European-vietnam free trade agreement (EVFTA) impacts on imports: A case study

Abstract

European-Vietnam Free Trade Agreement (EVFTA), signed on 30 June 2019, is one of the new generation Free Trade Agreements between Vietnam and 28 European Union member states. It is a comprehensive and high-quality agreement which ensures opportunities and challenges on developing trade for both Vietnam and the EU as well as boosting economy over the integrated period. Automobile is one of the most important goods exports in the EU and is one of the goods imports in Vietnam that experiences a significant decrease of tariff after the trade deal takes effect. The study would use Single market partial equilibrium simulation tool (SMART) to evaluate the potential impact of EVFTA on the imports of automobile in Vietnam. The result of the tool suggests that after the trade agreement takes effect, the European nations would boost export turnover of automobile to Vietnam by the declination of tariff to 0%. To be specific, Germany shows that its export turnovers surges compared to other nations, the subsequent ranks are Sweden, Italia and Slovakia. The SMART tool also claims that nations which are not in the European Union would have a negative growth of automobile exports to Vietnam after the agreement has effect. Based on the result of research process, the study also provides some remedies to boost the trade benefits for Vietnam and develop automobile industry under EVFTA.