Opportunities from the EVFTA for importing goods from Germany into Vietnam?

Question: Opportunities from the EVFTA for importing goods from Germany into Vietnam?


  • Opportunity from tariff reduction and market opening: This is probably the biggest opportunity from the EVFTA for German exports to Vietnam because currently Vietnam is applying relatively high MFN tariff rates on many of Germany's main export products. The EVFTA is also one of the FTAs ​​that Vietnam has  relatively high commitments to reduce tariffs, much higher than many previous FTAs of Vietnam. Therefore, with the EVFTA preferential tariffs when entering Vietnam, German goods could have reduced prices, thereby offsetting high transportation costs, and having a competitive advantage compared to many other competitors. German product groups that are considered to have many advantages from tariff reductions under the EVFTA are: vehicles, electrical machinery and equipment, plastic products, iron and steel, mineral oil fuels, animal meat and livestock sausages, sausages, milk and dairy products.

In addition, Vietnam shall also allow German companies to access  many procurement packages of many government entities (of 20 ministries, 2 cities, 34 hospitals, etc.). This will create opportunities for German contractors to supply goods for Vietnam through government procurement packages.

  • Opportunities from the reduction of non-tariff barriers: In the EVFTA, Vietnam has many commitments related to customs reform and trade facilitation, application of Sanitary and Phytosanitary Measures, Technical Barriers to Trade, trade remedies, etc., in compliance with the rules and standards of the EVFTA. These commitments will help reduce unnecessary barriers to trade between Vietnam and Germany.

Although Vietnam is considered as one of the relatively "easy" import markets for foreign goods, some imported products are still subject to many non-tariff measures of Vietnam such as: food, pharmaceutical products, chemicals, means of transport... In addition, many administrative procedures are still inadequate, time consuming and costly for businesses. The implementation of the EVFTA is expected to make it easier for German goods to access the Vietnamese market by reducing non-tariff barriers and reforming customs procedures.

Therefore, all German goods when accessing Vietnam will benefit from Vietnam's commitments on reducing non-tariff barriers. In particular, some German commodity groups will have more advantages from Vietnam's additional commitments, such as: non-agricultural products (thanks to commitments on EU labeling), automobiles - vehicle products - spare parts (thanks to TBT commitments for these products), pharmaceutical products (thanks to commitments on standards and transparency), remanufactured goods (thanks to the commitment on treating remanufactured goods like new ones).

  • Opportunities from enhanced protection of intellectual property rights: Germany is one of the countries that have the most advanced technology in the world, thus it owns many trademarks, patents and other IPRs. That is why German businesses often pay high attention to IP protection issues when accessing foreign markets. With the EVFTA, Vietnam has many strong commitments both on increasing the protection of IP rights and on strengthening enforcement measures to protect them. In particular, Vietnam committed to recognize 12 German geographical indications, which helps these products to be protected automatically in Vietnam. German product groups that will benefit greatly from Vietnam's IP commitments in the EVFTA are: pharmaceutical products, alcohol and beverages…

  • Opportunities from cost reduction due to improved legal and business environment: Throughout the EVFTA are commitments made by both Vietnam and the EU towards liberalization, equality, transparency and facilitation for trade and investment between the two sides. On the Vietnamese side, these commitments will make Vietnam's business and legal environment more and more favorable, cutting costs and time for businesses. Since then, when German goods enter Vietnam, whether through import activities, or setting up a representative office/product introduction, or through government procurement, etc., will be more facilitated and easier.


EVFTA opportunities for German pharmaceutical products

Germany is one of the world's largest pharmaceutical producers and exporters. Meanwhile, according to a KPMG Report, Vietnam's pharmaceutical market has been growing rapidly in recent years, from USD 2.7 billion in 2015 to USD 3.6 billion in 2018. Import demand for these products also increased by 43% from USD 2.3 billion in 2015 to USD 3.3 billion in 2020. In addition, with the rapid economic development and increase of middle and upper class in Vietnam, the demand for health care, especially for high-quality pharmaceutical products also increases. Therefore, German high-end pharmaceutical products will have great opportunities to access the Vietnamese market in the future thanks to the following benefits from the EVFTA:

- Benefits from tariff reduction: Currently, Vietnam is applying MFN tariff rates ranging from 0% to 14% (average 2.19%) on pharmaceutical products. In the EVFTA, Vietnam committed to eliminating about 63% of pharmaceutical tariff lines for Germany at entry into force of the Agreement. The remaining tariff lines will be eliminated gradually after 10 years.

- Benefits from commitments on standards and transparency: Vietnam committed on transparency in legal documents, regulations, criteria and procedures related to pricing, price listing, reimbursement or medication management. Vietnam also committed to building technical regulations for pharmaceutical products and medical equipment based on relevant international standards, practices and guidelines, unless it is scientifically proven that these standards, practices, and guidelines are inappropriate or ineffective for carrying out their legitimate objectives.

- Benefits from the commitment to allowing German investors to import, build warehouses, research and introduce pharmaceutical products: Vietnam committed to allowing German FDI enterprises to import pharmaceutical products but not engage in the wholesale or retail of them and only resell to enterprises that are licensed to distribute (wholesale) pharmaceutical products in Vietnam; These enterprises are also allowed to build warehouses to store imported medicine, conduct clinical research/testing to ensure that the pharmaceutical products are suitable for Vietnamese people, and introduce information about imported medicine to medical staff in accordance with Vietnam's regulations.

- Benefits from the commitment on marketing authorization procedures: Vietnam committed to abolishing the requirement of a minimum period of existing authorization in the EU, prior to the submission of a request for marketing approval in Viet Nam, and abolishing any additional requirements relating to clinical studies going beyond those stipulated in international practices (in particular the practice of The International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use - ICH).

- Benefits from commitments on intellectual property: Vietnam's commitment on compensating for the delay of marketing authorization which causes the commercial exploitation time of pharmaceutical products that are exclusively protected to shorten, and commitment on protecting exclusive data within 5 years, etc will help German pharmaceutical products to be protected higher when circulated in the Vietnam market.

- Benefits from commitments to opening the government procurement market: For pharmaceutical products, Vietnam committed to allowing EU enterprises to participate in pharmaceutical product procurement of the Ministry of Health and 34 public hospitals under the Ministry of Health with certain conditions and schedules. This will be a very good opportunity for German pharmaceutical contractors to access Vietnam's government procurement market, which has a lot of potential and open just to a few FTA partners.


EVFTA opportunities for German automobile products

Germany is one of the world's leading automobile manufacturers and exporters with many famous brands such as Mercedes, BMW, Audi, Porsche... Meanwhile, Vietnam is a developing country with economic growth rate being among the highest in the region and in the world, with an increase of the middle class. Therefore, Vietnam’s demand for luxury goods including automobiles, especially, luxury-brand cars imported from Germany is increasing. The percentage of car ownership in Vietnam has grown by about 10.5% per year in recent years (French Chamber of Commerce and Industry in Vietnam, 2021). In addition, according to a 2019 Automotive Industry Report of Vietin Securities Company, the growth rate of Vietnam's automobile industry in the period of 2014-2018 reached an average of 23.7%. Thus, the official implementation of the EVFTA will create easier conditions for Vietnamese people to purchase famous and quality cars from Germany. The benefits that EVFTA may bring to German automobiles include:

Benefits from tariff reduction: Vietnam currently maintains very high MFN tariffs on automobiles (from 3% to 70%). In the EVFTA, Vietnam committed to eliminating tariffs for most German automobiles after 9-10 years, just some types of automobiles have no tariff commitments (for example, some go-karts, all-terrain vehicles, ambulances, prison vans, sports cars, etc.).

Benefits from TBT commitments for automobiles:

Vietnam has a commitment that if Vietnamese law requires information about the country of origin, an enterprise labelling "Made in EU" or "Made in the EU" is considered to satisfy the requirement.

In addition, Vietnam committed to recognizing a number of standards of the 1958 UNECE Agreement for German automobiles. Although not yet a member of UNECE, in the EVFTA, Vietnam recognized the UNECE regulation as an international standard sufficient to ensure the safety or protection of the environment and human health in the automotive sector.

Vietnam also committed not to new domestic TBT regulations different from UNECE standards unless it can be demonstrated from a scientific and technical perspective that the UNECE standards are inappropriate or ineffective introducing new domestic TBTs that differ from UNECE standards unless it can be demonstrated from a scientific and technical perspective that the UNECE standards are inappropriate or ineffective for it.

Vietnam will accept whole motor vehicles of category M11 (according to UNECE’s definition) that have a valid UNECE International Whole Vehicle Type Approval certificate issued by the EU as compliant  with Vietnam's domestic technical regulations (without further testing requirements). The importer of that type of vehicle will have to submit the above Certificate for the first time of import into Vietnam.

The German automobile industry is currently applying UNECE standards, so Vietnam's acceptance of some UNECE regulations/standards will create favorable conditions for German automobile products to access the Vietnamese market.


EVFTA opportunities for German beverage products

Vietnam is one of the most dynamic markets for alcoholic beverages in Asia. Vietnam is in the top 15 countries consuming beer in the world and ranked 3rd in Asia with 43 liters/person/year. Vietnam’s alcohol consumption is increasing with an average annual growth rate of 5.3% for the period 2013-2018 (French Chamber of Commerce and Industry in Vietnam, 2019). In addition, Vietnamese people are increasingly interested in the quality and prestige of alcohol brands. Therefore, alcoholic beverages from Europe, including Germany, are increasingly favored by Vietnamese consumers. Especially, with many famous beer brands in the world, Germany is currently the EU country where Vietnam imports beer the most. In the future, the EVFTA is expected to help increase the export of German beverage products to Vietnam thanks to the following benefits:

Benefits from tariff reduction: Vietnam currently maintains relatively high MFN tariffs on beverage products, especially beer and wine. Specifically, the average MFN tariff in 2020 for beer products was 35%, for alcohol products was 45-55%. In the EVFTA, Vietnam committed to eliminating tariffs for wine and spirits after 7 years and for beer after 10 years.

Benefits from protection of Geographical Indication

Germany has 12 geographical indications automatically protected under the EVFTA, of which there are 9 GIs that are alcoholic beverages (beer, wine and spirits), including:

1.        Bayerisches Bier – Beer

2.        Münchener Bier – Beer

3.        Korn/Kornbrand - Spirit

4.        Franken – Wine

5.        Mittelrhein – Wine

6.        Mosel – Wine

7.        Rheingau – Wine

8.        Rheinhessen - Wine

9.        Genièvre/Jenever/Genever - Spirit

German beer products that are protected by geographical indications will have a better chance of accessing the Vietnamese market: being protected, known and increasing brand value.


EVFTA opportunities for German meat products

Germany has a developed agriculture sector with more than 80% of its territory used for agricultural and forestry purposes. Therefore, Germany is also known as a leading country in the production and export of agricultural products, including meats such as pork and beef... In 2019, Germany exported about 363 thousand tons of beef and 2.8 million tons of pork to about 100 countries around the world (german-meat.org). In addition, Germany also has a meat processing industry with hundreds of years of experience in the production of sausages, frozen meat, ham, etc.

On the Vietnamese side, the demand for pork and beef is increasing, while the domestic meat production sometimes does not meet the demand. Moreover, Vietnamese consumers have increased the use of frozen and processed meat products. Therefore, the amount of beef and pork imported into Vietnam in recent years has grown significantly. According to statistics from the Department of Livestock Production, Vietnam's total import turnover of bovine animals in 2020 reached nearly USD 414.4 million, increased by 28.8% compared to 2019.

Therefore, the EVFTA will help promote the export of German meat products to the Vietnamese market thanks to the following benefits:

Benefits from tariff reductions:

Vietnam currently maintains relatively high MFN tariffs on pork, beef and meat products. Specifically, the average MFN tariff in 2020 for fresh/chilled/frozen bovine animals was 14-30%, for fresh/chilled/frozen pork was 15-25%, and for salt/smoked meats was 10-20%, and for sausages and similar meat products was 22%. With the implementation of the EVFTA, German meat products imported into Vietnam shall be liberalized with a specific schedule as follows: Eliminating tariffs for bovine animals after 3 years, for pork after 7-9 years, for salt/smoked meats after 7-9 years, and for sausage after 10 years.

Benefits from protection of Geographical Indication

Of the 12 geographical indications of Germany that are automatically protected under the EVFTA when entering the Vietnamese market, there are 02 meat products: Nürnberger Bratwürste Sausage and Schwarzwälder Schinken Ham. These products will have advantages when approaching the Vietnamese market because they are protected, known and increase brand value..


EVFTA full text for more information: https://wtocenter.vn/chuyen-de/12778-eu-vietnam-trade-and-investment-agreements 

Source: The Center for WTO and International Trade