EU-Vietnam Free Trade Agreement launched

The new trade agreement between the European Union and Vietnam will enter into force on 1 August 2020.

The way in which this EU-Vietnam Free Trade Agreement has been put together is similar to the EU-Japan EPA. Importers and exporters are particularly affected by the (phased) reduction or elimination of import duties and obligations for certain products.

 Import duties in both the Union and Vietnam will be 0% for a wide range of products from 1 August. Other products will be phased out over several years. How many years that is and what the phasing-out will look like varies per product. However, there are a limited number of variants which can be applied, ranging from 'A' where the duties are 0% to 'B15' where the phasing-out is spread over a period of 16 years.

Tip

At the bottom of this article you will find a link to the website of the Rijksdienst voor Ondernemend Nederland and a link to the Official Journal L186 of the European Union.

What is important to know if you export to Vietnam?

In order to prove this preferential origin for imports into Vietnam of goods originating in the European Union (EU), the importer in Vietnam should use a certificate of origin. This is the so-called 'REX declaration' issued by the Union exporter. Thus, exporters have to register with the customs authorities as a 'Registered Exporter' (REX), should this not yet be the case. The assigned number is used in the Certificate of Origin. This must be mentioned on a document (or commercial document) accompanying the consignment. Often this is the invoice related to the shipment.

What if you import from Vietnam?

Proof of Vietnamese origin shall also be required for imports into the Community of goods originating in Vietnam and therefore eligible for preferential tariff treatment. For this purpose, you must submit a certificate of origin EUR.1. For shipments with a value of up to EUR 6,000 of originating goods, an origin declaration signed by the exporter is also sufficient.

Transitional provisions from GSP to EU-Vietnam Free Trade Agreement (FTA)

The EU had already granted trade preferences to Vietnam under the GSP (Generalised System of Preferences). They expire on 1 January 2023. During the period that both the GSP and the FTA EU-Vietnam are in force, you, as exporter or importer, are free to decide which scheme you use.

As an importer in the EU, do you make a claim for preference on the basis of the FTA EU-Vietnam and is that tariff less advantageous than the tariff under the GSP? In that case, the rate under the APS still applies. This concerns the APS tariff as it applies on 31 July 2020. Any adjustments to the APS rate after this date will not be applied. However, all the conditions for the preferential rate must then be met. Thus the preferential customs duty under the EU-Vietnam FTA will never exceed the preferential customs duty under the GSP. This rule applies automatically and for the first 7 years after the entry into force of the EU-Vietnam FTA.

When products are exported from Vietnam under the GSP, the rules of origin of the GSP are applied. This also applies to proofs of origin. Thus, for exports from Vietnam under the GSP, a certificate of origin under the REX system is required. In the EU, as an importer, you cannot claim any tariff preference under the GSP by using a proof of origin covered by the EU-Vietnam FTA. Conversely, the same applies.

What are the exceptions?

Exceptions and peculiarities; there are plenty of them. It is especially important to know that they can exist. Investigate per product you want to import/export good in which category this falls and what the reductions and conditions are.

Interesting links

Reading tips:

  • On page 174, "Appendix 2-A-1 begins with the EU tariff schedule. It contains the relevant descriptive commodity codes and the applied reduction scheme code.
  • From page 676 onwards, the list of tariffs on imports into Vietnam begins, which is important for our exporters to know if and when this will improve their competitiveness on the Vietnamese market.
  • From page 991 onwards, a number of exceptions are mentioned.

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