German Market

Opportunities from EVFTA for exporting Vietnamese goods to the German market

Opportunities from tariff reduction

One of the biggest opportunities that the EVFTA brings to Vietnam's exports to the German market is from the commitment on preferential tariffs of the EU (including Germany). Before the EVFTA came into effect, when exporting to Germany, although Vietnam enjoyed tariff preferences under the EU's GSP mechanism, not all products are eligible for tariff reduction and most of the GSP tariff rates applied are not as preferential as those under the EVFTA. Moreover, GSP is a unilateral preferential mechanism, the EU can stop or adjust the tariff preferences and conditions for enjoying them at any time, while the EVFTA tariff commitment is a reciprocal commitment between Vietnam and the EU, so they are more stable and predictable.

In addition, the preferential tariff rate that the EU gave Vietnam in the EVFTA is also the highest level of tariff commitment that Vietnam has achieved from an FTA partner up to now (the percentage of tariff elimination to the end of the schedule is up to 99.2%, the remaining products also enjoy tariff quotas). The key export products of Vietnam that are considered to have the most opportunities from the EVFTA's tariff reduction commitments when approaching the German market are Footwear (Chapter 64), Clothing (Chapter 61.62), Seafood (Chapter 3), Plastics (Chapter 39), Fruits and nuts (Chapter 08) because the EU (including Germany) currently maintains relatively high MFN and GSP tariffs on these products.

The EVFTA is even more meaningful for Vietnam's exports in the way that many of Vietnam's main competitors in Asia and ASEAN in the German market have not yet had an FTA with the EU.

Opportunity from reduction of production costs, improvement of competitiveness

In the EVFTA, Vietnam also committed to eliminating tariffs for a lot of raw materials and machinery imported from EU member states, including Germany, for domestic production. This is a great opportunity for manufacturing and exporting enterprises that use a lot of imported materials and machineries to buy such inputs from Germany at better prices (currently Vietnam is still maintaining high MFN tariff rates for many of these products).

In addition, Germany is known as the world's leading source of technology, modern machinery and equipment. Therefore, after the EVFTA came into effect, Vietnamese enterprises have a great opportunity to import the best quality machinery and equipment for production at a much lower price than before. Thereby, businesses can improve the production process, increase productivity and product quality, as a result improving the competitiveness of Vietnamese goods compared to other competitors in the region.

In addition, Vietnam has also made a lot of commitments in the fields of services and institutions that can help manufacturing and exporting enterprises save production costs, thereby improving their competitiveness. For example:

  • Commitments to opening markets for services supporting production such as finance (insurance, banking, securities), telecommunications, logistics... at a higher level than those under the WTO. This will create higher competition in these fields and give opportunities for manufacturing enterprises to access these services with better quality and more reasonable prices.

  • Commitments to promoting a competitive environment, modern trade methods, and business support (competition, e-commerce, small and medium-sized enterprises...) will help enterprises, especially small and micro enterprises, to improve competitiveness, better access to customers.

Other opportunities from the reduction of non-tariff barriers

Commitments on non-tariff measures of the EU (including Germany) for Vietnamese goods such as transparency and facilitation of customs clearance and release procedures, exemption from SPS inspection procedures for Vietnam's qualified production facilities, facilitation of  equivalent recognition for Vietnam's SPS measures, encouragement of the recognition for  Vietnam's TBT conformity assessment, etc. will make it easier for Vietnamese goods to access the German market.

Opportunities from commitments on protection of geographical indications

The EU's commitment to protect 39 Geographical Indication (GIs) of Vietnam will help these GI products when accessing the German market be protected automatically without going through a complicated protection application procedure. German consumers generally prefer products protected by GIs and are willing to pay higher prices. Therefore, Vietnamese enterprises exporting these products are expected to enjoy more advantages.

Source: "Business Handbook: Exploiting the EVFTA  to import and export goods between Vietnam and Germany" - Center for WTO and International Trade

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