On 4 August 2015, after three years and several rounds of negotiation, the European Union – Vietnam Free Trade Agreement (“EVFTA”) officially established principles for the basic content of the Agreement.
The EVFTA is a comprehensive and advanced Agreement, balancing rights and benefits for both parties whilst simultaneously complying with WTO regulations. The main content of the Agreement includes Trade of Goods, Principles of Origin, Customs, sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), Trade of Services, Investment, Trade Defence, Competition, State Owned Corporation, Government Procurement, Sustainable Development, Capacity Build and Cooperation, Legal Matters, and Intellectual Property.
Routes to Tariff Reductions
As the most important matter of any Trade Agreement, the EVFTA has set out requirements and routes to eliminate Tariff barriers. In particular, the EU agreed to eliminate 85.6% of import tariffs on Vietnam exports to the EU after the Agreement takes effect and 99.2% of such import tariffs after seven years. For some sensitive lines of goods (e.g., rice, sweetcorn, garlic, mushrooms, etc.), both the parties agreed to provide advantages, and facilitate import-export activities for each other.
Facilitation of Trade in Services and Investment
The EVFTA provides more favourable commitments than those in the WTO’s regulations, the aim of which is to create a more open and desirable investment environment for corporations of the two parties. Vietnam has committed to introducing advantages for EU investors in the fields of specialized services, financial services, telecommunications services, transportation services, distribution services. Both parties have agreed the key provisions on protection such as National Treatment and arrived at an understanding of the main substantive investment protection rules. Provisions on investment protection and dispute settlement are still being negotiated based on the new EU vision on investment dispute settlement.
Vietnam is committed to a high level of protection beyond the standards of the TRIPS agreement. The IP sector of this Agreement includes copyrights, patents and other commitments related to pharmaceuticals and Geographical Indications (GI).
When the EVFTA takes effect, 169 of the EU’s GIs will be protected in Vietnam and 39 of Vietnam’s GIs will be protected in the EU, all of which are for agricultural products and foodstuffs. This aspect facilitates some types of Vietnamese agricultural product branding activities in the EU. This Agreement also allows new GIs to be added in the future.
In the pharmaceutical sector, data protection will be improved and there will possibly be a patent extension of up to two years available in the event of delays in obtaining marketing authorization.
In brief, the EU’s innovations, artworks and brands shall be better protected against infringement through stronger enforcement provisions in Vietnam.
Although at present only principles have been agreed, and we are still waiting for the final legal texts, the EVFTA is being heralded as a ‘win-win agreement’. Businessmen, investors and other related parties are looking forward to its introduction. It will hopefully boost trade activities and strengthen relations between the EU and Vietnam.