EU-Vietnam free trade deal “huge boost” for European dairy industry

13 Feb 2020 --- Vietnam is a market with a growing taste for dairy with “ample opportunities for growth”, underscores European Association of Dairy Trade (Eucolait) Legal & Policy Adviser, Alice O'Donovan. Eucolait welcomes the approval of the EU-Vietnam trade and investment agreements by the European Parliament (EP) yesterday because it allows the EU dairy industry to trade on a level playing field with Oceanian competitors in this promising market. The agreement will be particularly beneficial to the dairy industry with complete removal of all tariffs in five years, O’Donovan notes in an interview with FoodIngredientsFirst.

The trade deal is hailed as the “most modern and ambitious agreement ever concluded between the EU and a developing country”, but it is particularly advantageous for the European dairy industry. Eucolait welcomes the vote in favor of the EU-Vietnam Fair Trade Agreement (FTA) as Vietnam solidifies its position as an important trading partner in the ASEAN region, with a population of almost 100 million and a growing appetite for quality dairy products.

The trade deal is hailed as the EU's “most ambitious agreement concluded with a developing country.”“Tariffs applied to European imports of dairy products by Vietnam are currently quite low. For Skim Milk Powder (SMP), for example, the tariff is 5 percent. Nevertheless, a complete removal of all tariffs in five years will allow European product to directly compete with imports from Australia and New Zealand, who enjoy duty-free access to the Vietnamese market as a result of the AANZFTA and now because of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” O'Donovan explains.

“Currently per capita consumption in Vietnam is low. While there is dairy production in Vietnam, self-sufficiency in milk is still quite far off. We expect that the FTA will create a boost in exports to Vietnam, with investment by European companies in Vietnamese dairy production also a possibility,” she adds.

While there is dairy production in Vietnam, self-sufficiency in milk is still quite far off. Members of the EP gave their consent to the free trade agreement by 401 votes, 192 votes against and 40 abstentions.

This agreement will bring substantial economic benefits, notably by liberalizing virtually all trade, addressing numerous non-tariff barriers and protecting the EU’s most iconic geographical indications. It also contains strong commitments to sustainable development.

Now that the way for the FTA has been cleared to enter into application, the EU dairy trading community looks forward to reaping the benefits of the deal. European dairy companies are already very active on the Vietnamese market, shipping approximately €170 million (US$185 million) worth of products per year.

In addition, the agreement is an instrument to protect the environment and to sustain social progress in Vietnam, including labor rights. It holds Vietnam to apply the stipulations of the Paris Agreement. Vietnam committed to ratifying two bills as requested by Parliament, one on the abolition of forced labor, the other on freedom of association, by 2020 and 2023, respectively.

The trade deal can be suspended if there are human rights breaches.

By Gaynor Selby

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