THE RELATIONSHIP BETWEEN

VIETNAM AND THE EU

Group 7
L Nguyn Khnh
V Phng Uyn
L Xun Thun

OVERVIEW
1. Establishing Vietnam EU relation
2. Vietnam and EUs targets
3. Vietnams perspective
4. Factors affecting Vietnam EU relation
5. Conclusion
VIETNAM EU TRADES AND AGREEMNETS

01

03

02

1.
2.
3.

Trade agreements
Trade
Investment

CONCLUSION
1. Benefits
2. Challenges
3. Solutions

Establishing
Vietnam EU relation
1990
Vietnam and the European (the
European Community at the
time The EUs precursor)
officially
established
a
diplomatic relation, forming a
firm base for an overall longterm relationship

1995

1996

Signing
the
Framework
Cooperation Agreement on
collaborating and setting basic
principles in order to enhance
the participants relations on
July 17th

FCA is a long-term framework

agreement, which enters force
on June 1st 1996 with 4 main
objectives. EUs first diplomatic
mission - the permanent
Delegation of EU to Vietnam
was established in Hanoi

To support sustainable
economic development
in Vietnam, especially
takes notice in
improving living
conditions for the poor.

To secure the conditions

and promote the
development of bilateral
trade and investment on
the base of win-win
principal and grant each
other MFN statute.

To enhance economic
cooperation, including
support to Vietnams
efforts to move towards a
market economy.

To support
environmental
protection and the
sustainable
management of natural
resources.

Vietnam and EU agreed on a

mutual economic corporation
and development strategy in
order to enhance Vietnams
conversion process to a market
economy

1996

In June, EU-Vietnam Framework

Agreement on Comprehensive
Partnership and Cooperation
(PCA) was signed. FTA
negotiations with Vietnam
started

2012

The agreement in principle

reached on 4th August 2015 for
a free trade deal includes the
elimination of nearly all tariffs
(over 99%)

2015

Establishing
Vietnam EU relation

Finally, after 3 years and 14 rounds of talks, on 2nd December

2015, the EU and Vietnam declared to officially complete
negotiations for an EU-Vietnam Free Trade Agreement (FTA).
In 2015, the EU and Vietnam are celebrating the 25th anniversary
of diplomatic relations.

2015

Establishing
Vietnam EU relation

Vietnams Target
Exporting is one of Vietnams main targets. European Union has been
and still is one of the Vietnams biggest partner, a wide and potential
consuming market for Vietnams products such as shoes, textiles,
agriculture commodities, handicrafts, joineries, plastic products and
aquatic products, etc.
EU is also a highly economic developed zone, which can easily satisfy
the rising needs of technology imports and input sources for several

industries, eventually serving Vietnams economic development and

executing the nations industrialization and modernization.
Earning foreign investments from the EU is another target. Indeed,
The EU is one of the largest foreign investors in Vietnam.

EUs Target
Supporting the sustainable economic development of
Vietnam and the improvement of living conditions of
the poor
Encouraging the integration of Vietnam in the world
economy and trading system and supporting the
process of economic and social reforms.
Supporting Vietnam's transition to an open society
based on sound governance, rule of law and respect for
human rights.

Raising the profile of the European Union in ASEAN

generally and in Vietnam specifically.

Vietnams perspective
Strengthening relations with EU also indicates
the consistence in Vietnams Party and
Governments foreign policies of multilateral
and diversified international politics and
economic relations, in which EU is the priority.
However, it is important that Vietnam does
not rely on EU or the relation between the
two, as Vietnam needs to be economically
strong and independent.

EUROPE

The
Cambodia
matter

Globalization

Vietnams
rapid growth
pace and
human right
problems

The
appearance
of the EU
and a mutual
currency

Politics

The
Cambodia
matter

The appearance of the EU and

a mutual currency

Vietnams
rapid growth
pace and
human right
problems

Globalization

Politics

1990
Vietnam and European
Communities officially
established diplomatic
relations.

1992
Vietnam and European
Communities signed
textile agreement.

1995
Vietnam and European
Community signed
Vietnam EC framework
cooperation agreement.

1996
European Commission
set up its permanent
Delegation to Vietnam

1997
Vietnam joined ASEAN
EU cooperation
agreement.

2003
Vietnam EU human
rights dialogue was
launched.

2004
First Vietnam EU
Summit in Hanoi

2005
Vietnam adopted a Master
Plan and Action plan in
developing Vietnam EU
relations towards 2010 and
orientations towards 2015.

2008
The negotiations on a
Framework Agreement on
Comprehensive Partnership
and Cooperation (PCA)
were launched.

2010
Vietnam EU PCA
was initialed.

2012
Vietnam EU PCA
was officially signed
and the negotiations
for a Vietnam EU
Free Trade
Agreement (FTA)
started.

2015
Officially finish
Vietnam EU FTA
negotiations after 3
years and 14 talk
rounds.

The EU- VN FTA

1.1 Eliminating customs duties
1.2 Reducing non-tariff barriers to European exports
1.3 Protecting European Geographical Indications
1.4 Allowing EU companies to bid for Vietnamese public contracts
1.5 Creating a level playing field for EU companies and innovative products.
1.6 Opening the Vietnamese market for EU services operators.
1.7 Promoting and protecting investment.
1.8 Establishing an efficient mechanism to resolve future disagreements.
1.9 Safeguarding social and environmental protection standards.
1.10 Promoting democracy and respect for human rights.

Eliminating customs duties

A few concrete examples:

Almost all EU
exports of
machinery and
appliances will be
fully liberalized at
entry into force
and the rest after
5 years.

Car parts will be

duty free after 7
years. Roughly
half of EU
pharmaceuticals
exports will be
duty free at entry
into force and
the rest after 7
years.

The totality of EU
textile fabric
exports will be
liberalized at
entry into force.

Close to 70% of
EU chemicals
export will be
duty free at entry
into force and
the rest after 3, 5
and 7 years.

Vietnam will also open

its market for most EU
food products, both
primary and processed,
allowing EU high quality
exports to reach its
growing middle class
consumers.

Wines and spirits

will be liberalized
after 7 years.

Frozen pork meat will be duty free

after 7 years, beef after 3 years and
dairy products after a maximum of 5
years and food preparations after a
maximum of 7 years.

Chicken will be fully liberalized

after 10 years.

The EU- VN FTA

1.1 Eliminating customs duties
1.2 Reducing non-tariff barriers to European exports
1.3 Protecting European Geographical Indications
1.4 Allowing EU companies to bid for Vietnamese public contracts
1.5 Creating a level playing field for EU companies and innovative products.
1.6 Opening the Vietnamese market for EU services operators.
1.7 Promoting and protecting investment.
1.8 Establishing an efficient mechanism to resolve future disagreements.
1.9 Safeguarding social and environmental protection standards.
1.10 Promoting democracy and respect for human rights.

Allowing EU companies to bid for Vietnamese public contracts

Vietnamese ministries, including for

infrastructure such as roads and ports,
important state-owned enterprises such
as the power distribution company and
the nationwide railway operator, 34 public
hospitals in the two biggest Vietnamese
cities, Hanoi and Ho Chi Minh City.

The EU and Vietnam have also agreed

on disciplines fully in line with
Government Procurement Agreement
(GPA) rules, achieving a degree of
transparency and procedural fairness
comparable to other EU FTAs with
developed countries and more advanced
developing countries. EU businesses will
be the first foreign companies to get
such a level of access to Vietnamese
procurement markets.

The EU- VN FTA

1.1 Eliminating customs duties
1.2 Reducing non-tariff barriers to European exports
1.3 Protecting European Geographical Indications
1.4 Allowing EU companies to bid for Vietnamese public contracts
1.5 Creating a level playing field for EU companies and innovative products.
1.6 Opening the Vietnamese market for EU services operators.
1.7 Promoting and protecting investment.
1.8 Establishing an efficient mechanism to resolve future disagreements.
1.9 Safeguarding social and environmental protection standards.
1.10 Promoting democracy and respect for human rights.

TRADE

In 2014, the EU
constituted one of the
most important
overseas markets for
Vietnam (EU came
second after it was
closely overtaken by
the US by only US$ 500
million)

The EU purchased as much as 18.6% of the country's

global exports in 2014. The two way trade expanded by
8.8%, mainly owing to the impressive growth rate of
Vietnam's exports to the EU which made year-on-year
increase of 14.7% (US$ 27.9 billion)
The EU was also the second largest trading partner of
Vietnam after China (excluding intra-ASEAN trade)

In particular, the continuous surplus of US$19 billion

that Vietnam enjoys in its bilateral commercial links
with the EU significantly helped to balance Vietnam's
huge trade deficits with China and South Korea and led
to an estimated global trade surplus of about US$ 2
billion
Thus, 2014 marks another year in which Vietnam enjoys a
record-high trade surplus with the EU. Meanwhile, the EU's
exports to Vietnam tumbled by 5.9% during 2014

Vietnamese exports to the EU concentrated on labor intensive products including assembly of

electronic items/ telephone sets, footwear, garments and textiles, coffee, seafood and furniture.
The main commodities of EU exports to Vietnam are high-tech products, including boilersmachinery & mechanical products, electrical machinery & equipment, pharmaceutical products,
and vehicles.

INVESTMENT
The investors
concentrated on
manufacturing, electric
production and
distribution, estate and
business planning.
Manufacturing has 590
projects and the total
capital is $6.62 billion.

In 2014 the EU ranked

fifth among the big FDI
partners of Vietnam.
From January to midDecember 2014, the
EU had a combined
committed FDI of
US$587.1 million

According to the
Foreign Investment
Agency of the
Vietnamese Ministry of
Planning and Investment,
investors from 22 out of
28 Member States of the
EU injected a total
committed FDI worth
US$21.48 billion into
1710 projects over the
course of the past 25
years (by December 20th
2015).

The projects be set in

52/63 provinces and
crowded in Ho Chi
Minh City, Hanoi, Ba
Ria Vung Tau
province, Quang Ninh
province, Dong Nai
province

The electric production

and distribution and
estate & business
planning come second
and third, with $3,54
and $3,4 billion in
registered capital

INVESTMENT
Two Vietnamese
partners and the
foreign partner hold
50% investment
It is a joint venture
among two

In 2015, The

Vietnamese partners -

Observation Complex

the Tien Phuoc Real

EU investment in

in the Thu Thiem New

Estate JSC and the

Vietnam is mainly in

Urban Area in Ho Chi

Tran Thai Real Estate

two forms: a joint

Minh Citys District 2,

Company - and the

venture and 100%

with investment capital

UKs Denver Power

foreign capital

of $1.2 billion were

Ltd under Gaw Capital

broken on December

Partners

2nd 2015

capital respectively

CONCLUSION

Benefits
For EU

For Vietnam

THE STRATEGY TOWARDS ASIA OF THE EU

Firstly, the EU improves the economic

presence in Asia to maintain its
dominant role in the world economy

Secondly, the EU promotes

cooperation and mutual
understanding at the international
level to contribute to stability in
Asia

Thirdly, the EU encourages economic development

of poor countries. The EU and its members
continue to contribute to alleviate poverty and
create sustainable growth in Asia region
Finally, the EU contributes to developing
and consolidating democracy, the rule of
law, as well as the human rights and
fundamental freedom in Asia.

Resources and market

Europe is an area which has
disadvantages about natural
resources, climatic condition and
population, but it has much
experiences of accumulating
experience of development,
appreciable capital and high
technology level. Viet Nam has
strategic position, diversity of natural
resources, workforces, big market
with demand of capital, technology
and management experience.

The Vietnamese
community in Europe
There is a large number of
Vietnamese people living in Europe.
Vietnamese people in Europe are
who were born in or immigrated to
Europe, or moved to the EU in order
to look up for jobs. Obviously, the
demand for Vietnamese products is
remarkably high. To meet the
demand of this community benefits
to both Vietnam and Europe.

Benefits for Vietnam

The EU is one of the most important partnership and market
01 .
02

Trade plays an important role in the relationship between Vietnam and EU. Currently the
EU is the 3rd largest trading partner and the 2nd largest export market of Vietnam

Investment from the EU

Its one of the most important resource for Vietnam development

03

Technical and financial co-operation

04

Poverty reduction and sectors setting the foundation for inclusive and sustainable growth,
including good governance; social protection, health and education; supporting a
favorable business environment and deeper regional integration; and sustainable
agriculture and clean energy, helping to provide safeguards against external shocks and
turn challenges of food security and climate change into opportunities for growth

Humanitarian Aid
The EU is the worlds largest provider of financing for humanitarian aid operations.
Altogether, the European Commission and the governments of the 28 EU Member States
pay for more than 50% of the assistance that comes from official channels

Challenges
Transportation
cost

Popularity of
Vietnamese
products

Competitiveness
of other
countries

Infrastructure
Vietnamese
state
enterprises

the

zero
Debt crisis in
Europe

Business
environment

The protection
of intellectual
property rights

Solution for businesses/enterprises

Enhancing
competitive ability

Decreasing
transportation
costs

Promotion strategies
Offering financial and
advising supports

Solutions for Government

Promoting Vietnams
images, especially
through natural
wonders and diverse
cultures, in the EU
nations should be
intensified in order
to push tourism

Establishing
laws to ensure
recognition to
technologys
origin

Establishing
favorable rules
and policies to
encourage EU
enterprises
and investors