The Economic And Social Effects Of The Eu Free Trade Agreement With Vietnam

Vietnam has integrated into the global economy and many bilateral and multilateral free trade agreements have been signed, which has a significant impact on the Vietnamese economy. In particular, the Europe-Vietnam Free Trade Agreement (EVFTA), for which negotiations were launched in June 2012, will, I hope, be submitted to the European Commission and the European Parliament for signature and ratification in 2019 (EUROCHAM, 2018). According to the General Statistics Office of Vietnam, the European Union (EU) market accounted for 21% of the total value of Vietnamese exports and 7% of the total value of Vietnamese imports in 2018. Therefore, the EVFTA will naturally bring a large number of enormous benefits for both Vietnam and the EU. In particular, this agreement will eliminate virtually all tariffs on goods between Vietnam and the EU. For example, products made in Vietnam, such as textiles, footwear and wood products, are widespread in all EU countries. In addition, EVFTA will certainly create valuable opportunities for business expansion, investment and labour force growth, as well as to stimulate trade and economic growth in Vietnam and the EU. Jean, S., Mulder, N. and Ramos, M.P. (2014), “A general balance, ex-post evaluation of the EU-Chile free trade agreement,” Economic Modelling, Vol.

Numerous studies and political reports have highlighted the inevitable trend towards tariff suppression or reduction in free trade agreements once countries commit their partners to promoting global and regional trade liberalization (Ahmed and O`Donoghue, 2010); Cirera et al., 2014). Fukase and Martin (2016) stressed that a free trade agreement would bring additional benefits to both countries and would have a positive impact on both economies by looking at the India-U.S. free trade agreement. Phan and Jeong (2016) found that the free trade agreement between Vietnam and Korea increased overall aid and reduced long-term unemployment for both countries due to improved allocation resources. Dung (2009) and Minh et al. (2018) concluded that membership of a free trade agreement has a positive effect on Vietnam`s economic growth by encouraging growth in gross domestic product (GDP), increasing the value of imports and exports, and promoting diversification and restructuring of the import export market. In the first scenario, the industrial tariff is used as an exogenous variable, while other endogenous variables are clarified when adjusting the industrial tariff in simulation methods.