After a yearslong negotiation, the European Union (EU) and Vietnam finally signed a Trade Agreement (along with an Investment Protection Agreement) on 30 June 2019. Less than a year later, on 12 February 2020, the European Parliament consented to the agreement, which was concluded by the Council later, on 30 March 2020.
Indubitably, this is excellent news for importers of Vietnamese products in the whole of Europe and Dutch importers, in specific. Improved market access is itself among the most imperative goals of any trade agreement, and the newly-agreed covenant between the EU-Vietnam, reaching it is not an exception. The trade agreement sets up the total dismantling of almost all goods importing tariffs (save for some products that are subject to the duty-free tariff rate quotas) between the two parties. With 65% of EU exports to Vietnam coming in duty-free from day one, widespread coverage was reached almost instantaneously at entry into force. The remaining trade—except a few products—were set to be liberalized after ten years.
On the other hand, the EU was expected to liberalize 71% of its imports from Vietnam from day one, and 99% will enter duty-free afterward, as customs duties are on course to be removed after a transitional period (maximum seven years for Vietnamese-produced goods and ten for the EU’s) so that domestic producers can gradually pick up the pace. Needless to say, consumers from both sides will benefit from lower prices and exporters from strengthened competitiveness.
The rising prominence of trading between the EU and Vietnam
Trading with Vietnam has been no stranger to several EU members since the two sides set up formal diplomatic relations in 1996. The Southeast Asian country is the EU’s 15th trade-in-goods partner and the EU’s largest ASEAN trading partner in 2020. As of currently, Vietnam’s main exports to the EU are telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, seafood, and furniture, accounting for approximately 17% of the country’s export (in 2018), making the Union its 3rd largest partner, after the US and China.
Before the commencement of the EVFTA, many Vietnamese products have been benefiting from trade preferences offered unilaterally by the EU under the long-term General Scheme of Preferences (GSP). The scheme, initiated by the United Nations Conference on Trade and Development (UNCTAD) almost 50 years ago, aims to remove import duties from products coming into the EU market from vulnerable developing countries..
With the new agreement coming in effect, it will not only allow Vietnam to maintain free access to the EU market for the products as mentioned above, regardless of future economic situations, which might no longer support a preferential treatment reserved for Vietnam.
According to the EU Delegation to Vietnam’s Guide to the EU-Vietnam free trade agreement and as mentioned earlier, by the time the agreement is fully in force, the import tax for commodities produced in Vietnam will be deducted toward 0%, processed agro-products (such as chocolate, confectionary, sweet drinks, beers, spirits, biscuits and bakery products) will specifically experience fast-paced elimination of tariff, dropping to 6.6% from 37.2% in just three years.
For the quintessential Vietnamese specials like Mộc Châu tea or Buôn Ma Thuột coffee, they will also be protected in the EU. The agreement also makes it possible for new products to be added to the protected list in the future (see the list here).
However, the agreement also takes into account the more sensitive situation of some of the EU’s agricultural sectors (e.g., rice, sweet corn, garlic, mushrooms, or sugar). In these cases, the access of Vietnamese products to the EU market will still be subject to tariff-rate quotas.
New opportunities for Dutch importers of Vietnamese goods.
With the EVFTA in action, this unleashes a massive opportunity for importers in the Netherlands looking to expand or establish their businesses with Vietnamese manufacturers, especially for importing products that didn’t make it to the list of preferential treatments. Moreover, the inclusion entails more positive competition to the exotic Asian product importing landscape, which Chinese manufacturers have long dominated.
However, the trade agreement won’t come easy. It’s worth noting that working with Vietnamese manufacturers will be significantly different from working with Chinese suppliers, with which many Dutch companies might already have had experience. Apart from the distinctive languages and specialties, there are also underlying differences in culture, mindset, and perception. Along with that is the regulation difference for export and importing imposed on Vietnamese manufacturers by the government.
With all of these potential disruptions, working with Vietnamese suppliers can be challenging. But that would only be so if you, as a Dutch importer of Vietnamese specialties, are unable to employ the help of people who are experienced in working with both Vietnamese and Dutch firms, such as VIEC.
What we do:
- Connect Vietnamese manufacturers with potential sellers and act on their behalf for seamless collaboration, besides omitting the supply chain complexity of employing importers and exporters.
- From Farm to Fork—Support manufacturers in setting up their proprietary retail system and making their ground in the foreign Dutch or Vietnamese markets.
So, what does this mean? This means that we are committed to helping you in connecting you with the leading Vietnamese manufacturers and catering to any inquiries during the importing process into the Netherlands, saving you substantial back and forth corresponding efforts.
VIEC aims to become the go-to commercial representative facilitating bilateral trading between F&B manufacturers and sellers in both Vietnamese and Dutch markets, bringing them closer and bringing their trading successes through credible, cost-efficient, and low-risk supply chain optimizations.
To faithfully maximize the benefits of all parties in the supply chain, from the Netherlands to Vietnam and vice versa:
- The manufacturers with expanding clientele in foreign markets
- The sellers with exclusive supplies of high-quality products
- The consumers with bolstered satisfaction and well-being
What VIEC does for you: Bring you the “cup of tea” for your business growth.
The moment you see our offerings for Vietnamese products, whatever you believe to be your “CUP OF TEA!”, we are here to help you:
- Test the market with small order quantities.
- Optimize the journey of your products: Direct from the factory—No Intermediary—Save you time and money doing business.
- VIEC supports the setup of a B2B or B2C distribution system for your business.
- Maintain your steady supply with packages that fit any size, shape, or form of your needs.
- VIEC guarantees to consistently distribute products to our customers with the highest quality and value that, at the same time, merit your pocket, as we always state in our motto: “VIEC—Value, Integrity, Exclusivity, Connections.”
For any inquiries, contact us HERE.