Question:
What impact will the EVFTA have on Vietnam’s poverty reduction efforts?
Answer:
According to the findings of the report “Vietnam: Enhancing International Integration and Implementing EVFTA,” conducted by the World Bank in late April, the EVFTA will help Vietnam reduce poverty at a faster rate. Specifically, the Agreement is expected to lift an additional 0.8 million people out of poverty by 2030, equivalent to a poverty rate reduction of 0.7%. The EVFTA also has the potential to narrow the wage gap by an additional 0.15%, particularly benefiting households in the lowest 40% income group.
Question:
How does the EVFTA impact labor, employment, social welfare, and society as a whole? What challenges do the labor commitments pose?
Answer:
– According to a study by the Ministry of Planning and Investment, the EVFTA is expected to create an additional 146,000 jobs annually, primarily focusing on labor-intensive industries with high export rates to the EU market. The expected increase in employment in various sectors is as follows: the textile and garment industry is estimated to increase by 71,300 jobs (by 2025) and 72,600 jobs (by 2030), representing growth rates of 1.2%, 2.3%, and 2.4%, respectively, compared to 2018. The leather and footwear sector is projected to have employment growth rates of 4.3% and 3.8% in 2025 and 2030. Other sectors with substantial job growth include aviation (1.5% by 2025) and water transportation (0.9% by 2025). However, some sectors may experience reduced employment, such as forestry, mining, and rice production, with annual decreases ranging from 0.26% to 0.36%.
– The EVFTA not only brings benefits in terms of job creation but also has the potential to raise wages for workers through more efficient market activities and spillover effects from foreign direct investment (FDI) enterprises. It is estimated that the wages of FDI enterprises will be nearly 1% higher than domestic enterprises. Additionally, since the economies of EU member states are more developed than Vietnam’s and serve as complementary rather than direct competitors, with a reasonable tariff reduction schedule and an improved social welfare system, Vietnam can address social issues arising from EVFTA participation. Importantly, as the EVFTA includes commitments on environmental protection, the trade liberalization and investment attraction process will be more environmentally friendly, contributing to more sustainable growth.
– Furthermore, labor commitments under the EVFTA, including allowing the establishment of labor organizations within enterprises and setting up Domestic Advisory Groups (DAGs) to enforce trade and sustainable development commitments with participation from labor representatives, business representatives, scientists, and non-governmental organizations in Vietnam, can increase social monitoring pressure during the agreement’s implementation, posing certain challenges to Vietnam.
Question:
Please provide a more detailed assessment of the specific impact of the EVFTA in the context of the Covid-19 pandemic, especially concerning economic growth, industries, employment, and social welfare.
Answer:
Currently, the Covid-19 pandemic continues to evolve, especially in European countries and Vietnam’s major trading partners. Therefore, conducting a comprehensive and detailed assessment of the overall impact of the EVFTA in the context of the Covid-19 pandemic requires a significant amount of time and resources. Therefore, the Ministry of Industry and Trade will propose to the Government to include this matter in the EVFTA implementation plan for further action with the participation of relevant ministries and sectors immediately after the agreement takes effect. This will help generate appropriate recommendations for coping measures based on the evolving situation.
