Free trade deal to boost EU-Vietnam trade by 50 pct

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Vietnam's garment and textile exports to the EU will be freed from tariffs when a free trade deal takes effect, possibly in late 2017. Photo by Reuters.

A free trade agreement signed between the European Union and Vietnam in August last year is expected to boost trade value between the markets by up to 50 percent by clearing thousands of tariffs.

The trade pact is expected to cut 4,959 tariff lines, or 52 percent of the total between the markets, to zero when the agreement takes effect at the end of 2017, and another 144 tariff lines by the end of 2018, insiders said at a conference on Thursday.

Products to benefit from the tax break include materials used for garments, textiles and shoes, and Vietnam's major exports such as seafood and agriculture produce.

Michael Behrens, chairman of the European Chamber of Commerce in Vietnam (EuroCham), which represents around 900 European businesses, said the trade deal is expected to enhance investments that can create millions of new jobs in Vietnam.

He said the trade deal will help increase trade value between the countries by 50 percent in just a few years. Annual trade between Vietnam and the EU is currently worth around $31 billion.

EuroCham is going to open an office, in the central city of Da Nang, after the two in Hanoi and Ho Chi Minh, to facilitate the increasing interest of European firms in Vietnam.

A recent survey by the organization showed high confidence among European firms about their business prospects in Vietnam, with more than 70 percent of respondents describing their business situation at present as well as the next quarter as “excellent” or “good”.

Behrens said European businesses in Vietnam are upbeat about the market, and they are looking forward to the free trade deal, which is expected to take effect in late 2017.

He believed that Brexit will not delay the implementation of the trade deal, but said that any delays will affect the companies’ enthusiasm and lower investments.

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The EU is a major investor in Vietnam with more than 1,800 projects effective as of the end of April this year, mostly in industry and construction. Their registered capital totals over $23.16 billion.