With improved productivity, a more transparent investment environment, and a reform-minded government, Vietnam is well-positioned to become a strategic hub for transit, manufacturing, and innovation for European businesses.

On the occasion of the fifth anniversary of the EU-Vietnam Free Trade Agreement (EVFTA), which came into force on August 1, 2020, EU Ambassador to Vietnam Julien Guerrier spoke with VietNamNet about the significant impacts the agreement has had on bilateral economic and trade relations.

Could you share some of the tangible outcomes the EVFTA has brought to EU-Vietnam economic and trade relations over the past five years?

Ambassador Julien Guerrier: The European Union (EU) and Vietnam have remained trusted partners in a global trade landscape marked by uncertainty. The EVFTA has served as a solid foundation for enhancing bilateral cooperation, complementing our engagement through the World Trade Organization (WTO) and regional frameworks like the CPTPP, in which Vietnam plays an active role.

The EVFTA is the EU’s first free trade agreement with a major Southeast Asian economy (following Singapore) and one of the most ambitious trade deals the EU has ever signed with an emerging market. With up to 99% of tariffs liberalized, the agreement not only opens markets but also establishes a sustainable legal and economic framework that supports growth, encourages investment, and generates mutual benefits for both sides.

The results speak for themselves. Since the EVFTA took effect on August 1, 2020, bilateral trade in goods between the EU and Vietnam reached over 64 billion euros by 2024. Trade in services has also grown robustly, nearing 8.4 billion euros. Notably, direct investment from the EU into Vietnam has risen to 10.7 billion euros, which is a very encouraging figure.

Which sectors and products have benefited the most from the EVFTA on both sides?

Ambassador Julien Guerrier: Leading Vietnam’s exports to the EU are machinery and equipment, which reached €28 billion in 2023–2024, with a growth rate of around 20%. This is followed by traditional export sectors such as textiles, footwear, and agricultural products. Particularly noteworthy is the significant growth in fruit and vegetable exports, which reflects the opportunities the EVFTA has opened up for Vietnam's agriculture.

On the EU side, we expect pharmaceuticals to become a key export sector, as the faster approval of advanced medicines in Vietnam will directly benefit the public. However, EU exporters still face technical and administrative barriers when importing agricultural products and food into Vietnam. These issues must be addressed to fully realize the potential of the EVFTA.

With bilateral trade approaching $70 billion and EU FDI reaching $30 billion, what are the key drivers behind these achievements? What is the outlook moving forward?

Ambassador Julien Guerrier: The EVFTA has given Vietnam a competitive edge in the region, encouraging both European and non-European investors to choose Vietnam as their destination. More than a trade agreement, the EVFTA serves as a catalyst to elevate Vietnam’s position in the global supply chain and enhance the attractiveness of its investment climate.

The outlook for EU-Vietnam economic cooperation in the coming years is very positive. However, fully capitalizing on the EVFTA requires effective implementation, especially the removal of unnecessary legal barriers and avoiding the introduction of new measures that contradict the liberalization spirit of the agreement.

How does the EU view Vietnam’s efforts to improve its institutional framework, legal environment, and sustainable development?

Ambassador Julien Guerrier: The EVFTA is not the end goal, but the beginning of a broader vision. Vietnam is implementing robust administrative reforms and has demonstrated strong ambition in economic renewal, institutional reform, and productivity enhancement. These efforts not only strengthen domestic capabilities but also increase Vietnam’s ability to attract high-quality EU investment.

We believe that with its commitment to reform and development, Vietnam can absolutely become a strategic hub for investment and production in Asia. The EU is ready to partner with Vietnam in areas such as green transition, renewable energy, sustainable infrastructure, the digital economy, and advanced technologies.

Has the EVFTA helped promote labor, environmental, and governance standards in Vietnam as the EU had hoped?

Ambassador Julien Guerrier: Sustainable development is a core pillar of the EVFTA. This includes standards related to labor, the environment, and climate. On climate, the EU is working with Vietnam under the Just Energy Transition Partnership (JETP). On the environment, EU regulations like anti-deforestation, carbon border adjustment mechanisms (CBAM), and the circular economy present opportunities - not barriers - for forward-looking businesses.

We are seeing more EU companies aiming to use clean energy and develop environmentally friendly business models in Vietnam. To achieve this, however, Vietnam must fully uphold its EVFTA commitments - including the most challenging ones.

What are the main obstacles in the EVFTA’s implementation from the EU’s perspective?

Ambassador Julien Guerrier: While Vietnamese exports to the EU are growing robustly, EU exporters still face some barriers to accessing tariff preferences, especially for agricultural and pharmaceutical products. We hope both sides will continue dialogue to resolve these bottlenecks and ensure a fair, reciprocal, and mutually beneficial partnership.

Amid rising trade protectionism, can the EVFTA serve as a strategic tool to defend free and rules-based trade?

Ambassador Julien Guerrier: Absolutely. The EVFTA is a powerful example of transparent, rules-based, and open trade. It also serves as a model for other economies in the region. The EU is currently negotiating new FTAs with India, Indonesia, Malaysia, Thailand, and the Philippines - demonstrating our strong belief in regional cooperation.

We also welcome Vietnam’s announcement to join the WTO’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA), reaffirming its role as a responsible and proactive partner on the global stage.

As EU companies face challenges in the U.S. market, how can Vietnam serve as a “bridge to Asia”?

Ambassador Julien Guerrier: Vietnam is proving to be a new anchor in the global supply chain. EU investors in Vietnam are currently less dependent on the U.S. market than Vietnamese companies themselves. With improved productivity, a more transparent investment environment, and a reform-minded government, Vietnam has every condition to become a regional hub for transit, production, and innovation for EU businesses.

EuroCham’s annual White Book contains many detailed recommendations. Vietnam’s willingness to listen, improve, and respond effectively will be critical in determining the pace and scale of future EU FDI inflows.

What recommendations would you offer EU businesses to better leverage the EVFTA in their strategy to reduce dependence on the U.S. and China?

Ambassador Julien Guerrier: Trust, transparency, and predictability are the most important factors for businesses. The EVFTA is a strategic tool that allows EU enterprises to expand their markets, diversify supply chains, and strengthen their position in Asia. With Vietnam’s rapid reform and deepening integration, the country is well-positioned to serve as a foundation for this transition.

Given global geopolitical instability, does the EU view Vietnam as a “stable and strategic partner” in the restructuring of trade and investment?

Ambassador Julien Guerrier: The answer is yes. The EVFTA has proven its resilience through COVID-19, the Russia-Ukraine conflict, and other global geopolitical shocks. After five years, the agreement has become more than a trade pact - it is a symbol of the strategic commitment between the EU and Vietnam to build a fair, sustainable, and rules-based trading system.

Marking five years of the EVFTA is a moment to reflect on our progress, identify remaining challenges, and look ahead with the ambition to fully unlock the potential of a comprehensive strategic partnership.

Tu Giang - Lan Anh