Europe seals free trade agreement with Vietnam and opens fifth Asian hub of Spanish fashion
Brussels and Hanoi sealed last Sunday the Free Trade Agreement that will gradually reduce 99% of tariffs and that incorporates aspects in defense of labor rights and the environment.
Brussels and Hanoi open the fifth Asian hub of Spanish fashion. The European Union and Vietnam sealed last Sunday the Free Trade Agreement that will gradually reduce 99% of tariffs. The Asian country is the fifth supplier of fashion of Spain in the continent, behind China, Bangladesh, India and Cambodia.
The European Trade Commissioner, Cecilia Malmström, and the Minister of Industry and Commerce of Vietnam, Tran Tuan Anh, signed the agreement in Hanoi, capital of the Asian country. The pact, in addition to phasing out 99% of tariffs, also incorporates measures for the defense of labor rights and the environment.
In a joint statement, it is explained that it is the most ambitious free trade agreement that seals the European Union with an emerging economy and that emerges from the commitment of both parties for a trade liberalization and an “open, fair and regulated” integration. The approval of the European Parliament and the National Assembly of Vietnam is still lacking.
Brussels and Hanoi began talks for this pact in 2012. However, while negotiations closed relatively quickly on economic issues, it stalled on the legal side because of Vietnam's reluctance to comply with international labor rights and environmental protection standards.
For the signing of the agreement, it has been essential for Vietnam to ratify the International Labor Organization (ILO) convention regarding collective negotiation. This move will allow, for example, the legality of trade union movements within the country. On the other hand, the accession of the Asian country to the Paris Agreement on climate change has also been a key factor to reaching an agreement.
The Spanish imports of textiles, apparel, footwear, leather and accessories from Vietnam amounted in 2018 to 726.7 million euros, 5.8% more than in the previous year. In the last five years, Spanish fashion purchases to the Asian country have climbed 23.4%. Vietnam, which is currently the fifth largest supplier in the sector in Spain, is right behind Cambodia, whose exports to the Spanish market stood at 793 million euros last year, according to Icex data.
The agreement has led to Vietnam's accession to the Paris Agreement and the ILO collective bargaining convention
60% of Spanish fashion purchases to Vietnam correspond to clothing. In 2018, Spain imported clothing from the Asian country for about 430 million euros. The second category was shoes, with almost 240 million euros. In fact, Vietnam continues to be the second largest footwear supplier in the country surpassed only by China.
Despite its prominence in the Spanish footwear market, the sector's purchases from the Vietnamese industry have maintained an irregular evolution in the last five years, which ended with a marked decrease in 2018 of 6.5% over the previous year. On the contrary, Spanish purchases from Cambodia, the third Asian footwear supplier in Spain, doubled in the last year, to 82.4 million euros.
With regard to the European Union as a whole, the fashion purchases of Vietnam stood at 6,545.7 million euros in 2018. It is the fourth supplier of textiles, clothing, footwear, complements and accessories in the community area, ahead of Cambodia.
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