Question:
In the context of the COVID-19 pandemic, how does the EVFTA play a role in helping Vietnam’s economic recovery?
Answer:
– The COVID-19 pandemic has had a significant impact on global production and trade, affecting not only Vietnam but the entire world. Many economic experts predict that economic growth targets for this year will not be met. In this context, the enforcement of the EVFTA is of vital importance in helping to offset the economic decline during the pandemic. From the perspective of businesses, the EVFTA is seen as a lifeline, offering opportunities in a more diverse market for enterprises and aiding in the post-pandemic recovery of economic growth.
– In recent times, domestic businesses have faced challenges in the European market due to competition from other global industries, particularly China. Vietnamese product prices are often 10-20% higher compared to China. Consequently, Vietnam’s market share in the EU has been relatively modest. However, the EU is the world’s second-largest import market, importing around $2.338 trillion USD annually, while Vietnam’s export share to the EU accounts for approximately 2%, with just over 42% of Vietnam’s exports to the EU benefiting from a 0% import tariff under the Generalized System of Preferences (GSP). With strong market access commitments and the elimination of import tariffs on nearly 100% of tariff lines under the EVFTA, the opportunity for increased Vietnamese exports is substantial, especially for competitive sectors such as textiles, footwear, agriculture, and wood products. Studies show that the EVFTA is expected to increase Vietnam’s exports to the EU by approximately 20% in 2020, 42.7% by 2025, and 44.37% by 2030 compared to a scenario without the agreement. Additionally, EU imports are expected to rise, but at a slower pace compared to exports, with approximately 15.28% growth in 2020, 33.06% by 2025, and 36.7% by 2030. On a macroeconomic scale, the EVFTA is estimated to contribute to Vietnam’s GDP growth at an average rate of 2.18% – 3.25% (2019-2023), 4.57% – 5.30% (2024-2028), and 7.07% – 7.72% (2029-2033). Furthermore, Vietnamese businesses will benefit from higher-quality imports of goods and materials from the EU at reasonable prices.
– Therefore, in the post-pandemic period, if the EVFTA is effectively implemented, Vietnamese businesses will have a significant advantage by reducing or eliminating trade barriers in the EU market, unlocking access to this $18 trillion USD market.
– Similarly, with regard to imports, Vietnamese businesses will benefit from high-quality imports of goods and materials from the EU at reasonable prices, particularly in machinery, equipment, and advanced technology. Furthermore, the importation of goods and services from the EU will create competitive pressure for Vietnamese businesses to improve their competitive capabilities.
– Importantly, the EVFTA will help establish a new value chain between Vietnam and a major global partner. With a more open and favorable investment environment and attractive export prospects, more FDI from the EU is expected to flow into Vietnam, particularly in sectors such as services, finance, automobiles, manufacturing, information technology, high-tech, and agri-food processing. This will drive improvements in Vietnam’s investment and business environment, governance, and legal policies, aligning them with international standards, ultimately propelling Vietnam toward a new level of development.
