Vietnam, EU signed a landmark free trade agreement

The European Union signed a landmark free trade deal with Vietnam on Sunday, the first of its kind with a developing country in Asia, paving the way for tariff reductions on 99% of goods between the bloc and the Southeast Asian country.

Signing a free trade agreement with the EU (EVFTA) is extremely important, especially at the moment when more and more people in the world are looking at protectionism. The agreement is a strong and positive sign in demonstrating Việt Nam’s policy of supporting free trade, said Ousmane Dione, World Bank Country Director for Vietnam. Vietnam Insider reports.

“Every agreement comes with both opportunities and challenges and the question here is how Việt Nam can grasp these opportunities,” Dione said, emphasizing that the agreement can help Việt Nam diversify trade partners and Vietnamese products can reach different markets, generating revenue and bringing more wealth to Vietnam.

However, Dione said it would also come with a number of standards which Vietnamese products have to meet and this would provide a golden opportunity for Vietnam and enterprises to take bold actions to modernise and improve national standards to be competitive.

At present, Vietnam has an abundant and “golden-age” labour force who have knowledge and are adaptable but they are also ageing very quickly. The trade agreement with the EU could be a catalyst for Vietnam to accelerate further to build human capacity and modernize different production systems to be able to compete and become an export leader in some specific sectors.

To do that, the Vietnamese Government should have reforms targeting small- and medium-sized enterprises (SMEs) and build the link between specific areas such as foreign invested companies and domestic private enterprises in order to level them up. The Government should give more incentives to help SMEs acquire knowledge, adopt new technology and get support from FDI enterprises.