No EU-Vietnam FTA benefit for 23% of businesses: EuroCham

About 23% of business respondents in a survey say they have not seen any tangible benefit from the EU-Vietnam Free Trade Agreement (EVFTA).

The survey results were announced Wednesday by EuroCham, just ahead of the EVFTA’s fourth anniversary (August 1, 2020-2024).

A EuroCham report said two-thirds of the respondents reported some level of benefit - significant, moderate, slight and marginal.

Notably, 27% of companies reported moderate to significant advantages, a marked increase from 18% in 2023. The number of those who reported no benefit fell from 31% to 23%.

EuroCham members have consistently highlighted tariff reductions, increased market competitiveness and expanded market access as key benefits. Other advantages cited include streamlined supply chains, improved business transparency, and a stronger legal framework.

Besides, in its Q2/2024 Business Confidence Index report, EuroCham mentioned a number of obstacles that European businesses face in fully leveraging the EVFTA.

“These include complex regulatory requirements and a lack of recognition for international standards by local authorities. Additionally, a lack of understanding of the agreement among stakeholders, combined with customs valuation issues and opaque clearance procedures, complicate trade. Technical barriers, particularly in the areas of certification and product testing, also remain a significant hurdle.”

Dominik Meichle, chairman of EuroCham Vietnam, noted: “As we enter the fifth year of the agreement, it is crucial to continue working on simplifying procedures, aligning standards, and ensuring everyone understands how the EVFTA works."

EuroCham vice chairman Jean-Jacques Bouflet outlined the association’s strategic initiatives to address identified challenges and maximize EVFTA benefits: “EuroCham is committed to working with stakeholders to streamline regulatory compliance, advocate for greater recognition of international standards and develop comprehensive education and awareness programs on the EVFTA.”

The EVFTA and the Euro-Vietnam Investment Protection Agreement (EVIPA) were signed in June 2019, then ratified by legislative bodies on both sides. The EVFTA took effect in August 2020; and the EVIPA awaits individual ratification from nine of 27 EU member states.

Vietnam’s exports to Europe surged from €35 billion ($37.9 billion) in 2019 to over €48 billion in 2023. Growth has been particularly pronounced in electronics, textiles, footwear, agriculture and seafood. The increase in EU exports to Vietnam in the same period has been far more modest – from €11 billion to €11.4 billion.