On 2/3/2011, in Hanoi, the Vietnam Chamber of Commerce and Industry (VCCI) organized a workshop on “EU-Vietnam Free Trade Agreement Negotiations: Opportunities and Challenges for Vietnam”. A similar workshop was also held in Hochiminh City on 3/3/2011.

This workshop is one of activities within the advocacy campaign on EU-Vietnam Free Trade Agreement carried out by VCCI, in the framework of EU – Vietnam MUTRAP III (the Multilateral Trade Assistance Project, Phrase III), sponsored by the European Union.

In the opening speech, Mr. Tran Huu Huynh – President of the Committee on International Trade Policies (CITP) of VCCI said that the participation of Vietnam in previous Free Trade Agreements (FTA) was somewhat passive but now Vietnam is heading towards some new FTAs with more active attitude with better participation of the business community. In the coming time, Vietnam is about to negotiate a FTA with the EU – one of the most important trade partner of Vietnam. EU-Vietnam FTA is expected to be a model of “State - Business working together” so that the commitments will reflect the best benefits of the industries and the whole economy.

According to PhD Nguyen Thi Thu Trang, member of the CITP committee, EU – Vietnam trade relations in recent years have seen impressive progresses. In 2010, EU ranked second in Vietnam’s largest exporting markets and fifth in import into Vietnam. Meanwhile, being actually a minor partner of the EU (ranking 31st in import into EU and 41st in export from EU), Vietnam could be a very potential one with a rapid growing economy, a young population with high demands for goods and services, an attractive and stable investment destination etc.

From governmental aspect, Vietnam and the EU signed a Framework Agreement on Cooperation and Development in 2005. After that, several plans and programs have been set up to promote trade relationship between the two sides. In 2010, Vietnam and the EU finished negotiations and initialed a comprehensive EU-Viet Nam Partnership and Cooperation Agreement (PCA). Leaders of the two sides also show the consensus on considering the negotiation of a bilateral Free Trade Agreement (FTA).

Thus, it’s high time to prepare for the negotiation and conclusion of an FTA between Vietnam and the EU, which is very probable in the coming time..

As a strong market-opening commitment in almost trade aspects (goods, services, investment, intellectual property…), will this FTA have strong impacts on each Vietnamese industry in particular and the whole economy in general?

To answer this question, Prof. Claudio Dordi – MUTRAP III Team Leader, presented a study on some signed FTAs between the EU and other developing countries with conditions similar to Vietnam. The results show positive impacts on these economies. For example, since the entry into force of the FTA (2000), trade flows between the EU and Mexico have been particularly dynamic. Bilateral trade rose 207% in 2008 compared with 1999, exports climbed 228%, while imports increased by 196% in the same period. Employment and technology transfer are improved significantly. Similarly, EU – South Africa trade also grew impressively since the coming into force of FTA with imports from EU to South Africa in the period of 2001-2008 rose 160% and exports increased by 143%.

For Vietnam, a study of MUTRAP III on potential impacts of an EU-VN FTA on Vietnamese economy also shows positive results. Specifically, exports would increase on average by 4% annually, with peak of more than 6% annually for sectors of interest for Vietnam such as garment and textiles, footwear, furniture…with tariff may be cut to 0%. Imports may increase 3,1% annually due to Vietnam’s commitments on opening domestic market. Besides, Vietnam would receive a substantial amount of FDIs from the EU with higher quality of investment. Other influences on domestic prices, jobs and wages…are also favorable. Study on potential impacts of this FTA on many industries shows similar positive outcomes.

However, some business associations expressed concerns about meeting EU’s requirements in this FTA. For example, the textile industry cared about the rules of origin to get preferential tariff because most materials are imported from China. Meanwhile, the footwear industry was concerned about trade remedies as Vietnam is still considered a non-market economy…But for the benefit of the whole economy, all businesses and associations were in favor of the conclusion of a Vietnam – EU FTA.

The workshop concluded with remarks of Mr. Jean-Jacques Bouflet – Minister Counsellor of the EU Delegation to Vietnam, that a EU-Vietnam FTA will bring benefits to both sides. Therefore, Vietnam should be more active in negotiation and conclusion of this FTA to promote trade, investment and sustainable development.

After this workshop, VCCI will conduct a survey to get business opinions on negotiating strategies to make recommendations to the Government so that the commitments will reflect rights and benefits of each industry as well as the whole economy.