Businesses in Vietnam prefer the free trade agreement with the EU than the Trans Pacific Partnership. They feel the EU agreement can bring them bigger benefits and gives more favorable conditions in government procurement as it allows procurement deals in localities as well.
Since the EU offers attractive schemes for Vietnam, in return, Vietnam is also willing to give preference to the EU. Under the free trade agreement, the EU will remove 85 per cent of the tariffs imposed on Vietnamese goods as soon as the agreement takes effect. The EU has offered attractive provisions to Vietnam regarding many production fields. For example, it agreed to remove all import tariffs on Vietnam’s textile and garment products within seven years. The tariffs on footwear and shoes will also be completely removed by the EU.
The EU has also promised strong support to Vietnamese farm produce to approach the EU market. Vietnam’s fish products, for example, will be freed of tariffs within three years. Moreover unlike TPP, EU does not set the yarn-forward principle for Vietnam’s garment exports. Instead, the fabric-forward principle is applied. The EU agreement and the TPP are expected to take effect in one or two years.