EU Parliament approves landmark trade pact with Vietnam

The E.U.-Vietnam Free Trade Agreement (EVFTA) was voted in favor by 401 European Union lawmakers. There were 192 votes against and 40 abstentions.

The agreement, which went through a negotiation period of eight years, will remove virtually all customs duties between the two parties over the next ten years, including on Europe’s main export products to Vietnam: machinery, cars and chemicals.

Vietnam’s National Assembly is expected to vote on the trade pact in May, and it is set to be effective one month after both parties have completed all legal procedures.

Deputy Minister of Industry and Trade Do Thang Hai told reporters that the trade pact is a major step for Vietnam’s trade sector, but businesses such as fruit exporters will need to meet the E.U.’s high standards to take advantage of the deal.

Under the deal, Vietnam will eliminate 99 percent of its import duties over 10 years and the E.U. will do the same over seven years.

The pact will open up Vietnam’s services, including post, banking and shipping and public procurement markets, align some standards and protect E.U. food and drinks, such as French champagne or Greek feta cheese, from imitations being sold in the country.

Belgian lawmaker Geert Bourgeois said: "The deal will boost prosperity, create new and better paid jobs, cut costs for companies big and small, and give them better access to each other's markets."

European lawmakers on Wednesday also voted in favor of the Investment Protection Agreement (IPA), which includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved.

"The IPA is a step forward in Vietnam’s orientation to move from quantity to quality of foreign direct investment. It will help us procure more advanced, high tech and sustainable investment, especially projects with high added value," Nguyen Chi Dung, Minister of Planning and Investment, had said earlier.

The International Labour Organization (ILO) has expressed its support for the trade pact.

"Labour and environment requirements of EVFTA would help to facilitate win-win and sustainable achievement for Vietnam by avoiding the "race to the bottom" and ensuring that the growth today does not come at expense of future generation’s opportunities," said ILO Vietnam Director Chang-Hee Lee.

The EVFTA is E.U.’s second deal with an ASEAN country, after Singapore, and one of few with a developing country.

The E.U. was Vietnam’s second largest export market last year behind the U.S. with a value of $41.48 billion, down one percent year-on-year.