Partners are enjoying German tariff preferences
Partners are enjoying German tariff preferences
Besides Vietnam, the EU is currently applying the GSP mechanism and/or having FTAs with many other countries and regions in the world. Those partners also receive incentives when exporting to the EU like Vietnam although the incentives may vary among partners. Thus, their goods can create more competitive pressure for Vietnamese goods than other partners that are not subject to any EU’s tariff preferences when accessing the German market.
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FTA partners
By the end of 2021, the EU had a total of 42 FTAs in force, 2 signed FTAs waiting for approval, and 5 FTAs under negotiation. In terms of partners, there are 79 countries and territories that have FTAs in force with the EU. Thus, goods from these 79 partners when exported to the German market will enjoy preferential tariffs under the FTA with the EU.
However, it should be noted that these FTA partners are mainly in Europe and the Americas. For the Asian region, the EU has only 12 FTA partners, of which there are only 2 countries in Southeast Asia including Vietnam and Singapore.
Table: EU’s FTAs and FTA Partners
|
No |
FTAs |
Partners |
|
1 |
42 FTAs in force |
- 12 partners in Asia (Japan, Korea, Singapore, Vietnam...) of which only 2 partners in ASEAN - Singapore and Vietnam - 18 non-EU partners in Europe (Iceland, Norway, Switzerland, Turkey, Ukraine, Liechtenstein, UK...) - 18 partners in Africa (Algeria, Botswana, Eswatini, Mozambique, South Africa, Zimbabwe...) - 27 partners in the Americas (Mexico, Colombia, Ecuador and Peru, Chile, Canada...) - 4 partners in Oceania (including: Solomon Islands, Samoa, Papua New Guinea, Fiji) |
|
2 |
2 signed FTAs waiting for approval |
14 partners in West Africa |
|
3 |
5 FTAs under negotiation FTA Australia – EU FTA China – EU FTA Indonesia - EU FTA New Zealand – EU FTA Philippines - EU |
Australia, New Zealand, China, Indonesia, Philippines |
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GSP Partners
GSP is a preferential tariff mechanism that the EU unilaterally grants to developing and least-developed countries. The EU currently applies 03 different GSP mechanisms to a total of 67 economies, including:
(i) EBA (Everything But Arms) for least developed countries (LDCs) which can benefit from duty-free (0% duties) or quota-free when accessing the EU market for all products except arms and ammunition;
(ii) Standard GSP for low and lower-middle income countries which are granted a partial or full removal of customs duties on two thirds of tariff lines. Vietnam is currently enjoying this GSP mechanism and will end from August 1, 2022 due to the coming into force of the EVFTA;
(iii) GSP+, the special incentive arrangement for sustainable development and good governance which will reduce tariffs to 0% for the same tariff lines as in the case of Standard GSP for beneficiaries accepting additional sustainability requirements (it is based on application).
Unlike FTAs, GSP is a unilateral preferential mechanism of the EU, so the EU can change the beneficiaries and conditions to enjoy GSP at any time, depending on its policies in each period. Furthermore, the preferential tariffs in the case of the standard GSP are usually lower than the preferential tariffs under the FTA. However, tariff reduction under the GSP mechanism could still create certain advantages for products of beneficiary countries when accessing the EU market in general and the German market in particular.
Currently in ASEAN, Cambodia, Laos, and Myanmar are enjoying EBA of the EU, while Vietnam (until July 31, 2022) and Indonesia are subject to the standard GSP of this region. The remaining countries in ASEAN except Singapore (which already has an FTA with the EU) when exporting to Germany are not eligible for any preferential tariff rates other than the WTO’s MFN rate.
Source: "Business Handbook: Exploiting the EVFTA to import and export goods between Vietnam and Germany" - Center for WTO and International Trade
