On 30 June 2020 it was published in the Official journal of the European Union that the Free Trade Agreement (FTA) between the European Union (EU) and the Socialist Republic of Viet Nam (Viet Nam) will enter into force on August first of this year.
What can this possibly mean for your company?
If you are involved in business with Viet Nam, the entry into force of the Free Trade Agreement can have a direct significant tariff and administrative impact on your imports into Viet Nam. You might benefit from an immediate duty cost reduction given that you meet all the conditions to do so.
Seeing as Viet Nam currently falls under GSP it could be that your company is already profiting from reduced tariffs on import into the EU. In this respect, it is important to assess which effect the new FTA will have, since the rules and conditions under the FTA will not necessarily be the same as under GSP.
For a period of two year after entering into force of the FTA Viet Nam will stay part of GSP, however after that period, only the FTA can be utilized to import products with Viet Nam origin against a preferential duty rate into the EU.
Often the rules and regulations included in an FTA are more favourable then those under GSP. As such it is worth already looking into the FTA to assess whether there are any interesting opportunities for your company even though your company is already profiting under GSP.
On the other hand, it is not given that an FTA is more favourable and as such it is also important to analyse whether after the two-year transition period your company can still benefit from a preferential tariff upon import into the EU. that it now enjoys under GSP. For example, in case a company uses regional cumulation between ASEAN countries, this will only be possible for a very limited number of products under the FTA.
In case you would like to read the full article on our website, please click this link.
In case you need any advice on this matter or require our assistance, please contact your regular trade contact at PwC.