Vietnam-EU: Expanding opportunities into new fields

WVR - The European Union is one of the major economies of the world, and also one of Vietnam’s most important partners.
Ambassador Nguyen Van Thao - Author of the article. (Photo by Tuan Anh)
Ambassador Nguyen Van Thao. (Photo: WVR/Tuan Anh)

Prime Minister Pham Minh Chinh’s official visits to Belgium, Luxembourg and his attendance at the ASEAN-EU 45th Anniversary Commemorative Summit from 9-16 December, 2022 proved that Vietnam and the EU both attach great importance to and are strongly committed to promoting the Comprehensive Partnership, especially in economic cooperation. At the same time, the two sides are also actively seeking for new directions, expanding cooperation opportunities into new fields to commensurate with their internal resources, potentials and great needs.

Take advantage of the "golden time" to promote trade

Trade is one of the most important pillars of Vietnam-EU cooperation. The state of the world and the region is presenting numerous complicated and unpredictable developments, such as economic recession, supply chain disruption, food insecurity, and energy security. However, these challenges will also help open up more cooperation opportunities between Vietnam and the EU, bringing mutual benefits to both sides.

Vietnam is one of the few developing countries in the region that signed a comprehensive Free Trade Agreement with the EU, the structure of our exports is suitable and complementary to this market.

In fact, after more than two years of implementing the EVFTA, the two-way import and export growth has achieved encouraging results. Despite of the pandemic’s negative impacts, the two-way trade and Vietnam’s exports to the EU still grew impressively, with an average growth of 12% per year.

Still, these successes are only the beginning. There are a lot of opportunities in the EU market. It’s high time for Vietnam to take advantage of its strengths to further promote trade with the 27-member bloc.

According to the Ministry of Industry and Trade, some of Vietnam’s key export products only account for a very low proportion in the EU market (such as fresh vegetables and processed vegetables, seafood). Therefore, there’s a large room for enterprises specified in agricultural, forestry and fishery products, especially when we enjoy great tariff preferences compared to other EU’s partners.

In addition, the conflict in Ukraine also caused the EU to lose important supplies of some food products, thereby creating more favorable conditions for Vietnamese substitutes.

However, the road ahead still possesses a number of challenges that Vietnam needs to address and overcome.

Objectively, Vietnam is currently under the recommendations on combating illegal, undeclared and unregulated (IUU) fishing, also known as the IUU “yellow card”, leading to some restrictions on seafood exports. Moreover, the EU market has high standards, many technical/non-tariff barriers. The problem of long geographical distance, high logistics transportation costs, inappropriate storage and packaging of goods are also limitations that need to be overcome.

Subjectively, Vietnamese enterprises have just initially approached the market on a very small scale, mainly with individual orders, through distribution channels of Vietnamese people, but have not really penetrated the EU market systematically.

At the same time, the competitiveness and deep involvement of Vietnamese enterprises are still limited. Vietnam has not been able to combine exports with high-tech investment cooperation to produce, process and distribute products. Vietnamese brands are also not well known in European countries.

In order to really take advantage of the opportunity, in the coming time, Vietnam needs a separate trade promotion strategy for the EU market in a comprehensive, effective and drastic way, with specific solutions for specific areas.

Accelerate investment attraction

Investment should be identified as an important pillar of Vietnam-EU economic cooperation in the coming time. The EU has a great financial prowess, high and advanced source technology.

Recently, the EU has launched a series of major and important strategies, such as the Strategy for Cooperation in the Indo-Pacific, the Global Gateway - a 300-billion-USD connectivity plan, the Strategic Compass which ensures security autonomy, including commercial maritime routes…

The EU highly appreciates Vietnam's role, position and potentials in the region. The bloc hopes that Vietnam can become an important economic partner, helping it to implement its development strategies. This is a favorable foundation for Vietnam to attract more from European countries. Currently, more than 1,000 EU enterprises have invested in Vietnam, creating an important bridge and resource to continue promoting high-quality investment from EU countries strongly.

Despite many advantages, still, it is necessary to realize that Vietnam have not yet attracted adequate investment resources from the EU. Currently, there are more than 2,000 investment projects from the bloc, with a total capital of more than 22 billion USD, accounting for 5% of total foreign direct investmen in Vietnam, much lower than other major partners.

The reason may be due to geographical distance, logistics difficulties, Vietnam's investment environment is still inadequate, somewhat not attractive enough for EU businesses...

In order to solve this issue, in the short term, it is necessary to continue to mobilize EU member states to ratify the EU-Vietnam Investment Protection Agreement (EVIPA). Nevertheless, we should not consider this as the main driving force to enhance the EU's investment.

Most importantly, it is necessary to have a strategy to attract high-quality investment from the EU, especially in the areas where the bloc has strengths and wants to promote cooperation with us and we also have development needs, namely clean energy, green economy, digital economy, response to climate change, logistics, smart agriculture...

In addition, we also need to strengthen the full and serious implementation of commitments, continue to improve the investment environment, accelerate reform of administrative procedures, improve the quality of human resources and technology levels, review the legal background and have appropriate preferential policies for large-scale, quality and high-tech projects from the EU.

Illustrative image (Source: VNA)
Trade is one of the most important pillars of Vietnam-EU cooperation: Illustrative image. (Source: VNA)

Opportunities from green transformation

Responding to climate change and protecting the environment is one of the EU's top priorities both in terms of within the bloc and with other partners.

The EU has a strategy call the Green Deal. It’s goal is to transform the overall economic structure towards green and sustainable. At the same time, the bloc is promoting the establishment of partnerships with other countries, including the Just Energy Transition Partnership (JETP) with Vietnam and a number of countries.

Thus, we can see that the bloc’s interest in climate change response and environment protection, green transition presents a great opportunity for Vietnam. It is an important resource that needs to be utilized for the sustainable development of our country and the implementation of international commitments and a driving force to help us transform the economic structure towards a more modern and sustainable direction.

Therefore, in the coming time, it is necessary to focus on promoting cooperation with the EU, enhancing the sharing of information, experience, green, clean and cheap new technologies, participating in depth and in breadth in cooperation in innovation, digital transformation, green economy development, circular economy. It is necessary to strengthen the advocacy of the EU for cooperation in capacity building and development of environmental standards, develop projects on climate change adaptation and mitigation, especially in the Mekong Delta; cooperation in marine economic development, sustainable fishing and aquaculture and smart agriculture, the protection of biodiversity, land and ocean ecosystems restoration; ocean waste disposal...

There’s a huge potential in economic cooperation with the EU. However, it requires high determination, synchronous and effective coordination of all levels, sectors and localities.

For their part, the Vietnamese Representative offices in the EU, including Vietnamese Embassies in European countries and the Vietnam’s Delegation to the EU will continue to make efforts to bridge the connection and cooperation between the two sides, take advantage of favorable platforms and contribute to solving difficulties and obstacles to further strengthen economic cooperation between Vietnam and this important partner.

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(Translated by Quang Dao)