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EU’s FTA with Vietnam to boost growth and job creation in retail sector

YarnsandFibers News Bureau 2016-09-19 16:00:00 – USA

Vietnam is EU retail sector’s second largest source of fast-moving consumer goods after China. With EU’s FTA with Vietname expected to boost European growth and job creation in the retail sector as well as development of Vietnam.

There is also a growing interest for investment in retail stores in Vietnam. The scale of the potential gain for the sector is enormous. For EU retail, FTA with Vietnam is more important than the agreements with the US, Canada and Japan combined.

Speaking at an event by the Mission of Vietnam to the EU and Business Europe on 14 September in Brussels, the chief negotiators and ambassadors from both sides were joined by leading EU trade association representatives in urging for the speedy ratification and entry into force of the agreement.

EU retailers currently import eight percent of fast-moving consumer goods from Vietnam, a figure still well behind the 50 percent imported from China, but growing fast and set to get a boost from the elimination of tariffs under the FTA, which would lower costs for importers and European consumers. Even without the FTA, EU clothing imports from Vietnam increased by 3.2 percent in 2015.

Among Vietnam’s key export items, garment and textile exports grew 4.2 percent an increased turnover of $15.5 billion year-on-year in the first eight months of 2016. The agreement is also expected to boost Vietnam’s development, already considered an exceptional success story, with per capita income rocketing from 100 dollars in 1986 to 2100 dollars in 2015.

Given the sensitivity of the sector, the full elimination of the tariffs will be staged over seven years. Rules of origin conditions for garments will require the use of fabrics produced in Vietnam, with the only exception being of fabrics produced in South Korea, another FTA partner of the EU.

The Vietnamese market is also increasingly attractive to European producers and retailers. The FTA will give tariff-free access to a market of 90 million consumers – with a middle class expected to reach 30 million by 2020 – to European products including cars and motorbikes, pharmaceuticals and alcoholic beverages. Goods produced in Vietnam will have duty-free access to the 630 million plus strong Asian Economic Community and with the impending Trans-Pacific Partnership to the largest free trade area in the world.

Vietnamese Vice-Minister for Trade and Industry Mr. Tran Quoc Khanh said that Vietnam is a very attractive destination for investment. Anything produced in Vietnam enjoys tariff-free export to most of world.”

Ambassador to Vietnam Bruno Angelet said that development has been driven by economic growth and economic growth has been driven by exports. The EU pushed for a move from development aid to trade and Vietnam responded.

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