On June 30 in Hanoi, Vietnamese and EU officials signed a new free trade deal that could shift the balance of manufacturing in the region. The EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement will reduce tariffs and facilitate trade between the two parties.
Vietnam will cut tariffs on 65% of imports from the EU later this year, with the tax reduction expanding over the next 10 years to cover 99% of EU products. The EU will do the same for 71% of imports from Vietnam, covering nearly all Vietnamese products within seven years.
But Thailand stands to lose out. The deal could impact Thailand’s car, computer, and circuits exports as manufacturers move to Vietnam to capitalise on free trade with the bloc. The garment sector, rice producers, and seafood processors could also see losses as the new deal makes Vietnamese products more competitive.