With the EU representing a meticulous market, there is no room for impatient businesses that show a lack of creativity or have poor-quality goods, meaning that local firms must be proactively innovative with their product quality and strive to meet high standards set on goods and services.

Prime Minister Nguyen Xuan Phuc made the remarks at a teleconference on August 6 to discuss the implementation of the EU-Vietnam Free Trade Agreement (EVFTA), 

During his address, the Government chief described the recent trade deal as a new generation agreement which sets comprehensive high standards, whilst also boasting a large openness that balances the interests of both sides.

Most notably for the country, a study by the Ministry of Planning and Investment indicates that under normal circumstances, the EVFTA has the potential to contribute to an average GDP increase of up to 3.2% over the first five years of its implementation. Indeed, this average GDP increase will rise to 5.3% over the subsequent five years and up to 7.72% ahead in the following five years.

With a strong commitment to open markets and eliminating almost all import taxes on EU tariffs, the EVFTA is expected to provide a widow of opportunity for local enterprises to increase export turnover to the EU by 42% in 2025 and to nearly 45% in 2030 in comparison to the scenario without the agreement in place. In addition, the agreement will serve to increase the nation’s potential to attract greater FDI investment.

Furthermore, the Agreement also serves to create approximately 150,000 jobs annually whilst helping between 800,000 and 1 million people escape from poverty by 2030, according to a report compiled by the World Bank.

PM Phuc said the EVFTA offers plenty of opportunities for the country to innovate its growth model, motivate domestic businesses to strive for improvements, whilst also accepting stricter new rules in order to progress with higher values in the EU, along with global supply and distribution chains.

The implementation of the trade deal is also important for the nation in the context of several major EU groups shifting their investment to the country by diversifying their production supply chains, the PM said.

Amid global economic growth being affected by the novel coronavirus pandemic and the EU suffering an economic slowdown, PM Phuc believes the EVFTA promises to bring optimistic forecasts regarding export growth in the near future.

With the trade deal entering into effect, several Vietnamese products must now compete with EU products in the domestic market due to the removal of protection barriers.

As a result of this increased level of competition, the Government and local businesses must take steps to effectively manage the market whilst creating a healthy business environment in order to be able to meet the requirements set by the EU market.

PM Phuc added that EU and Vietnamese goods can be considered to be supplementary for each other due to their differences in geography and development level.