Vietnam and four European countries not part of the European Union (EU) finalized a free trade deal in Hanoi on Sunday (Oct 18), aiming to broaden their market options as U.S. tariffs affect international trade.
The agreement, involving Southeast Asia's most rapidly growing economy and the European Free Trade Association (EFTA), consisting of Iceland, Liechtenstein, Norway, and Switzerland, removes or lowers customs tariffs on imports of industrial, fish, and agricultural goods.
The agreement was executed in the capital with Vietnam's leading figure To Lam and officials from EFTA nations present.
Vietnam stated that the agreement demonstrated the commitment of the parties to "strengthen the rules-based trading system in light of ongoing volatility in the global economy," as per a government statement.
The government stated it was anticipated to assist Vietnam in "diversifying its import and export markets" and "integrating more thoroughly into global value chains."
In July, Vietnam and EFTA finalized negotiations, over ten years after the free trade discussions officially commenced in 2012.
The parties resumed talks in September of last year, after they had been inactive since 2018.
The pact came after a global trade-disrupting tariff campaign by the US under President Donald Trump, imposing a significant tax on Vietnam's exports to the US during ongoing talks with Washington.
Specialists indicate that the recent agreement demonstrated a collective effort to broaden trade relations and lessen dependence on key trading partners.
"With the US applying more trade pressure on European nations, the agreement represents a collaborative attempt to transform economic integration into enhanced strategic independence and to cultivate alternative trade relationships instead of depending solely on their major partners," says history and politics expert Do Dinh Lam Khang to AFP.
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Khang noted that stronger connections with EFTA nations could help Vietnam achieve its goal of transitioning to activities with higher added value.
The accord addresses commerce in goods and services, intellectual property rights, trade remedies, and sustainable development, among other topics, according to both parties.
According to the association, bilateral trade between Vietnam and the EFTA last year was worth 4.8 billion euros (US$5.4 billion).
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Last year, the leading exports from EFTA countries to Vietnam were electrical and mechanical machinery, fish, and pharmaceutical products.
Machinery, footwear, and clothing were the main exports from Vietnam to the EFTA.
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The association was established as a counterpart to the European Economic Community, the forerunner of the European Union, which its four member nations are near to but have not become part of.