“This is a far-reaching, fully symmetrical tariff elimination that has never before been achieved with a developing country, but with adequate transition periods to allow Vietnam to adapt,” the European Commission said.

For the first time in an FTA, Vietnam accepted the marking of origin 'Made in EU' for non-agricultural goods, with the exception of pharmaceuticals. EU member state-specific markings of origin will continue to be accepted as well. But, this provision will allow manufacturers to reflect the increasing EU market integration.

All these provisions, together with others addressing, for example, import and export licensing, customs procedures, will facilitate access of European goods to the Vietnamese market and boost their competitiveness vis-à-vis other suppliers, the Commission said.

Once the legal text is finalised by the EU and Vietnam negotiators, the agreement will need to be approved by the European Council and the European Parliament. The agreement will contain a legally binding link to the Partnership and Cooperation Agreement (PCA) that governs the overall relationship between the EU and Vietnam.

EU exports to Vietnam are dominated by high tech products including electrical machinery and equipment, aircraft, vehicles, and pharmaceutical products. Vietnam's key export items to the EU include telephone sets, electronic products, footwear, textiles and clothing, coffee, rice, seafood, and furniture.

The EU has a negative balance of trade in goods with Vietnam. In 2014, EU-Vietnam trade in goods was worth over €28.3 billion, with €22.1 billion in imports from Vietnam into the EU, €6.2 billion in exports from the EU to Vietnam.

The EU is one of the largest foreign investors in Vietnam. In 2013, EU investors committed a total $656 million in Foreign Direct Investment (FDI) and thus remained Vietnam's sixth largest foreign investor partner. (RKS)

Fibre2Fashion News Desk – India