Firms demand EU trade deal

Vietnam’s manufacturers are keen to gain access to European markets. Source: Wikimedia

The European drinks industry has called for a speedy ratification of the free-trade agreement (FTA) between the EU and Vietnam, which is expected to provide a “major boost” to the business.

The European Commission in Brussels has announced a new trade strategy which has been generally welcomed by Spirits Europe with a FTA between the EU and Hanoi expected to be ratified early next year.

The EU and Vietnam concluded FTA negotiations in December 2015, paving the way for the elimination of Vietnam’s 45-per-cent tariff for spirits and protecting geographically identified drinks like Cognac and Scotch whisky.

Negotiators, ambassadors and EU trade association representatives this month urged for the agreement to be put into action.

It is planned that the FTA will come into effect by 2018.

“Trade is hugely important for our sector,” explained Paul Skehan of Spirits Europe. “We’ve already seen a doubling of our export revenues over the last decade to €10 billion [US$11.2 billion] and removing tariffs which are currently at 45 per cent for EU spirits entering Vietnam will greatly expand the market.

“The provisions for the protection of geographical indications, such as Scotch or Cognac, would also maintain the value of the market. It will take seven years for the tariffs to drop to zero but Asean trade in spirits will be duty-free from 2018 so we’ll already be at a disadvantage for many years.”

European textile exporters are also looking to make significant gains from increased access to Vietnam.

“The EU retail sector has a double interest in Vietnam as it is our second-largest source of fast-moving consumer goods after China and because of growing interest for investment in retail stores in Vietnam,” said Pierre Gröning of the Foreign Trade Association. “For retail, the FTA with Vietnam is more important than TTIP [with the US], CETA [with Canada] and the Japan agreement combined.”

EU retailers import 8 per cent of fast-moving consumer goods from Vietnam, a figure still well behind the 50 per cent imported from China, but growing fast and set to get a boost from the elimination of tariffs under the FTA, which would reduce costs for importers and European consumers.

Clothing and other textiles witnessed an increased turnover of US$15.5 billion, up 4.2 per cent in the first eight months of the year compared with 2015, and footwear was up US$8.6 billion or 8.1 per cent. Even without the FTA, EU clothing imports from Vietnam increased by 3.2 per cent last year.

The EU has already signed an FTA with Singapore and is keen to link the bloc with the 90 million Vietnamese customers. The country is expected to have a 30-million-strong middle class by 2020.

The FTA aims to remove 99.8 per cent of duties on European exports gradually over a decade. Brussels is hoping the same model will be replicated in the Philippines, Malaysia and Indonesia.