There are growing concerns that the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) is being pushed back for political reasons by the EU institutions, which can result in postponement of the deal’s entry into force well beyond 2019.
amfori and the partner associations believe that the EU should move quickly to ratify the EVFTA because of the need to:
- Uphold the EU’s reputation: it is vital to respect the patience already shown by other third countries; the EU should not to side-line the EVFTA, since doing so would send the wrong message to EU trading partners and hurt the EU’s credibility in the global trading community;
- Increase the EU’s competitiveness: EU Companies are facing tough competition in Vietnam and South East Asia due to the lack of FTAs the EU has in the region, and the EVFTA can go a long way in mitigating this;
- Promote Sustainable Development: Delaying the entry into force of the agreement also delays the implementation of the platforms for Trade and Sustainable Development which the EVFTA envisages. This in turn affects negatively the promotion of human rights, labour and environment standards in the country.
To recap, the EVFTA negotiations were concluded in 2015; however, due to institutional matters relating to the European Court of Justice’s ruling on the EU-Singapore free trade agreement, this has delayed the ratification of the EVFTA. The European Commission would like to split the Vietnam agreement, just like the Singapore deal, into two parts:
- Part 1: (containing most of the tariff reductions), would only require ratification by the EU institutions;
- Part 2: (consisting of investment and labour clauses), would need to be ratified by all EU Member State parliaments.
However, sources have informed us that the Commission is prioritizing the EU-Japan FTA and the Singapore FTA for conclusion before the end of its current term, which is 2nd Quarter 2019. This would mean that the EVFTA would be sent for ratification and would enter into force only once the new Commission and European Parliament take shape, which could be by 4th Quarter 2019 or even after 2020.