EU VN - FTA

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International EconomicRelations

Instructor: Nguyen Kim Thao,MBAGroup Members:1. Nguyen Thi Thuy Diem2. Dao Thi Hanh Dung3. Nguyen Ngo Tinh Giang4. Luu Tieu Yen

Class: ForeignTrade 1Course: 35

8/4/2019 EU VN - FTA


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WELCOME TO OUR

PRESENTATION

Topic: FTA between

EU – VN

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Contents

I EU – VN overview

II Scope of the negotiated FTAEU-Vietnam

III Opportunities and Challengesto Vietnam

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I/ EU – Vietnam overview

1/ EU introduction

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2/ EU – VN

relations


2005 signed agreement onmarket access

17/07/1995 FrameworkCooperation Agreement VN –EU in Bruselles

22/10/1990 officially establish diplomatic

1/1/1995 EU started the approval of the GSP for VN

10/2010 signed PCA VNEU

2014, VNstillreceivesGSP

GSP

02/03/2010 started FTAnegotiation

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a. Commercialrelation

3/ The process of economic

cooperation

Source:


EU is the2th largest

exportmarket of

Vietnam

EU is a veryimportant

major tradepartner of

VN

EU is the 4thlargest importer

of Vietnam in2009.

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Vietnam's export in 2009

Vietnam's import in 2009

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cooperationa. Commercialrelation

E

X

P

O

R

T

I

M

P O

R

T

Unit: billion USD

Source: http://www.customs.gov.vn

http://trungtamwto.vn

0

2

4

6

8

10

12

TRADE IN GOODS VIETNAM WITH EU 27

Vietnam always has a trade

surplus from 2007-2010

7 months in 2011

VN IM from EU: 4 billionUSD

EX to EU: 8.8 billion USD


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cooperationa. Commercialrelation

E

X

P

O

R

T

I

M

P O

R

T

Source:http://trungtamwto.vn


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b. Direct investment

FDI commitments

in VietNam

ODA commitments to

Vietnam

2009 2010 2011 2009 2010 2011

726.6 4,919.3 135.25 893.49 1,082.32 774.69Source:

http://www.mofa.gov.vn

Unit: million

USD

EU is the second largest partner (after

ASEAN) have FDI in Vietnam, with 2.25billion USD, accounting for more than 12%of the total FDI into Vietnam in 2010.

In 2010, EU is the fourth largest donor with about $1.4

billion, after the WB($2.498billion), Japan ($1.64 billion)



cooperation

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c. ODA

I/ EU – Vietnam overview3/ The process of economiccooperation

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Contents




h i i i h

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The inconsistency in thenegotiating process

March 2010

EU Trade Commissioner Karel DeGucht

Prime Minister NguyenTan Dung

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I do notunderstand whyup to now theagreement has

yet to reach anyspecificachievement

Vietnam and EUhas disagreed onthe way to accessthe agreement

Mr. Jean Jacques Bouflet, EUMinister Counselor in Vietnam

Mr. Nguyen CanhCuong Deputy Head of European MarketDepartment, Ministryof Industry and Trade

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Mainissues

EU import

Vietnamimport

Tariff Barrie

rs

Technical

Barriers

Non-

tariff

II/ Scope of the negotiatedFTA EU-VN

Rules of Origin

SPS

the Agreement on

the Application of Sanitar and

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1/ Tariff Barriers

Fields Current EU import tariff rate Textile andgarment 12%

Footwear12.4% (dumping: 17% - until

31/3/2011)Aquaculture 10.8%Source:

trungtamwto.vn

IN2009


( n e a r l y ) 0 %

T o 9 0 – 9 5 %

p r o d u c t s

http://var/www/apps/conversion/current/tmp/scratch6845/slide15.xml


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1/ Tariff

Barriers

FieldsCurrent Vietnamimport tariff rate

Steel and Iron 7% ~ 15%

Aero planes 0.0%

Automotive industry 77%~83% (depend)Electronic industry 8.9%

Source: SGGP, CustomsUnion

IN

2011


( n e a r l y

) 0 %

T o 9 0 – 9 5 % p r o d u

c t s








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m 2018 :ă

confirmed

commitments under

the CEPT

tentative

Need to have a competitive priceand cost

The violent competition of car importing from ASEANcountries, especially since 2015

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1/ Tariff Barriers

The schedule of EU and Vietnam is muchdifferent

EU: 3 – 5 yearsVN: 10 – 15 years

Schedule


f h i d

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The food processing companiesmust comply with stricthygiene standards.Ex: HACCP - Hazard AnalysisCritical Control Point

TBT

Quality

Hygienefood

Safety forConsumers

Environmental

protectionLaborstandards

Products related to thehealth of consumers must

have their codes as to the EUregulation.Ex: CE mark - "ConformitéEuropéenne" ("EuropeanConformity")

2/ Non-tariff Barriers


T e c h n i

c a l

b a r r i e

r s t o

t r a d

e

Quality management systemISO 9000 is almost amandatory requirement forenterprises in developing

countries which export goodsto the EU market.

Ho we ve r, i t

see m s t ha t

t he re w i l l N O T

HA V E a n y T B T

o r S P S

red uc t io n.

European Commission (EC)prohibits importing goods whosemanufacturing processes use anyform of forced labor such asprison labors, children labors ....defined in the Geneva conventionon 25/9/1926 - 7/9/1956 and theInternational Labor AgreementsNo. 29 and 105

The EU market require goodsrelating to the environmentmust be labeled according toregulations (eco-labels,recycled labels) and havecertificates which areinternationally recognized. Ex:GAP , ISO 14000

D t Di t f M LISA’

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• Deputy Director of MoLISA’s(B L -TBXH) Departmentộ Đfor International

Cooperation, Mr. NguyenKim Phuong said: “Vietnamhas not yet signed any

bilateral or multilateralagreements with articleson labor standards”

⇒ labor standards are considereda new issue for Vietnam in itsFTA negotiations.

⇒ High recommend from

experts:§ Have clear terms in the

negotiation§ Im rove national labor law

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Before Vietnam joined WTO 2007, EU had appliedquota and high anti-dumping import tariff onsome important export products of Vietnam as an

non-market economy.

Lawyer Olivier Prost, Branch Manager law firm GideLoyrette Nouel EU (Gide) in Belgium claims that “ FTA negotiations are not meant to eliminate the

trade remedies. However, the FTA provides Vietnamwith an opportunity to be recognized as a market economy. This is a "passport" to help us to easily overcome the barriers to trade in the EU market inparticular and the world in general. Because most

commercial protective cases now come from the'

After joining WTO, Vietnam has been abolishedand reduced a significant tariff rate on almost

products.

II/ S f th ti t d

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Services

• Focus mainly on Banking,Finance, Tourism, andInsurance, …

• Big distance in developing

aspect

II/ Scope of the negotiatedFTA EU-VN3/ Priorities in

Services

EU is world leader of exporting services accounted

for 40.8% of world market share. Import

32.7%Require us

open servicemarket

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Short summaryclip

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Contents




III/ O t iti d

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III/ Opportunities andChallenges

1/ Opportunities:

1 Opportunities

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1. Opportunities According to Truong Dinh Tuyen (former Vietnamese Minister of Trade), signing FTAs with EU, VN will have opportunities to

import high-technology and materials with low price

Expanding export

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Expanding export

211million

285million

233

million

166million

207

million

Reducing tariffsfrom 12% to 0%

The elimination of tariffs by theEU would produce an increase

of export of the five mostexported products mentioned

above, on average, of more than

20%.

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1. Opportunities

High income (26 million USD/year)

Increaseinvestment

III/ O t iti d

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III/ Opportunities andChallenges

2/challenges:

2 Ch ll

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2. Challenges

REACH

ChemicalLaw

Technical

Barriers The European CommunityRegulation on chemicals and their safe use (EC 1907/2006).

Registration EvaluationAuthorisation and Restriction of Chemical substances.

The law entered into force on 1June 2007.

The REACH Regulation places greater responsibility on industry to manage the

risks from chemicals and to providesafety information on the substances.

Business can release their informationand trade secrets

Business have to pay high cost

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006R1907:EN:NOT

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006R1907:EN:NOT

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2. challenges

IUU regulation

(Entered into forceon 1 January 2010)

TechnicalBarriers

The regulation aims to preventIllegal, Unreported and

Unregulated fishing (IUU)

Aim to trace the origin of good

quality seafood products

Aim to ensure that fishingoperations are conducted on a

more sustainable and responsiblebasis.

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IUU regulation

name of fishingvessel

gross

register tonnage

type of vessel

Fishermen and businesses arenow required to provide clear

and comprehensive details andcertificates

Type of fishing

methods

Registeration

number

……

Vietnam will facemany difficulties

The fishing industry is not yet

developed on a large scale

Fishermen are unware of IUU

TechnicalBarriers

Fishing skills are still limited

2 Ch ll

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2. Challenges

Lack of competitive

Brands

Affect negatively the environment

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Affect negatively the environment

According to Le Danh Vinh, exports growth in recent period isnot sustainable, value of exports is still low becauseenterprises mainly based on exploitating the natural

resources.

Export’s developmentpolicies which is too focused

on the quantity, make the

natural resources becomeexhausted

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• Close relationship in export and import.

Cooperate for two-side benefits.• Up to now, although there wasn’t any

negotiated round, it is expected to rocket thegrowth rates

3 main issues in FTA• Tariff rate will be reduced to 0% applied for 90-

95% products after signing.• TBTs: difficult to satisfy => VN have to try our

best => difficulty for enterprises• EU is extremely interested in services category.

However, our country’s improvement in this is=

Summary

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PREDICTIONS FROMEXPERTS:

Variable Results (estimated)

National Income + 26 Million USD / year

Export + 4% to + 6% / year

Import+ 3.1% (Electronics: +2.7%,

chemical,+ 2.5%, pharmaceutical: +3%)

Balance of Trade + 500 million USD / year

GDP + 2.7% / year

Government and Individuals

Expense+ 2%.

Price significant decrease

Salary dramatical increase

Author: Professor Claudio Dordi Professor of International Law at Bocconi

University (Milan)Federico Lupo Pasini: Lawyer and consultant specialized in

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*****THE END*****

Thank you for

listening

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EU VN - FTA