As part of the ratification process for the new free trade, improved trade has also been accompanied by an improvement in the social situation. Where possible, this should be launched before it comes into force, in order to consider improving the situation step by step. In this way, trade and change will be linked so that the Vietnamese economy can benefit from more exports while having access to European products and goods. In February 2020, the European Parliament ratified a free trade agreement (FTA) and an Investment Protection Agreement (PPI) with Vietnam. MEPs (ENPs) voted in favour of the agreements in Strasbourg. This agreement includes many provisions that contribute to the convergence of Vietnamese standards with those of the EU. The importance of the Vietnamese market will only increase if elements of the ALEC are implemented and the corresponding non-tariff barriers are removed. On 8 June 2020, the National Assembly of Vietnam unanimously ratified the new free trade agreement between Vietnam and the European Union (“TFUE”) and the UE-Vietnam Parallel Agreement on Investment Protection (EUVIPA). It was preceded by the approval of both agreements by the European Parliament on 12 February 2020. The TFUE came into force on 1 August 2020.

EUVIPA, which falls under the shared competence1 of the EU and its member states, is currently being nationally ratified by the regional and national parliaments of the EU Member States. The TFUE is discussed below. We will treat EUVIPA separately if this agreement is ratified and enters into force. Such agreements illustrate the strength of EU-Vietnam relations and the opportunities Europe sees in the Southeast Asian country. The EU is achieving a long-term goal of increasing its influence and expansion in ASEAN markets by targeting Vietnam, and European entrepreneurs will have better access to one of the fastest growing Asian economies when the agreements come into force. Despite the interruption of the coronavirus pandemic and the slowdown in the global economy, Vietnam is expected to continue to record economic growth of 4.8% this year, returning to 6.8% in 2021. The central element of the TUE IS The near-total abolition of tariffs between the EU and Vietnam, including the abolition of more than 99% of tariffs in ten years. Immediately after entry into force, 65% of EU exports (by product type) to Vietnam and 71% of Vietnamese exports to the EU will be exempt from tariffs. Tariffs on other EU products will be progressively liberalised over a period of time and tariffs on some Vietnamese products will be reduced over a seven-year period. The TFUE also provides for tariff quotas for some remaining agricultural products, for which import duties are not phased out. This agreement will enable EU exporters and investors to access a fast-growing market of 90 million people and consolidate their presence in one of the world`s most dynamic regions.

The entry into force of TUEFTA comes amid growing global trade tensions with China. Combined with the ongoing COVID 19 pandemic, this has contributed to the growing trend of companies diversifying their supply chains, with Vietnam rapidly becoming the main beneficiary.