VIETNAM – BREAKING AMAZING NEWS: EU-VIETNAM FREE TRADE AGREEMENT COMES INTO FORCE ON 1 AUGUST 2020

1. VIETNAM – BREAKING AMAZING NEWS: EU-VIETNAM FREE TRADE
AGREEMENT COMES INTO FORCE ON 1 AUGUST 2020
With the EVFTA coming into effect, Vietnam will eliminate import duties on 91.8% of tariff
lines, equivalent to 97.1% of EU exports.
Some notable provisions of the EVFTA are as follows:
Tax:
Vietnam commits to eliminate import duties on 48.5% of tariff lines, equivalent to 64.5% of EU
exports immediately after the Agreement came into effect.
After 7 years, import taxes on 91.8% of tariff lines (equivalent to 97.1% of EU exports) will be
removed from Vietnam. After 10 years, the abolition rate will be 98.3% of the total tariff lines,
equal to 99.8% of the EU's exports respectively.
Banking:
Vietnam pled to favorably consider allowing EU credit institutions to raise foreign ownership to
49% of charter capital in two Vietnamese joint stock commercial banks. This commitment will
be valid for 5 years only (after the expiry of 5 years Vietnam will not be bound by this
commitment) and is not applicable to 4 banks where the State is holding a large sum of shares
(i.e. BIDV, Vietinbank, Vietcombank and Agribank).
Market access:
For the sectors listed in the Specific Schedule of Commitments, except where there is a specific
reservation, the two parties undertake to not apply restrictions related to: (i) the number of
businesses enterprises are allowed to participate in the market, (ii) the transaction value, (iii) the
number of activities, (iv) foreign capital contribution, (v) the form of legal entities, (vi) the
number of natural persons recruitment.
Public procurement packages:
Under EVFTA, Vietnam commits to allow EU contractors to participate in bidding packages that
simultaneously meet the three conditions regarding Value of bidding package; Shopping agency;
Goods and services need shopping.
Distribution service:
Vietnam has agreed to abolish the requirement of economic needs test five years after the date of
entry into force of the Agreement, but Vietnam reserves the right to implement the distribution
system planning on a non-discriminatory basis. Vietnam also agrees not to discriminate in the
production, import and distribution of alcohol, allowing EU businesses to reserve their operating
conditions under current licenses and only need one license to carry out import, distribution,
wholesale and retail activities.
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2. Please do not hesitate to contact the author Dr. Oliver Massmann under
omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris
Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only
foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY
OF VIETNAM.