Opportunities from EVFTA tariff commitments of Germany for Vietnamese goods
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
Vietnam's tariff commitments in the EVFTA include (i) commitments on import tariffs (applied to goods imported from the EU into Vietnam), and (ii) commitments on export tariffs (applied to goods exported from Vietnam to EU countries).
Commitments on import tariffs
In the EVFTA, Vietnam made commitments on preferential import tariffs for each product line in the HS system. For each product, a preferential tariff rate is applied uniformly to all EU member states, including Germany.
Specifically, the EVFTA preferential tariffs that Vietnam grants to products imported from Germany are as follows:
-
48.5% of tariff lines shall be fully liberalized at entry into force of the Agreement (August 1, 2020);
-
91.8% of tariff lines will be duty free after 07 years (after December 31, 2026),
-
98.3% of tariff lines will be duty free after 10 years (after December 31, 2029),
-
For 1.7% of the remaining tariff lines (sugar, salt, poultry eggs, tobacco...), Vietnam applies tariff quotas or does not commit to eliminate tariffs (some automobiles).
Before the EVFTA took effect, Vietnam and the EU did not have any other mutual FTA. Therefore, German goods imported into Vietnam before the EVFTA are subject to MFN tariffs which are applied to WTO member countries. The average MFN import tariff rate of Vietnam in 2020 was 11.93%. The specific MFN tariff rate for each item was relatively high, even some items were imposed tariffs up to 135%. With tariff commitments in the EVFTA, German goods imported into Vietnam will benefit significantly.
Below is a summary of Vietnam's tariff commitments under the EVFTA for the top 10 German export products, all of which are industrial products. It can be seen that more than half of these German products could enjoy duty free at entry into force of the EVFTA, the rest will be eliminated tariffs over a transitional period - except for some products in Chapter 87 that do not have tariff commitments. Compared with the current MFN tariff rates that Vietnam are applying, it can be seen that German commodity groups that benefit significantly from Vietnam's commitments on tariff reduction in the EVFTA are: Vehicles (Chapter 87), Electrical machinery and equipment (Chapter 85), Plastics (Chapter 39), Iron and steel (Chapter 73), Mineral fuels (Chapter 27).
Table: Vietnam's preferential tariff commitments for key export products of Germany in the EVFTA
|
HS Code (Chapter) |
Products |
Vietnam’s MFN tariff rate in 2021 |
Vietnam's preferential tariff commitment for for the EU |
|
84 |
Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof |
From 0% to 50% Average: 4,85% |
- 841/1269 tariff lines were liberalised at entry into effect - 5/1269 tariff lines will be liberalised over 04 equal annual stages (parts of pump, parts of liquid pusher) - 256/1269 tariff lines will be liberalised over 06 equal annual stages - 160/1269 tariff lines will be liberalised over 08 equal annual stages - 7/1269 tariff lines will be liberalised over 11 equal annual stages (Marine propulsion engines of a power not exceeding 22.38 kW…) |
|
87 |
Vehicles other than railway or tramway rolling stock, and parts and accessories thereof |
From 0% to 75% Average: 36,72% |
- 28/468 tariff lines were liberalised at entry into force - 156/468 tariff lines will be liberalised over 08 equal annual stages - 18/468 tariff lines will be liberalised over 10 equal annual stages - 179/468 tariff lines will be liberalised over 11 equal annual stages - 87/468 tariff lines of this Chapter are not subject to tariff commitments |
|
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 35% Average: 8,74% |
- 309/798 tariff lines were liberalised at entry into effect - 18/798 tariff lines will be liberalised over 04 equal annual stages - 454/798 tariff lines will be liberalised over06 equal annual stages - 17/798 tariff lines will be liberalised over 08 equal annual stages
|
|
30 |
Pharmaceutical products |
From 0% to 14% Average: 2,19% |
- 62/99 tariff lines were liberalised at entry into force - 1/99 tariff lines (3004.50.21 - Of a kind taken orally) will be liberalised over 06 equal annual stages - 34/99 tariff lines will be liberalised over 08 equal annual stages - 2/99 tariff lines (3006.92.10, 3006.92.90 - Waste pharmaceuticals) will be liberalised over 11 equal annual stages |
|
90 |
Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof |
From 0% to 25% Average: 1,83% |
- 230/253 tariff lines were liberalised at entry into force - 23/253 tariff lines will be liberalised over 04 equal annual stages |
|
39 |
Plastics and articles thereof |
From 0% to 27% Average: 8,51% |
- 126/271 tariff lines were liberalised at entry into force - 95/271 tariff lines will be liberalised over 04 equal annual stages - 49/271 tariff lines will be liberalised over 06 equal annual stages - 1/271 tariff lines (3926.30.00 - Fittings for furniture, coachwork or the like) will be liberalised over 08 equal annual stages |
|
73 |
Articles of iron or steel |
From 0% to 35% Average: 11,07% |
- 41/223 tariff lines were liberalised at entry into force - 6/223 tariff lines (Anchor; some kind of spring…) will be liberalised over 04 equal annual stages - 147/223 tariff lines will be liberalised over 06 equal annual stages - 5/223 tariff lines will be liberalised over 08 equal annual stages - 24/223 tariff lines will be liberalised over 11 equal annual stages |
|
88 |
Aircraft, spacecraft, and parts thereof |
0% |
22/22 tariff lines were liberalised at entry into force |
|
38 |
Miscellaneous chemical products |
From 0% to 20% Average: 3,40% |
- 112/131 tariff lines were liberalised at entry into force - 1/131 tariff lines (3816.00.10 - Refractory cements) will be liberalised over 04 equal annual stages - 8/131 tariff lines (Softening agents, Tall oil fatty acids, Prepared additives for cements, mortars or concretes…) will be liberalised over 06 equal annual stages - 10/131 tariff lines (3825: Residual products of the chemical or allied industries) will be liberalised over 11 equal annual stages |
|
27 |
Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes |
From 0% to 20% Average: 7,09% |
- 42/81 tariff lines were liberalised at entry into force - 6/81 tariff lines (Liquefied petroleum gases) will be liberalised over 08 equal annual stages - 10/81 tariff lines (Petroleum oils excluding light oils and preparation) will be liberalised over11 equal annual stages - 23/81 tariff lines will be liberalised over 11 years (B10**) as specified in Appendix 2-A |
Although foods and agricultural products are not in the list of top export products of Germany in terms of export turnover, they are also the products which Germany has export strengths. Currently, Vietnam is maintaining relatively high MFN tariff rates on these products. In the EVFTA, Vietnam also makes commitments to eliminate tariffs for many foods and agricultural products from Germany such as animal meat (swine, cow, goat, etc.), poultry meat (chicken, geese, etc.), sausages, milk and dairy products (Table 3).
Table: Vietnam's preferential tariff commitments for key agricultural export products of Germany under EVFTA
|
Products |
HS Code |
Vietnam’s average MFN tariff rate in 2021 |
Vietnam’s preferential tariff commitments for the EU |
|
|
Meat of swine, fresh, chilled or frozen and preparations of meat |
Meat of bovine animals |
0201-0202 |
From 14 to 30% Average: 19,67% |
- 6/6 tariff lines will be liberalised over 04 equal annual stages
|
|
|
Meat of swine |
0203 |
From 15 to 25% Average: 20% |
- 3/6 tariff lines will be liberalised over 08 equal annual stages (frozen) - 3/6 tariff lines will be liberalised over 10 equal annual stages (fresh, chilled) |
|
|
Meat of the poultry |
0207 |
From 15 to 40% Average: 28,08% |
- 26/26 tariff lines will be liberalised over 11 equal annual stages |
|
|
Meat of sheep or goats |
0204 |
7% for all tariff lines |
- 9/9 tariff lines will be liberalised over 04 equal annual stages
|
|
|
Meat and edible meat offal, dried or smoked (excluding meat of whales, dolphins...) |
0210 |
From 10 to 20% Average: 15% |
- 5/9 tariff lines will be liberalised over 08 equal annual stages (from meat of bovine animals and chicken) - 4/9 tariff lines will be liberalised over 10 equal annual stages (from meat of swine) |
|
|
Sausages and similar products, of meat |
1601 |
22% % for all tariff lines |
- 2/2 tariff lines will be liberalised over 11 equal annual stages |
|
Dairy and Dairy products |
0401 to 0406 |
From 0 to 20% Average: 9,96% |
- 2/38 tariff lines (Whey) were liberalized at entry into force - 15/38 tariff lines (Milk in liquid form/in frozen form, Buttermilk…) will be liberalised over 04 equal annual stages - 21/38 tariff lines (Butter, Cheese…) will be liberalised over 06 equal annual stages |
|
Commitments on export tariffs
In the WTO, despite its commitments to eliminate export tariffs, Vietnam still reserved the right to continue to impose export tariffs on a list of 603 items.
In the EVFTA, Vietnam committed to further reduce tariffs for this list of 603 export tariff lines reserved under the WTO. Specifically, Vietnam committed to:
-
Maintaining the current tariff rate of 0% for 134 tariff lines;
-
Eliminating export tariffs for 412 tariff lines after a period of time (schedule of 5, 7, 10, 12 or 15 years depending on the tariff lines);
-
Reserving export tariffs for 57 tariff lines, including products such as sand, shale, granite, some types of ores and concentrates, crude oil, coal, coke, gold, etc. Of which, export tariff is limited at 20% for 56 tariff lines after 5 years, especially for manganese ore, export tariff is limited at 10%.
|
Note to businesses The level of commitment in the Import Tariff Schedule of Vietnam is only the minimum reduction. In fact, Vietnam can reduce and eliminate tariffs greater and sooner for EU goods. Similarly, with commitments on export tariffs, Vietnam has the right to apply reservations in the Agreement, but in fact, Vietnam can choose not to impose export tariffs or impose a lower tariff rate. Therefore, in order to know the preferential tariff rates of the EVFTA applied by Vietnam in practice, businesses need to look up the Decree on Vietnam's special preferential import and export tariff schedule under the EVFTA in a particular period of time. When the EVFTA came into effect, Vietnam issued a special preferential import and export tariff schedule for the implementation of the EVFTA Agreement for the period of 2020 - 2022 in Decree No. 111/2020/ND-CP dated September 18, 2020 of the Government. Businesses can look up the EVFTA tariff rates applicable to import and export products in this document. |
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
