Tariff commitments are stated in Chapter 2 – “National Treatment and Market Access for Goods” of the EVFTA full text, including 2 parts:

• The text of Chapter 2 - National Treatment and Market Access for Goods

This section includes general rules related to tariffs, applicable to both the EU (including Germany) and Vietnam (but there are also some specific contents that only apply to Vietnam or the EU);

• Annex 2-A – Reduction or Elimination of Customs Duties

This Annex includes 05 Appendixes, of which 03 Appendixes are related to tariff commitments, including:

o   Appendix 2-A-1: Tariff Schedule of the Union (including Germany) for Vietnamese goods

o   Appendix 2-A-2: Tariff Schedule of Vietnam for EU’s goods (including Germany)

o  Appendix 2-A-3: Export Duty Schedule of Vietnam for Vietnamese goods exported to the EU (including Germany)

These Tariff Schedules list specific tariff reduction commitments (schedule) for specific products (according to HS code).

Note to businesses To know the preferential tariff commitments of Vietnam or the EU (including Germany) for a specific product, businesses need to: 1. Determine the correct HS code of the product (according to the HS System of the import market) 2. Look up the tariff for that product in Appendixes of Annex 2-A of the import market Note: It is necessary to read the General provisions of Annex 2-A to understand each symbol used in the Tariff Schedule, then look up the Tariff Schedule (search by HS code) 3. If you have concerns about other tariff issues, read the rules of tariff reduction in the text of Chapter 2 of the EVFTA.

 

Commitments on import tariffs

In the EVFTA, the EU (including Germany) committed to eliminate import tariffs for most Vietnamese products right after the Agreement came into force (August 1, 2020), the remaining products will be liberalised over a transitional period or imposed tariff quotas.

Specifically, EVFTA preferential tariffs of Germany for products imported from Vietnam are as follows:

• On August 1, 2020 when the EVFTA came into effect: Germany eliminated tariffs for 85.6% of tariff lines;

• By January 1, 2027, Germany will eliminate tariffs for a total of 99.2% of tariff lines;

• For about 0.8% of the remaining tariff lines, Germany will impose tariff rate quotas (TRQs) with the import tariff within the quota of 0%. The products of Vietnam imposed the tariff quotas in the EVFTA are: Birds’ eggs and egg yolks; Garlic; Sweetcorn; Husked rice; Milled rice; Manioc (cassava) starch; Tuna; Surimi; Sugar and other products containing high levels of sugar; Speciality sugar; Mushrooms; Ethanol; and Mannitol, Sorbitol, Dextrins and other modified starches.

Note that the quota allocation mechanism for Vietnam under the EVFTA will be regulated by the EU for the whole EU territory for each specific product/product group. Therefore, there will be no separate quota of the German market for any product.

Before the EVFTA, the EU had no FTA with Vietnam. Therefore, in principle, Vietnamese goods imported into Germany - an EU member must be subject to the MFN tariff rate that the EU applies to WTO member countries. However, currently, the EU (including Germany) has been maintaining the Generalised Scheme of Preferences (GSP) for developing and least-developed countries, including Vietnam. Under this mechanism, many export products, especially key export products of Vietnam such as textiles and garments, footwear, seafood, etc., are enjoying GSP preferential tariff rates significantly lower than the MFN tariff rates when imported into the German market (in 2021, the EU's average MFN tariff rate was 4.71%, and the average GSP tariff rate was 2.35%). However, the EU sets a "maturity threshold" for countries/products eligible for GSP. This regulation simply means that when Vietnam's total national income or export turnover of a certain type of goods reaches a certain threshold, they are no longer eligible for GSP.

Up to now, the GSP tariff rates that the EU unilaterally granted Vietnam are relatively low. In the comparison at the early stage of EVFTA implementation, some export products have a long tariff elimination schedule (5-7 years), so the EVFTA tariff rates applied to these products may be higher than the current GSP tariff rates. However, overall, in the EVFTA, the EU commits to eliminate up to 85.6% of tariff lines right after the Agreement came into effect and 99.2% of tariff lines will be eliminated after 7 years. Thus, by the end of the schedule, almost all of Vietnam's exports to the EU (including Germany) will be completely eliminated tariffs, while GSP only applies to some product groups and GSP tariff rates are not always 0%. Therefore, in the long run, compared to the GSP tariff rates, the EVFTA tariff rates are more beneficial for businesses.

Note to businesses According to the EU's regulations on GSP, Vietnam can continue to enjoy the GSP mechanism of the EU in parallel with the EVFTA for a period of 2 years from the date of entry into force of the EVFTA (until the end of July 31, 2022). At the same time, according to the EVFTA, the EVFTA preferential tariff rates applied to Vietnamese goods will not be higher than the tariff rates that the EU applied to those goods at entry into force of the EVFTA. This means: - During the period from August 1, 2020 to July 31, 2022: Businesses can choose to use the EVFTA or GSP depending on which preferential tariff rate is more beneficial to businesses. In case of choosing GSP preferential rate, the products must meet rules and procedures for certification of origin of the GSP; In case of choosing EVFTA preferential tariff rate, the product must meet rules and procedures for certification of origin of the EVFTA. - From August 1, 2022: The GSP mechanism will automatically end, businesses will use the preferential tariff under the EVFTA. However, in case the EVFTA tariff rate is higher than the GSP tariff rate, the EVFTA allows that the product will still be eligible for GSP tariff rate. No matter which preferential tariff rate is chosen, the product must meet the rules and procedures for certification of origin of the EVFTA. This is a flexible commitment, which is very beneficial for Vietnamese businesses to export to the EU because it is guaranteed that the EVFTA tariff rates applied will always be lower or at least equal to the GSP tariff rate on 01/08/2020.

Below is a summary of Germany's commitments in the EVFTA for a number of product groups which Vietnam has export strengths. It can be seen that product groups with low MFN or GSP tariff rates were liberalised by Germany right after the EVFTA came into effect (for all or most product lines). For the product groups that are still maintained high MFN and GSP tariff rates, Germany commits to eliminated tariffs for about half of them at entry into force, the rest will be duty free according to schedules (especially for some fruits under Chapter 08, the tariff elimination is applied to the ad valorem duty only, keeping the absolute duty).

Thus, in comparison with the MFN and GSP tariffs that Germany is applying, the EVFTA tariffs will bring great advantages to the following export product groups of Vietnam: Footwear (Chapter 64), Clothing (Chapter 61,62), Seafood (Chapter 3), Plastics (Chapter 39), Fruit (Chapter 08).

Table: Germany's preferential tariff commitments s for the top 10 key export product groups of Vietnam in the EVFTA

HS Code (Chapter)	Products	EU’s MFN tariff rate in 2021	EU’s GSP tariff rate in 2021	EU’s preferential tariff commitment for Vietnam
85	Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	From: 0% to 14% Average: 2,08%	From: 0% to 9,8% Average: 0,29%	-450/500 tariff lines were liberalised at entry into effect - 35/500 tariff lines shall be liberalised over 04 equal annual stages - 15/500 tariff lines shall be liberalised over 06 equal annual stages
84	Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof	From: 0% to 9,7% Average: 1,85%	From: 0% to 2,2% Average: 0%	873/873 tariff lines were liberalised at entry into effect
64	Footwear, gaiters and the like; parts of such articles	From: 3% to 17% Average: 9,95%	From: 0% to 11,9% Average: 5,99%	-37/86 tariff were liberalised at entry into effect - 13/86 tariff lines shall be liberalised over 04 equal annual stages - 10/86 tariff lines shall be liberalised over 06 equal annual stages - 26/86 tariff lines shall be liberalised over 08 equal annual stages
61	Articles of apparel and clothing accessories, knitted or crocheted	From: 8% to 12% Average: 11,60%	From: 6,4% to 9,6% Average: 9,28%	-91/147 tariff lines were liberalised at entry into effect - 21/147 tariff lines shall be liberalised over 04 equal annual stages - 35/147 tariff lines shall be liberalised over 06 equal annual stages
62	Articles of apparel and clothing accessories, not knitted or crocheted	From: 6,3% to 12% Average: 11,56%	From: 5% to 9,6% Average: 9,25%	- 56/194 tariff lines were liberalised at entry into effect - 21/194 tariff lines shall be liberalised over 04 equal annual stages - 73/194 tariff lines shall be liberalised over 06 equal annual stages - 44/194 tariff lines shall be liberalised over 08 equal annual stages
94	Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; . . .	From: 0% to 5,7% Average: 2,46%	From: 0% to 2,2% Average: 0,16%	77/77 tariff lines were liberalised at entry into effect
03	Fish and crustaceans, molluscs and other aquatic invertebrates	From: 0% to 23% Average: 10,85%	From: 0% to 19,5% Average: 6,64%	- 220/425 tariff lines were liberalised at entry into effect - 108/425 tariff lines shall be liberalised over 04 equal annual stages - 78/425 tariff lines shall be liberalised over 06 equal annual stages - 19/425 tariff lines shall be liberalised over 08 equal annual stages
72	Iron and steel	From: 0% to 7% Average: 0,23%	From: 0% to 3,5% Average: 0,08%	- 341/344 tariff lines were liberalised at entry into effect - 3/344 tariff lines shall be liberalised over 08 equal annual stages (Ferro-chromium containing by weight no more than 4% of carbon)
39	Plastics and articles thereof	From: 0% to 6,5% Average: 5,46%	From: 0% to 3% Average: 0,90%	205/205 tariff were liberalised at entry into effect
08	Edible fruit and nuts; peel of citrus fruit or melons	From: 0% to 20,8% Average: 7.14%	From: 0% to 20,8% Average: 4,49%	- 107/124 tariff lines were eliminated at entry into effect - 16/124 tariff lines shall be eliminated the ad valorem duty at entry into effect, the absolute duty (A+EP) is still maintained - 01 tariff lines (HS Code: 0803.90.10: Bananas excluding plantains) shall be reduced tariffs as specified in Appendix 2-A and to 75 EUR/ton from 2025 onwards

Commitments on export tariffs

The EU committed to completely eliminating export tariffs on all goods exported to Vietnam. Therefore, no goods exported from Germany to Vietnam will be subject to any export tariff under the EVFTA.

Note to businesses Businesses can look up the tariff rates that the EU (including Germany) applies each year to each product (MFN, GSP, FTA preferential tariffs) from any country (including Vietnam) at the EU’s Market Access Database (Access2Market) at the following link: https://trade.ec.europa.eu/access-to-markets/en/content

 

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

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

• How to take advantage of the EVFTA to increase exports of Vietnamese goods to Germany
• Challenges from the EVFTA for Vietnam's exports to the German market
• EVFTA opportunities for Vietnamese fruit and vegetable products
• EVFTA opportunities for Vietnamese footwear products
• EVFTA opportunities for Vietnamese coffee beans