Vietnam has ratified a new trade deal with the European Union which is expected to significantly boost the country’s manufacturing sector as well as exports. It comes at a time when the country is looking to recover from a dip caused by the COVID-19 pandemic.
This new free trade agreement between Vietnam and Europe will eliminate about 99 percent of tariffs on goods traded between the Southeast Asian country and the bloc. Along with this, the European Union-Vietnam Investment Protection Agreement has also been passed.
As per the reports, the European Union-Vietnam Free Trade Agreement legislature was passed by 94.62 percent of votes while the European Union-Vietnam Investment Protection Agreement was passed with 94.65 percent votes.
The deal also commits Vietnam to standards for sustainable development, including improving its human rights record, protecting labor rights, and upholding its pledges to deal with climate change under the Paris accord.
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The free-trade agreement took about eight years to negotiate and as a part of this, Vietnam will eliminate 99 percent of its import duties over 10 years while the European Union will do the same over seven years.
The agreement will also help Vietnam to attract investors given that the company is in a good position to win manufacturing contracts with many companies shiting from China, fuelled by US-China Trade War and the COVID-19 pandemic.
The European Union already has a free-trade agreement deal with Singapore and now Vietnam has become the second such country. The World Bank estimates that the deal will help Vietnam increase its GDP by 2.4 percent and exports by 12 percent.
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