On August 1, 2020, the Vietnam-European Union Free Trade Agreement (EVFTA) officially came into effect. This is the most comprehensive and high-standard free trade agreement (FTA) that the EU has signed with a developing country in the Asia-Pacific region.

To date, the EVFTA has basically achieved its set goals in promoting the overall relationship between the two sides. Photo: VGP

After four years of implementation (2020-2024), both Vietnam and the EU, along with the EVFTA, have faced numerous challenges such as the severe impact of the Covid-19 pandemic on global supply chains and geopolitical changes. However, the trade achievements made over the past period have become a highlight in the economic cooperation between the two sides.

To date, the EVFTA has essentially achieved its goal of promoting the overall relationship between the two sides. The EU has become Vietnam's fourth largest trading partner and vice versa, Vietnam has become the country with the largest market share among ASEAN countries exporting to the EU.

EVFTA: Resounding success

The Vietnam-European Union Free Trade Agreement (EVFTA) has undeniably been a resounding success for Vietnam.

According to the Multilateral Trade Policy Department of the Ministry of Industry and Trade, among the new-generation FTAs that Vietnam has joined, the EVFTA has yielded the most positive results.

After four years of the EVFTA's implementation, trade has emerged as the most significant highlight in the bilateral relationship. In these four years, Vietnam's exports to the 27 EU member states are estimated to have reached approximately US$200 billion, with growth rates ranging from 12% to 15%.

In July 2024 alone, Vietnam's trade surplus with the EU was estimated at US$20.1 billion, a 19.4% increase compared to the same period in 2023. Exports grew by 15.8%, while imports increased by 8.7%. The 27 EU member states are among Vietnam's top 6 largest export and import markets.

The latest data from the General Department of Customs shows that in the first half of 2024, exports to most of the key markets in the EU increased compared to the same period in 2023.

Among them, the Netherlands was the largest export market, reaching over US$6.14 billion, accounting for 24.88% of total goods exports to the EU, an increase of 27.12% compared to the same period in 2023. Following closely was Germany with nearly US$3.82 billion, accounting for 15.46%, up 3.27%; and Italy with nearly US$2.53 billion, accounting for 10.23%,up 9.23%.

Thanks to the EVFTA, Vietnamese consumers have more opportunities to access a diverse range of high-quality products from Europe at more affordable prices. Import duties on many products from Europe to Vietnam are gradually decreasing to 0% as committed in the Agreement.

Vietnamese lychees are sold at Carrefour Tongres supermarket in Brussels. Photo: VNA

Beyond trade benefits

With the EVFTA, Vietnam has become one of only two ASEAN countries (along with Singapore) to have a free trade agreement with the EU.

Beyond the commercial benefits, the Agreement has contributed to solidifying Vietnam's position as an attractive investment destination for European countries, helping to create a breakthrough in foreign direct investment (FDI) into Vietnam.

The Vietnam-EU Investment Protection Agreement (EVIPA), signed concurrently with the EVFTA, is still in the process of being ratified and has not yet been implemented, but FDI flows from the EU into Vietnam have seen a significant acceleration in recent years.

According to the Ministry of Planning and Investment, as of August 20, 2021, the EU had 2,240 valid projects with a total registered capital of US$22.25 billion, accounting for 5.55% of total registered FDI in Vietnam. The average project size of the EU in Vietnam is US$9.9 million per project, lower than the average project size of US$11.7 million per project.

The EVFTA has contributed to raising the EU to the 6th position among the largest FDI investors in Vietnam with 28 billion Euros in 2.450 projects.

Notably, Vietnam has "won" the trust of EU businesses in its economy and attracted more than 800 million Euros in investment in the first nine months of 2023 amid a declining global FDI trend.

As of the end of the first half of 2024, the Netherlands was the largest investor among EU countries in Vietnam with $14.56 billion in 441 projects.

Looking further into the future, with Vietnam's increasingly open and comprehensive business policies, European businesses have expressed growing confidence in the economy and investment environment of the Southeast Asian country.