According to a report from Bảo Việt Securities Joint Stock Company (BVSC), textile, garment and footwear products made in Việt Nam will not enjoy immediate tariff cuts after the EU-Việt Nam Free Trade Agreement (EVFTA) comes into effect as the agreement will replace GSP rates with Most Favoured Nation (MFN) tariffs. The MFN rates for those products will be higher than GSP rates of 9 per cent for garment products and 3-4 per cent for footwear products at present. Specifically, most apparel products that Việt Nam has been exporting to the EU will see export tariffs eliminated gradually from the MFN tariffs of 12 per cent to zero in 3-7 years after the EVFTA comes into effect. Similarly, footwear products will be exempt from MFN tariffs of 12.4 per cent in 3-7 years.

Those that will enjoy the immediate tariff cut are products which are not Việt Nam's major exports to the EU such as fibre to make clothes and other materials to produce footwear. Under the deal, Việt Nam's footwear, textile and garment industries will have to make changes to meet origin conditions and take advantages of preferential tariffs.

For the textile and garment industry, fabrics used to make the products must originate from Việt Nam or the EU, and the cutting and sewing stages must be performed in either the bloc or Việt Nam.

Despite this, the EVFTA has some flexibility on product origin. For instance, local garment firms can use fabric imported from countries that have signed FTAs with the EU and Việt Nam, like the Republic of Korea (RoK).