The negotiation lasted for three and a half years. The draft agreement was concluded and signed at the end of December 2015. Due to the internal legal procedures of the EU, it has been delayed so far. On June 25 this year, the agreement was finally ratified by all EU member states. At present, the two agreements still need to be approved by the legislative bodies of both sides before they can enter into force. The Vietnamese side will be submitted to the Vietnamese National Assembly for approval, while the European side still needs to be approved by the European Parliament. In addition, the investment protection agreement will be ratified by EU member states in accordance with their national procedures.

　　EU and Vietnam are important trade partnership

Vietnam is the EU's second largest trading partner in the ASEAN region after Singapore. In 2018, the EU and Singapore signed a free trade agreement, which plans to exempt all bilateral tariffs within five years. Vietnam has become the second country in Southeast Asia to sign a free trade agreement with the EU. This agreement is also the largest free trade agreement signed by the EU and developing countries.

At the same time, the EU is also Vietnam's second largest export target market after the United States. Vietnam's main exports to Europe include clothing products. In 2018, Vietnam's clothing exports to the EU totaled US $4.098 billion, textile yarn exports US $0.029 billion, and fabrics and apparel exports US $0.24 billion. The EU accounts for 13.5 per cent of Vietnam's total garment exports, behind the United States (45 per cent).

In the future, after the EU-Vietnam Free Trade Agreement comes into effect, the import tariffs on cotton, wool, silk and hemp yarns (current tax rate 3-5%), chemical fiber filaments and staple yarns (tax rate 4-8%) and fabrics/fabrics (tax rate 3-8%) exported to the EU in all upstream and intermediate links of Vietnam's textile industry chain will be reduced to zero immediately from the effective date of the agreement.

In the end products, the tariff of most clothing products (the current tax rate is 8-12%) will be reduced to zero in stages after a transition period of 3 to 7 years, and the tariff of a small number of clothing products will be reduced to zero directly. In household textiles, tariffs on curtains, blankets, etc. (tax rate 6.9-12%) can be exempted from the entry into force of the agreement, and tariffs on cotton sheets, quilt covers, pillowcases, etc. (tax rate 12%) will be reduced to zero within 5 years. Carpets (tax rate 3-8%), industrial finished products (tax rate 3.2-12%), special woven fabrics and tufted fabrics (tax rate 5-8%) will be reduced to zero immediately after the agreement comes into effect.

Vietnam, as the world's third largest garment exporter, is expected to total textile and garment exports to reach $50 billion billion by 2020. In recent years, the Vietnamese government has attracted a large amount of foreign investment by vigorously reforming the business environment and improving preferential policies, which has led to the rapid development of the local textile and garment industry and the continuous improvement of international competitiveness.

With the signing of the free trade agreement and investment protection agreement between the EU and Vietnam, Vietnam's textile and garment industry will usher in greater development opportunities. The EU-Vietnam Free Trade Agreement will promote Vietnam's garment exports to grow at a faster rate and continuously improve its competitiveness and market share in the EU market. At the same time, the investment protection agreement between the EU and Vietnam will promote Vietnam to create a better business and investment environment and further enhance the attractiveness of investment.

At present, there is a strong market competition between China and Vietnam in the export trade of textiles and clothing, and the competition for international orders is fierce. The signing of the agreement has brought pressure to China's enterprises exporting textile and clothing products to the EU to a certain extent.

(Source: China Textile Industry Federation International Trade Office)