Thursday, 4 July 2019

Questions (174)

Robert Troy


174. Deputy Robert Troy asked the Minister for Business, Enterprise and Innovation if she will report on the EU-Vietnam Free Trade Agreement; the offensive and defensive interests for businesses and SMEs here in the deal; the details of market access and removal of import tariffs or duties by sector; and the timeline for same. [29005/19]

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Written answers (Question to Business)

Negotiations for a comprehensive Free Trade Agreement between the EU and Vietnam were concluded in December 2015. After the process of “legal scrubbing” and the preparation of the legal texts in the various languages was completed, the EU and Vietnam signed the Free Trade Agreement (FTA) along with the EU-Vietnam Investment Protection Agreement (IPA) on 30th June last.

The FTA will unlock a market with significant potential for Irish and EU firms and includes the elimination of nearly all tariffs (over 99%) on EU exports to Vietnam. Widespread coverage is achieved at entry into force, with 65% of EU exports to Vietnam coming in duty-free from day one. Tariffs on our remaining trade – with the exception of a few products – will be fully liberalised after 10 years. These sensitive items are not offensive export interests for Ireland. The EU will liberalise 71% of its imports from Vietnam from day-one and 99% will enter duty-free after seven years. The EU-Vietnam FTA provides for the full dismantling of nearly all tariffs except for a few tariff lines that are subject to duty-free Tariff Rate Quotas (TRQs). The gradual elimination of custom duties on these sensitive products will allow domestic producers to gradually adapt. Consumers from both sides will benefit from lower prices and exporters from strengthened competitiveness.

Sectoral opportunities include almost all EU exports of machinery and appliances which will be fully liberalised at entry into force of the FTA. Around half of EU pharmaceutical exports will be duty-free immediately and the rest after seven years. Close to 70% of EU chemicals exports will be duty free at entry into force and the rest after three, five and seven years respectively. In addition, Vietnam will also simplify requirements for marketing authorisation of pharmaceutical products and medical devices, which in turn will reduce delays and costs for these important Irish exports.

The FTA also improves market access by addressing non-tariff barriers to trade and other trade related issues such as public procurement, competition, services, investment, intellectual property rights, regulatory issues, and sustainable development. The benefits and opportunities to business in the Agreement will be especially valuable for SMEs, given that trade barriers tend to disproportionately burden smaller firms, which have fewer resources to overcome them than larger firms.

In 2018, Ireland’s goods exports to Vietnam amounted to €65 million. Ireland’s main exports to Vietnam include medical and pharmaceutical products valued at €18.6m in 2018. Ireland's food exports to Vietnam have grown considerably in recent years. While meat and dairy products are the largest share of this, beverages and seafood also contributed strongly. In 2017 (the most recent year with available figures), services exports from Ireland to Vietnam were valued at €164m.

Through the Government’s Trade Strategy, ‘Ireland Connected: Trading and Investing in a Dynamic World’, we aim by 2020 to increase indigenous exports by Enterprise Ireland supported companies, including food, to reach €26 billion and secure 900 new foreign direct investments. As part of the Government’s Global Ireland 2025 strategy, Enterprise Ireland will open a new office in Ho Chi Minh City this year to support Irish businesses to expand into the Vietnamese market and to take advantage of the new opportunities presented by the FTA.

Opportunities exist for Ireland to grow exports in dairy products, pork, seafood and alcoholic beverages by taking advantage of reduced tariffs under the FTA. Currently tariffs on EU exports of spirits to Vietnam are particularly high at 48% and will be eliminated over a 7-year period following entry into force of the FTA. The elimination of tariffs of 15% on frozen pork products is also significant for Irish producers.

Ireland is an exceptionally open economy and is dependent on international trade and investment as sources of growth. Building new export opportunities for our businesses forms a vital part of Ireland’s enterprise strategy. We favour ambitious and balanced trade agreements, negotiated by the EU Commission on our behalf, which are designed to deliver jobs and growth for the benefit of our citizens. The EU-Vietnam FTA and the EU’s other trade agreements help to open new markets, break down barriers and provide new opportunities for Irish firms.

In a wider context, Vietnam is a member of the Association of South East Asian Nations (ASEAN). The EU is working towards achieving a region-to-region FTA with ASEAN by first concluding FTAs with individual ASEAN members. The first of these was signed with Singapore in October 2018, the Vietnam FTA is the second, and negotiations for an FTA with Indonesia, the largest county in the ASEAN group, are ongoing.

The text of the EU-Vietnam Agreement, including tariff schedules, has been published can be accessed at: