Vietnam is the European Union's largest trading partner within ASEAN, which groups together the "small" countries of Southeast Asia. In June 2019, the EU and Vietnam agreed to sign a free trade agreement (FTA), which entered into force on 1 August 2020, in the midst of Covid-19. This was the second such agreement with a Southeast Asian partner after the agreement signed with Singapore, which came into effect in November 2019.
The European Union has therefore assigned a triple objective to this free trade agreement :
Under the FTA, Vietnam removed 65% of its tariffs on EU goods on the day the agreement entered into force, with the remainder to be phased out by 2030. The EU, for its part, has committed to phasing out its tariffs on imports from Vietnam by 2027.
Five years after its signing, has the FTA fulfilled its expectations? Let us examine the evolution of bilateral trade between the European Union and Vietnam to assess the initial results of this agreement.
Even before the signing of the free trade agreement, trade between the EU and Vietnam was already doing well. In 2018, the value of bilateral trade in goods had already more than doubled compared to 2012.
Following the FTA, trade continued to increase, but at a greater pace. As such, between 2019 and 2024, the total amount of trade between the EU and Vietnam increased from 45.6 to 67.1 billion euros, an increase of 47%.
Figure 1 - Source : Eurostat
For Vietnamese exports to the EU, the increase is very pronounced (+58%). Exports of European goods to Vietnam have also increased, but this increase is more modest, around 10.5% between 2019 and 2024. Moreover, since the values are essentially low, even with this increase, European exports remain weak. Furthermore, the increase in European exports to Vietnam, which were significant from 2022, were only following a more general trend, that of an increase in European exports to the rest of the world (see grey curve in figure 1). In 2024, Vietnam was only ranked as the 17th market for EU products, while the latter is the 3rd biggest outlet for Vietnamese products.
In terms of trade in goods, the agreement is therefore generally positive, even if it is comparatively more favourable to the Vietnamese side. The EU's trade deficit with Vietnam in goods trade has almost doubled, rising from €23.4 billion to €42.5 billion. In the services sector, on the other hand, the trade balance is positive, but too weak to effect the overall balance. Thus, the EU's trade deficit with Vietnam in goods and services increased from €21.4 billion in 2019 to €34.2 billion in 2023. It is too early, however, to conclude that the European Union is losing out: the entry into force of the FTA is gradual, and we are only halfway through a process of removing customs duties for European exports to Vietnam that will continue until 2030. Moreover, the balance of flows is not the only means by which the agreement can be judged. For example, the EU may have an interest in turning to Vietnam to diversify and thus secure its sources of supply for certain goods, even if it means agreeing to increase its deficit.
In 2019 as in 2024, the EU exported to Vietnam mainly machinery and transport equipment, and chemical and medicinal products (Figure 2).
Figure 2 - Source : Eurostat
Here too, the FTA reinforced a trend that was already at work before the agreement was signed. For the EU, the agreement with Vietnam is an opportunity to position itself favourably in goods and services in the areas of transport, energy and pharmaceutical products – areas in which it has developed real expertise and quality equipment. As Vietnam is undergoing two structural changes - the emergence of a middle class and an aging population - the EU wanted to anticipate the increased needs in these demographic groups with its goods and services. However, success is not evenly spread over all sectors: while the trajectory is very clearly favourable in the chemical products sector, it is more uncertain in the machinery and transport equipment segment, which has still not returned to pre-Covid levels.
In the particular case of agriculture, most of the products that Europe exports are still subject to dissuasive tariffs, even if these will be gradually eliminated. For example, tariffs on alcohol and wine are currently 50%, and they will not be abolished until 2027. Given this particularity, no agricultural product currently appears in the Top 10 of the most exported products by the EU (see figure 4). This could develop favourably in the coming years. Furthermore, the agreement immediately recognises 169 protected geographical indications (PGIs), including Feta, Parmesan and Cognac, thereby establishing a de facto legal basis that can serve French and European exporters to combat counterfeiting from now on, even if it remains unlikely that their exports will increase before the easing of customs tariffs in 2027.
While goods exports to Vietnam are growing 'slowly but surely', it is the services sector that has benefited most from the FTA. The EU enjoys a trade surplus of more than 2 billion euros there. Commercial services, transport, telecommunications, travel, and financial services accounted for nearly 85% of services exports to Vietnam in 2023. Services and goods go somewhat hand in hand, particularly in the transport and energy sectors. The European Union's objective of increasing the export of services to Vietnam has therefore been achieved, especially since it is drawing with it the exports of goods in these sectors.
Imports of products from Vietnam are increasing sharply. They have grown by 12-15% per year since the introduction of the FTA.
Figure 5 - Source : Eurostat
At the top of this list are machinery and equipment, and manufactured goods. Just like for the EU? In fact, the trading partners are not exchanging the same products, with the EU exporting transport equipment and Vietnam telecommunications equipment.
Vietnamese "manufactured goods" are mostly shoes, clothes and hats. Finally, Vietnamese agricultural products benefit from a commercial asymmetry: they already have access to the European market. They represent about 10% of total Vietnamese exports, and fruits and vegetables are among the most exported products to the EU.
Early access to the European agricultural market, translated into staggered tariffs from the EU, is a "old classic" of free trade agreements signed by the EU with emerging countries, which often derive a significant portion of their income from it. However, given the difficulties encountered by the agricultural sector in certain Member States - such as France - opposition to this type of asymmetry is gaining ground. For example, French farmers recently tried to put pressure on President Emmanuel Macron, without success, to abandon the ratification of the free trade agreement with Mercosur.
Overall, the trade relationship between Vietnam and the EU is doing well. Although Vietnamese exports are significantly higher in value than European exports, the latter are increasing, and the EU is doing well thanks to its surpluses in trade in services.
Among the FTAs signed by the EU with emerging countries, that with Vietnam stands out in that it pays particular attention to rules of origin. These provisions apply to determining where a product comes from. They vary depending on the agreements and can be more or less strict. For example, a product can be considered as originating from country X or Y, if at least 25% of its components (or 50%, 75%, 85%, depending on the result of the negotiations) come from that country.
In the case of Vietnam, the rules of origin are very strict and determined by a dedicated protocol. This important precautionary measure stems from the free trade agreement previously concluded between Vietnam and China. To prevent Beijing from taking advantage of the EU-Vietnam FTA to export to the EU without customs measures, Brussels has introduced a safeguard via rules of origin that have proven rather effective: Vietnamese exports to the EU, although growing strongly, do not have an abnormally high trajectory.
While the EU has agreed to sign an FTA with ASEAN countries such as Vietnam and Singapore, China's trade capabilities, combined with growing cooperation difficulties, are dissuading the EU from entering into such an agreement with Beijing.
Five years after its signing, the free trade agreement between the EU and Vietnam presents a generally positive assessment, even if the benefits remain asymmetrical. On the European side, services in particular are doing well, while exports of goods are growing at a still measured, but promising, pace. Vietnam, for its part, is consolidating its position as a major supplier to the European market, particularly in textiles, telecommunications equipment and the food industry. Strict rules of origin prevent an influx of Chinese products transiting through Vietnam, thus avoiding tariffs. However, trade asymmetry, particularly in agriculture, is fuelling growing tensions within the EU. It remains to be seen whether the complete lifting of tariffs on European products, in the agricultural sector for example, will open up a new market at a time when these products are being hit hard by Donald Trump's customs barriers.