The EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) were officially ratified by the European Parliament (EP) on February 12, 2020. This is a significant event, creating a turning point in the integration process of Vietnam, said Minister of Industry and Trade Tran Tuan Anh in an article published on Nhan Dan Newspaper.
This historic event also turns Vietnam from a later nation in the process of international economic integration to become the first developing country in the Asia-Pacific region to have free trade relations with the EU. Vietnam together with Singapore is also the first group of countries in ASEAN to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Therefore, both strength and position of Vietnam in the international arena continue to be enhanced, helping Vietnam to confidently assume the position of ASEAN Chair and non-permanent member of the United Nations Security Council in 2020.
In 1991, at the seventh National Party Congress, the Communist Party of Vietnam declared that Vietnam wishes to be friends with all countries in the world. Since then, Vietnam has continuously expanded bilateral, regional and multilateral economic relations after the collapse of the socialist system in Eastern Europe to build new international economic relations, paving the way for economic reforms and overcoming the crisis.
At the 10th National Party Congress in 2006, our Party emphasised the policy of proactive integration into the international economy. Pursuing that policy, Vietnam joined the World Trade Organization (WTO) in January 2007 and began to participate in a number of traditional free trade agreements, firstly with neighbouring countries without imposing too high requirements in the agreements. This is considered the second phase of Vietnam’s official economic integration and participation into global economic - trade institutions. Vietnam has become an active country in building equal relations with other countries as well as in regional and global economic and trade forums.
To prepare for a new stage in the integration process, the 12th Party Central Committee issued Resolution No. 06-NQ/TW on November 5, 2016, on the effective implementation of international economic integration and maintenance of socio-economic stability in the context of Vietnam joining new generation of free trade agreements. With the ratification and effectiveness of CPTPP in early 2019 and the EP’s ratification of EVFTA on February 12, 2020, we have successfully implemented the guidelines set out in the Resolution No. 06-NQ/TW and officially moved to the third stage of the international economic integration process - the stage of implementing the new-generation FTAs with strong commitments and considerable impacts on many aspects for Vietnam.
Improving the internal strength of the country
Our country gained many achievements in development in 2019, including significant contributions for the process of international economic integration. Vietnam recorded an import and export turnover of US$517.26 billion in 2019 and enjoyed a trade surplus ofUS$11.12 billion. CPTPP - the first new generation FTA that Vietnam has participated in for more than a year, has contributed more than US$5.23 billion to Vietnam’s trade surplus, demonstrating its effectiveness for the country's economic development.
With many complicated and unpredictable world political and security situations, the implementation of EVFTA is expected to help Vietnam improve its internal strength to better cope with these adverse developments.
The EU is currently one of Vietnam's largest export markets, with Vietnam’s export revenue to the market reaching US$41.48 billion and import revenue reaching US$14.91 billion in 2019. Therefore, the agreement will help Vietnam to facilitate export and diversify markets to gain higher added value through the establishment of new supply chains.
In addition, the FTA with several leading economic partners will help consolidate the position of Vietnam so that the country can implement its foreign policy of independence, self-reliance, multilateralisation and diversification along with strengthening its national defense and security. As a comprehensive agreement, EVFTA is also a huge motivation for Vietnam to accelerate reforms and restructure the economy in a more efficient and modern manner.
Contributing to creating momentum for reforms
Unlike traditional FTAs that only focus on reducing tariff and non-tariff barriers, EVFTA is a new generation FTA associated with profound reforms. In addition, Vietnam has cooperated with the EU to formulate an agreement with differences, even compared to the previous new generation of FTAs such as the CPTPP. Under EVFTA, great importance is attached to the role of sustainable development and workers instead of focusing only on economic values.
The reforms in EVFTA are reflected in many areas especially labour. In preparation for the implementation of EVFTA, the National Assembly of Vietnam officially adopted the revised Labour Law which will be put into effect from the beginning of 2021. The most important contents of all eight basic Conventions of the International Labour Organisation(ILO) have been reflected in the provisions of the law. Besides the generations of economic benefits, we have also built institutions to ensure that benefits will be shared in the most equal manner for workers.
Regarding sustainable development, the agreement also looks to the participation of people, mass organisations and smaller organisations representing the voice of social classes and communications in the policy-making process. This is a completely new mechanism, built on the foundation of a facilitating state that appreciates the accountability of state management agencies and the enterprise community. In addition, the contents in EVFTA on close cooperation in combating climate change, fighting against illegal fishing, increasing the use of renewable fuel sources, and others are also considered as a basis for sustainable development.
Regarding the business environment, with the implementation of commitments in EVFTA, the business environment, policies and laws of Vietnam will see changes and improvements in the direction of more transparent, convenient and more appropriate with international rules.
Regarding the renewal of economic structure and growth model, Vietnam has an opportunity to attract huge investment and connect trade and investment activities between the EU and ASEAN region, particularly when Vietnam has been implementing other important FTAs with the Eurasian Economic Union, the Republic of Korea, and others.
"Highway" for Vietnam to accelerate!
It must be affirmed that the accomplishment of the above goals are not easy, requiring high determination of agencies, localities, mass organisations and the business community. We are still a developing country, with an average income per capita of about US$2,800. Although enterprises have a strong desire to grow, they are in small scale and have limitations in size and potential.
According to a study by the Vietnam Chamber of Commerce and Industry (VCCI), 17% of enterprises do not know about EVFTA and 56% of enterprises are not fully aware of EVFTA. Therefore, we need to work soon to make the most of the benefits of EVFTA.
When signing EVFTA in June 2019, the Prime Minister stated that EVFTA is like a "highway" in integration to connect Vietnam with an important economic centre, creating a premise for the national development in the future. The new generation free trade agreements are the "highways" for Vietnam to accelerate and successfully respond to challenges and changes of the world production during the Industrial Revolution 4.0.
We are building a national development strategy until 2030 with a vision to 2045 with the goal of becoming a powerful and reputable country in the region and in the international arena. International economic integration has become an important driving force for national innovation and development at a higher level.
2020 is considered a pillar and a transitional year for the country to enter a new phase. The ratification of EVFTA by the EP is a positive signal to help Vietnam to gain confidence to enter a new stage of integration and take lead in economic cooperation institutions in the region.
Source: Nhan Dan Online