The Committee on International Trade of the European Parliament has approved the free trade agreement signed last June by the European Commission with the government of Vietnam, paving the way for its endorsement by the full Parliament in February, ahead of its ratification by the European Council. It calls for the total elimination of duties on both sides over a period of 10 years.
For sensitive items, it will take seven years for the elimination of EU duties on footwear from Vietnam, but other types of shoes will be liberalized immediately. For textiles and apparel, it will take between five and seven years to abolish duties on sensitive items, and three years for the others. These and other industrial products originating in the EU will have to bear the “made in EU” label when they enter Vietnam. Imports of fabrics from the EU into Vietnam will become duty-free as soon as the agreement becomes effective.
Footwear represents 16.2 percent of Vietnam’s total exports and 4.7 percent of its total exports to the European Union. The corresponding figures for textile and garments are 30.4 percent and 4.4 percent. In the first 11 months of 2019, Vietnam’s total shoe exports grew by 13 percent to $16.5 billion, driven by a 36 percent increase to $5.96 billion in the U.S. because of the trade dispute between the U.S. and China, which has softened, as reported elsewhere in this issue. Increases of less than 7 percent were recorded in exports to individual EU member states.
The FTA should help European importers to negotiate better deals with Vietnamese manufacturers in competition with the generally larger orders placed by U.S. importers, which are seeking to diversify their sourcing away from China.
At the same time, the parliamentary committee endorsed the parallel Investment Protection Agreement negotiated by the two parties, which is set to promote the development of environmental standards and human and labor rights in Vietnam. This agreement will have to be ratified by all the member states of the EU.
Neil Narriman, president of the Federation of the European Sporting Goods Industry (Fesi), pointed that the two agreements, if ratified, would eliminate 99 percent of tariffs, cut red tape and open up public procurement markets. Narriman believes it would also likely expand the Vietnamese workforce in the sporting goods industry, which already exceeds 4.5 million people. Fesi’s secretary general, Jérôme Pero, noted Vietnam’s progress in freedom of association and in narrowing the gender gap in the workplace.