Article by Sebastian Schlitter - Partner, JP contagi Asia
How the EVFTA Benefits European Importers and Exporters
In a perfect world without customs and tariffs, global trade would be seamless. While we are not there yet, the EU Vietnam Free Trade Agreement (EVFTA) has brought this vision remarkably close to reality for European businesses. For Belgian and Luxembourg companies, the EVFTA is a strategic key that unlocks tangible competitive advantages.
A Geopolitical Advantage in a Shifting World
In the context of ongoing global trade tensions, many companies are adopting a "China+1" strategy to diversify their supply chains. Vietnam has become a premier destination for this move. The EVFTA gives European businesses a unique edge, allowing them to de-risk their supply chains while gaining preferential market access that competitors from other nations do not have.
1. Immediate and Long Term Tariff Reductions
The most direct benefit is the aggressive reduction of customs duties. The EVFTA immediately eliminated 65 percent of duties on EU exports and 71 percent on Vietnamese exports, with a roadmap to over 99 percent elimination.
For importers, sourcing manufactured goods, textiles, or agricultural products from Vietnam becomes significantly cheaper, directly boosting profit margins.
For exporters, key European products, from machinery and automotive parts to pharmaceuticals and specialty foods, face lower or zero tariffs. This makes these products more competitive in the Vietnamese market.
2. A More Predictable Business Environment
The EVFTA’s impact goes far beyond just cutting costs. It creates a more transparent and reliable framework for trade.
• The agreement modernizes and simplifies customs procedures, reducing paperwork and potential delays at the border.
• It raises Vietnam’s Intellectual Property (IP) standards to be more aligned with Europe’s. European innovations, brands, and "Geographical Indications" (GIs) receive stronger protection.
• It opens Vietnamese markets for European service providers in areas like logistics and finance and provides fairer access to public procurement contracts.
Conclusion: A Strategic Opportunity
The EVFTA is more than a trade deal; it is a clear strategic opportunity. By understanding and leveraging its benefits, from tariff cuts to improved market access, European companies can not only trade more efficiently with Vietnam but also solidify their competitive position in one of Southeast Asia’s most important economies. At the same time, success depends on people. Many firms discover that securing the right leadership teams, experienced executives and managers who can bridge European and Vietnamese practices, is just as critical as supply chain optimization.
Key Takeaway for Your Business
The EVFTA is not just about saving money on tariffs. It is a strategic tool that gives your company a competitive advantage in the race to build a resilient and cost effective Asian supply chain. Businesses that proactively analyze how the EVFTA impacts their specific products and routes, and invest in the managerial talent to execute these strategies, will be the winners in this new era of EU Vietnam trade.
Quellen
- European Commission – EU-Vietnam trade and investment agreements (2020)
- Delegation of the European Union to Vietnam – EVFTA Implementation Updates
- Ministry of Industry and Trade of Vietnam (MOIT) – EVFTA Overview
- EuroCham Vietnam – Whitebook 2024: Trade & Investment Chapter
For more information, visit JP contagi Asia at https://contagi.ch/