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 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