The EU–Vietnam Free Trade Agreement (FTA) was signed in Hanoi on 30 June 2019. The agreement is expected to enter into force in early 2020. It is the most ambitious and comprehensive agreement ever concluded by the EU with a developing country. The FTA opens up new market access and business opportunities also for Finnish companies, said the Ministry for Foreign Affairs in a press release.
Finnish Goverment estimates that "the agreement will increase trade between the EU and Vietnam by as much as 50%. At the same time, it will bolster Vietnam’s importance as a hub of trading between Southeast Asia and Europe".
The FTA will remove nearly all tariffs on trade between the EU and Vietnam either immediately after the agreement's entry into force or within ten years at the latest. Many Finnish export products currently carry high tariffs of even up to 25%. The FTA also removes many barriers to trade, which will facilitate especially small and medium-sized Finnish companies’ market access. From now on, as a rule, standards and technical regulations must be based on international standards. The FTA also includes a separate chapter on the removal of barriers on trade in renewable energy.
The Ministry for Foreign Affairs considers that "the FTA will also improve access to Vietnam’s services markets, facilitating trade in environment, education and social services, for instance". According to its predictions, market access will be improved also for maintenance of machinery and equipment, IT, and research and development (R&D) services. Moreover, access to Vietnamese public procurement markets will become easier, and Finnish companies will be able to participate in competitive tendering of public procurements concerning rail, hospital and infrastructure projects in Vietnamese cities, for example.
Vietnamese economy growing rapidly
Vietnam is a lower middle-income country, which is experiencing a dynamic phase of development. Its export-driven economy is one of the fastest growing economies in the world. In the 2000s, Vietnam’s annual economic growth has been 6.4% of GNI on average. The EU–Vietnam Free Trade Agreement will open up doors for growing markets with over 95 million potential consumers, a growing middle class and a young working age population.
In 2018, the value of trade in goods between Finland and Vietnam was approximately 410 million euros. Finland’s exports to Vietnam include machinery and equipment, paper industry products, metal, leather and fur products, wood and chemical industry products, and powdered milk.
Vietnamese exports to Finland include machinery and equipment, shoes, textiles, leather and fur products, metals and plastics. In 2017, Finland's exports in services to Vietnam totaled approximately 138 euros million and the value of imports was 30 million euros, according to goverment figures.