The Committee on International Trade backed the free trade and investment protection agreements between the EU and Vietnam on Tuesday.
The committee gave its consent to the free trade agreement by 29 votes, six votes against and five abstentions and recommends that EP Plenary should do the same. The agreement will remove virtually all tariffs between the two parties in ten years. It will protect emblematic European products, and allow Europe to access the Vietnamese public procurement market.
The agreement is also an instrument to protect the environment and further social progress in Vietnam, including in labour rights, the resolution accompanying the consent decision states. The trade committee’s demands from Vietnam, including on labour and human rights, as well as on the mechanism ensuring the enforceability of the sustainability clauses, was adopted by 29 votes for, nine against and two abstentions.
Vietnam is the EU’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth €47.6 billion a year and €3.6 billion when it comes to services. EU exports to the country grow by 5-7 percent annually, yet the EU’s trade deficit with Vietnam was €27 billion in 2018.
The main EU imports from Vietnam include telecommunications equipment, clothing and food products. The EU mainly exports goods such as machinery and transport equipment, chemicals and agricultural products to Vietnam.
The main elements of the trade deal are the following:
removal of customs duties: 65% of EU exports to Vietnam will be immediately duty free, with the rest – including motorcycles, cars, pharmaceuticals, chemicals, wines, chicken and pork – gradually liberalised over ten years. 71% of Vietnamese exports to the EU will be duty free on day one, with the rest catching up in seven years. Duty-free Vietnamese exports of sensitive agricultural products, such as rice, garlic or eggs, will be limited;
non-tariff barriers will be eliminated in the automotive sector, export and import licensing, and customs procedures. Vietnam accepted the “Made in EU” marking, beyond national markings of origin, for non-agricultural products;
geographical indications: 169 emblematic EU products such as Parmigiano Reggiano cheese, Champagne, or Rioja wine, will enjoy protection in Vietnam, as will 39 Vietnamese products in the EU;
services: EU companies will have improved access to business, environmental, postal and courier, banking, insurance and maritime transport services in Vietnam ;
public procurement: EU firms will be able to bid for contracts with Vietnamese ministries, state-owned enterprises, as well as with Hanoi and Ho Chi Minh City;
sustainable development: there are legally-binding rules on climate, labour and human rights. The agreement commits Vietnam to apply the Paris Agreement. Vietnam scheduled the ratification of two remaining bills on the abolition of forced labour and on freedom of association by 2020 and 2023, respectively. If there are human rights breaches, the trade deal can be suspended.
Dispute settlement between companies and state
Separately, the trade committee also agreed by 26 votes for, seven against and six abstentions to an investment protection agreement providing an investment court system with independent judges to settle disputes between investors and state. The accompanying resolution passed by 27 votes for, seven against and five abstentions.
“By giving consent to this trade deal with Vietnam in the committee we give a positive signal to the ASEAN region and the rest of the world in times of rising trade tensions. Not only does this deal contain chapters related to economic sectors, we have a modern chapter on sustainable development that shows how these agreements can lift people out of poverty,” said rapporteur Geert Bourgeois (ECR, BE).
“This deal really is a win-win situation. In absolute terms Vietnamese exports of goods and services to the EU will increase by €15 billion while EU exports to Vietnam augment by €8.3 billion by 2035. As previous DG Trade studies indicate that each billion extra exports generate 14,000 jobs, you can roughly say that by 2035 the FTA will generate 116,200 EU jobs. It is also important to underline the strategic importance of this deal. Vietnam has a vibrant economy of more than 95 million consumers, a growing middle class and a young, dynamic workforce. It is a market with big opportunities for the export of agricultural products, industry and services in the EU,” he added.
According to Bourgeois, the agreement will stimulate cooperation in the field of labour and human rights: “The trade agreement with Vietnam will have a positive impact on the reform process in the country and offer progress in the field of labour and human rights through a clear commitment from the Vietnamese authorities.”
The Report will now need to be endorsed by the whole Parliament. A Joint debate and vote are scheduled for the February session in Strasbourg.
EPP: Trade Agreements will create jobs and protect human rights in Vietnam
The EPP Group wants to use the Trade and Investment Agreements between Vietnam and the EU as a door opener to access other Asian markets. At the same time, the agreements shall raise environmental, labour and human rights standards in Vietnam says the Group.
“The Trade and Investment Agreements with Vietnam can boost our trade and therefore create growth and jobs, both in Europe and Vietnam. The agreements will also help to raise environmental and labour standards and engage Vietnam on human rights according to EU standards,” declared Iuliu Winkler MEP, who negotiated the approval of the agreements on behalf of the EPP Group.
The EU’s main exports to Vietnam are high tech products, including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products. Vietnam’s main exports to the EU are telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, seafood and furniture.
“In times when the Trump Administration destabilises international trade, we need to push for rules-based trade. The Vietnam Agreements are a door opener for European products and European standards in other parts of Asia. We need trade agreements to ensure stability, protection and benefits for companies and consumers on all sides,” insisted Winkler.
“Champagne, Rioja wine, feta cheese… we will also protect more than 160 traditional European food and drinks products from a specific geographical origin against imitation on the Vietnamese market. It’s clearly a step forward to defend our European products,” the MEP further stated.
“Of course, we do not give a ‘blank check’ to the Vietnamese authorities, but we will monitor the full observance and implementation of all the commitments made,” the MEP continued.
Together with the National Assembly of Vietnam, the European Parliament took up the initiative to set up a Joint Committee, which will scrutinise the implementation of the agreements. “Such direct contact with Vietnamese authorities will provide us with a good platform to engage and address early on any implementation issues that might arise,” Winkler concluded.
S&Ds: significant progress on labour rights ahead of Vietnam trade deal
The Socialists and Democrats voted in favour of a trade agreement with Vietnam in the European Parliament’s Trade Committee. Before accepting the trade deal, the S&Ds had worked towards and obtained important labour and sustainable development guarantees from the Vietnamese government.
“For Social Democrats trade can never be an end in itself, but must be a tool to make people’s lives better. I am proud that during the negotiation of the EU-Vietnam trade deal, we exerted our leverage and set in motion positive change that will improve the situation of millions of workers in Vietnam. At the beginning of last year, Vietnam still had not signed three core ILO Conventions. Due to pressure from the S&D Group, the government has since ratified the convention on collective bargaining, passed a fundamental labour reform and committed to a concrete roadmap for the ratification and implementation of the two outstanding conventions on forced labour and freedom of association. To secure this progress and continue building on it, we voted in favour of the trade agreement with Vietnam,” said Bernd Lange, Chair of the European Parliament’s Trade Committee and S&D spokesperson on the Vietnam trade deal.
“Over the past years, we as an S&D Group have put all our pressure to bear to ensure that labour and human rights were at the top of the political agenda of the EU-Vietnam negotiations. Now, we have obtained from the Vietnamese government both tangible results and a roadmap setting out concrete benchmarks for the implementation of labour rights. We will make sure to monitor future steps very closely, especially the involvement of civil society in the new Domestic Advisory Groups and the handling of new cyber-security law. Although the Vietnamese government has cooperated with the EU on human rights, the S&D Group is still concerned about the situation. We will continue to call upon the European Commission to use all the instruments in its toolbox to push for positive change in Vietnam,” added Kathleen Van Brempt, S&D spokesperson on trade.