On 8 June 2020 Vietnam ratified the European Union - Vietnam Free Trade Agreement (EVFTA) and the European Union - Vietnam Investment Protection Agreement (EVIPA). The EVFTA will provide expansive preferential markets access for goods traded between Vietnam and the European Union (EU). The EVFTA will enter into effect on 1 August 2020.
In order to export from Vietnam to the EU, exporters must have a REX number in order to complete shipments valued at over EUR 6,000 from 1 July onwards. REX numbers are required for shipments regardless of whether or not goods are traded under EVFTA preferential terms.
On 11 June 2020, the European Union issued the 'Notice to exporters concerning the application of the REX system in the European Union for the purpose of the Free Trade Agreement with Vietnam.' This is a follow up to the 8 April notification from the EU to Vietnam that the REX system will apply to trade under the EVFTA.
What is the REX system?
The REX system is the EU database used to register and identify exporters, allowing them to certify the origin of goods based upon self-certification of origin. Exporters sending goods from the EU to Vietnam will satisfy EVFTA origin documentation requirements by submission of a self-certified statement of origin made out by a registered exporter in the REX system database, or by any exporter for consignments that do not exceed EUR 6,000.
Likewise, Vietnam exporters supplying goods to the EU should register for a REX number as soon as possible via the EU Customs website. Following online registration, Vietnam exporters can then deliver their application to the Vietnam Chamber of Commerce and Industry (VCCI) who will progress their REX number registration. All exports valued at over EUR 6,000 and destined for the EU, Norway, and Switzerland from 1 July 2020, will require a REX number, regardless of whether or not they rely upon the EVFTA.
Once the EVFTA enters into force and preferential tariff rates are domestically adopted, preferential tariff rates will become available to traders shipping originating goods between the EU and Vietnam. Upon entry into force 85% of tariffs covering imports of goods into the EU will be eliminated, as well as 48.5% of tariff lines applicable to imports into Vietnam, with annual reductions on 1 January of each year thereafter.2
For imports into Vietnam, the Ministry of Finance has already released a draft decree adopting the EVFTA import / export tariff schedule for the period of 2020 - 2022, which is available here, and is open for comments from the public until 30 June 2020. 3
Though the country of origin requirements under the EVFTA are very strict, the benefit can be substantial, so it is important to assess your own position with reference to your particular products and the change that is coming.
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