How EVFTA will impact China-Vietnam industrial chain?
Published: Jul 02, 2020 07:13 PM

Illustration: Luo Xuan/GT

Vietnam's National Assembly recently ratified the European Union Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). What substantive changes will these two agreements have on both sides? Will some Vietnamese people' plan to get rid of Vietnam's economic dependence on China become a reality?

According to, right after the deal takes effect, more than 85.6 percent of tariff lines imposed on Vietnamese products, equivalent to 70.3 percent of Vietnam's export turnover to the EU, will be removed. Seven years after the agreement comes into force, the EU will abolish 99.2 percent of tariff lines, or 99.7 percent of Vietnam's export turnover. For the remaining 0.3 percent of shipments, the EU pledged to provide Vietnam with a tariff quota of 0 percent. 

In addition to economic benefits, the agreements have political significance for Vietnam and mark the country's deep participation in the international community, a goal long pursued by Vietnam. Getting on the fast track to EU cooperation, Vietnam's opening-up stance has been demonstrated. The EU is no doubt a better partner for Vietnam than the US, which frequently cites human rights as an excuse to put pressure on the Asian country.

Some in Vietnam hold an anti-China stance. Vietnam is trying to expand to markets such as Australia and Japan, but their market sizes are far smaller than China. As the coronavirus pandemic continues to rage across many regions around the world, many countries' buying power has been falling. To promote its products in China, Vietnam enjoys many advantages including convenient transport. For many businesses in Vietnam, if they succeed in expanding to the Chinese market, that vast buying power will secure their businesses in the future. Thanks to advanced transport connections, China-Vietnam trade has long exceeded $100 billion annually. The two economies are highly interdependent.

Attempting to eliminate economic dependence on China is bound to fail. Vietnam's new agreements will introduce new forms of industrial collaboration to China-Vietnam economic cooperation. For example, Vietnam doesn't produce cotton. To export more cotton products - an important export category which includes clothing and shoes - to Europe, Vietnam needs more products and investment from China. And more Chinese businesspeople will be attracted to Vietnam to make their fortunes.

Vietnam needs to hold a neutral view of its rising neighbor China. China's rise could be a precious development opportunity for Vietnam. 

The author is senior research fellow and professor at the Collaborative Innovation Center of South China Sea Studies, Nanjing University.

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