The FTA has finally been ratified by the EU and Vietnam. What are the implications for Italy?
The European Council approved on March 30th the Free Trade and Investment Agreement (FTA) between the EU and Vietnam. Today, also the Vietnamese National Assembly ratified the agreement, finalizing the procedure. This is the most ambitious trade agreement the EU ever set up with a developing country, offering significant advantages for European and Italian businesses in South-East Asia. After Singapore in November 2019, the EU-Vietnam FTA is the second agreement between the EU and an ASEAN country.
According to the EU Commission, exports from the EU to Vietnam could increase by 29% in 2035, with an estimated value of more than 8 billion euros. As a consequence, the agreement is expected to boost the creation of more than 110.000 jobs in the EU. These significant numbers will be achieved thanks to an initial 65% reduction in Vietnamese tariffs on EU products, that will be followed by an almost complete removal in 10 years from now. Other relevant points for the EU in the agreement are: the reduction of non-tariff barriers, by adopting European and international norms; an unprecedent access for European industries to the Vietnamese public procurement and services market; the ratification of international norms in regard to labour rights and environmental sustainability.
With regards to Italy, the agreement could prove to be extremely beneficial. Data provided by ISTAT and Confindustria reveal that until now Italy has a trade deficit with Vietnam: in 2018, the country imported goods for 2,5 billion euros, while it exported goods for just 1,3 billion. One of the reasons is definitely the high percentage of Vietnamese tariffs on European products, that creates obstacles also for the 4.400 Italian companies exporting to the Vietnamese market (mainly SMEs). By eliminating trade barriers and developing commercial ties with Vietnam, the agreement could bring significant benefits to some crucial sectors of the Italian market, namely the mechanical, automotive, textile, pharmaceutical and agri-food sectors.
Denomination of origin and geographical indication, which is crucial for Italian export, are also included in the agreement. 169 European Geographical Indications are protected, and among these 38 are Italian. The list includes Modena Balsamic Vinegar, Asiago and Gorgonzola cheese, Grana Padano, Bresaola della Valtellina, Campanian Mozzarella di Bufala, Prosciutto di Parma and San Daniele, Prosecco, Franciacorta, and others. The list is subject to continuing revision and potential extension.
Those listed above are just some of the potential benefits for Italy, the EU and Vietnam, that prove the importance of international trade. The FTA brings important benefits and offers interesting opportunities at a time when trade is suffering the dramatic consequences of the Covid-19 crisis. The hope is that this agreement will represent a useful precedent for other negotiations between the EU and South-East Asian countries.
Article edited by Valentina Beomonte Zobel.