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CHAPTER I:  OVERVIEW OF EVFTA, EU TEXTILE MARKET,
VIETNAM TEXTILE AND GARMENT INDUSTRY
1.1 OVERVIEW OF EVFTA
1.1.1 Definition of EVFTA
The EU-Vietnam Free Trade Agreement (EVFTA) is a new generation FTA between
Vietnam and 28 European Union member states.

It is a comprehensive and high-quality agreement which ensures balanced benefits for

both Vietnam and the EU, with consideration for the differences in development levels
between the two sides.

Upon entering into force, the EVFTA is expected to be a huge boost to Vietnam's exports,
helping to diversify markets and exports, particularly agricultural and aquatic products as
well as Vietnamese products with competitive advantages.

1.1.2 Aspects of EVFTA

The EVFTA is a win-win trade deal with balanced benefits for both Vietnam and the EU
which complies with the provisions of the World Trade Organisation (WTO).

The agreement includes 17 chapters, two protocols and several attached memorandums,
with main contents covering the following aspects.

- Trade in goods

- Services, investment liberalisation and e-commerce

- Government procurement
- Intellectual property rights

The EVFTA also covers other aspects including rules of origin, customs and trade
facilitation, sanitary and phytosanitary measures, technical barriers to trade, sustainable
development, cooperation and capacity building, and legal-institutional issues.

1.1.3 Effects of EVFTA

The elimination of tariff barriers will be at the highest level, which will benefit exports of
both sides.
After the trade deal takes effect, the EU will eliminate about 85.6% of import tariffs on
Vietnamese goods, equivalent to 70.3% of Vietnam’s revenue from exports to the EU.

Within seven years of the deal taking effect, EU will remove 99.2% of tariffs, equivalent
to 99.7% of Vietnam’s revenue from exports to the EU.

Regarding the remaining 0.3% of Vietnam’s export revenue, EU pledged to provide

Vietnam with tariff-rate quota, with the import tax rate set at 0% within the quota.

For EU exports, Vietnam committed to truncate 48.5% of tariff lines immediately after

the agreement comes into force (accounting for 64.5% of import revenue). After seven
years, 91.8% of the tariff lines, equivalent to 97.1% of EU export revenue, will be
removed by Vietnam.

After 10 years, about 98.3% of the tariff lines (accounting for 99.8% of import turnover)
will be cut. For the remaining 1.7% of the tariff lines, Vietnam will apply tariff-rate quota
under WTO commitments or a special roadmap to remove tariffs.

1.1.4 The importance of the deal

The level of commitment in the EVFTA is the
highest level that Vietnam has reached among
signed FTAs so far. This is of great
importance to Vietnam as only 42% of
Vietnam’s exports to the EU enjoy a 0% tax
rate under the Generalised Scheme of
Preferences (GSP).
In 2018, the EU was the second largest export market of Vietnam

The strong commitments on market opening in the EVFTA will certainly promote
Vietnam - EU trade relations, helping to further expand the market for Vietnamese
exports.

With the commitments to abolish nearly 100% of import duties as agreed by the two
sides, there are huge opportunities to increase the export of Vietnamese products such as
garments and textiles, footwear, agricultural and seafood products (including rice, sugar,
honey, and vegetables), wood products, and others.

According to the Vietnam Ministry of Planning and Investment, the EVFTA will help
raise Vietnam's revenue from exports to the EU by about 20% by 2020; 42.7% by 2025
and 44.37% by 2030. In addition, Vietnam’s imports from the EU will also increase but at
a lower rate than exports, at about 15.28% by 2020; 33.06% by 2025 and 36.7% by 2030.

The EVFTA is also expected to raise Vietnam's GDP by an average of 2.18-3.25% per
year in the 2019-2023 period; 4.57-5,30% in the 2024-2028 period and 7.07-7.72% in the
2029-2033 period.
Moreover, commitments on services, investment, government procurement as well as
specific regulations on market opening and technical measures in some specific areas will
also create opportunities for EU enterprises, products and services to have better access to
the Vietnamese market of nearly 100 million people. Meanwhile, Vietnamese consumers
will have easier access to high quality products and services from the EU in the areas of
pharmaceuticals, health care, infrastructure construction, and public transportation, among
others.

Commitments on state governance will also ensure a stable and open business and legal
environment for investors of both sides.

Through the EVFTA and the Investment Protection Agreement (IPA), EU investors will
have opportunities to gain access to markets that have signed FTAs with Vietnam with
more preferential treatment. The agreements also help to promote relations between the
EU and each ASEAN country and the ASEAN bloc at large, creating a foundation
towards negotiating an FTA between the EU and ASEAN in the future.

1.2 OVERVIEW OF EU MARKET AND CURRENT STATUS OF

VIETNAM'S TEXTILE AND GARMENT EXPORT TO EU
Although the EU is the largest textile and apparel importer in the world, the EU is also the
second largest textile and garment exporter in the world, after China, accounting for 24%
of the world's textile and apparel export turnover. EU countries import apparel from
developing countries and re-export to other EU countries themselves. Therefore, EU
textile and apparel exports within the EU account for more than 40.1% of total imports of
this market, about 60% of the remaining imports come from non-EU countries, mainly
from EU countries. develope.
Among developing countries exporting to the EU, China, Turkey and Bangladesh are the
three countries with the largest export market share to the EU, accounting for nearly 36%
of total imports worth US $ 100 billion.
Although China holds the largest market share, nearly 20% on the EU market, in the past
5 years, the double growth rate - CAGR of China's exports to the EU decreased by 0.1%,
while Bangladesh, Pakistan increased by 10%, Vietnam increased by 9%, especially
notably Cambodia increased by 17% (from USD 2.8 billion in 2013 to USD 6.3 billion in
2018).
Except for China as a "big player" in the industry, other countries such as Bangladesh,
Cambodia or Pakistan all have an outstanding advantage of import tax incentives
compared to Vietnam when exporting to the EU. Bangladesh and Cambodia are exempted
from the import tax regime under the EBA program (which stands for Everything but
Arm program - Exemption from all commodities except weapons), Pakistan is also
exempt from import tax under the GSP + program. Although Vietnam is also entitled to
the GSP preferential tariff, it is only "Standard GSP - Standard GSP" at 9.6%.
It is clear that the competition among developing countries exporting to the EU is quite
fierce, the application of GSP + and EBA preferential regimes help countries enjoy a
great price advantage compared to the price. Vietnam. This also explains why Vietnam's
export market share in the EU market remains around 2-3%.
Although the growth rate of dual export in the past 5 years has increased by nearly 9%,
the proportion of textile exports to the EU in the total textile and garment export turnover
to the world of Vietnam in the past 5 years has decreased from 17.1%. in 2015 to 16.3%
in 2019.
 
1.3 Overview of the Vietnam Textile and Garment Industry
Textile industry is an industry with a long tradition in Vietnam. This is an important
sector in the economy of our country because it serves the basic needs of human beings, is
the industry solves many jobs for the society and in particular it is the sector with
strengths in export, create conditions for economic development, contributing to the
balance of imports and exports from the country. Textiles and garment products is one of
the most important sectors for Vietnamese export and outsourcing of production. In the
process of international economic integration, the textile sector, as proved to be a key
sector in the economy was reflected in exports continued to increase even during the years
of crisis, the market is always wide open, the number of employees in the industry and
more and a large proportion of the industry, the value of the sector's contribution to
national income ... however facing relentless volatility of world economies, Textile
industry is facing opportunities and great challenges.

The textile products of Vietnam have been exported to 180 countries and territories
around the world. Particularly in the first six months of 2015, textile exports Vietnam
continues to maintain two-digit growth, reaching 12.18 billion US dollars, up 10.26%
compared with the same period of 2014.
1.3.1 Prospects for the sector 2 cái bảng cho cùng một chỗ cho nó
đẹp với không tốn diện tích nhé bạn
It can be said, textile is one of the bright spots in the picture of Vietnam's exports in 2014.
The strong growth in exports has boosted the trade balance of the sector towards a
surplus. With average export value reached USD 1.955 billion / month, experts said that
in 2014 Vietnam's garment industry may finish exceeded $ 1 billion. Commenting on this
possibility, Mr. Le Tien Truong, General Director of Vietnam National Textile Garment
Group said: in 2014, the textile industry is capable of exceeding the target of 0.5-1 billion
USD export growth 15-16% compared to the 12% target set. Particularly Vietnam Textile
Group also expects exports to reach US $ 3.4 billion worth of goods.

According to the “world trade organization [2019]” Vietnam became the 8th largest
textile exporter in the world with export value of 8.3 billion dollar with a highest growth
rate of 12.5% [2018-2017].

It is also ranked 3rd in exporting apparel with the highest growth rate of 13.4% where
China lost 0.4%.
In 2019 the revenue of Vietnam textile is 39bn dollar. Infect Vietnam is aiming to raise 50
billion dollars from its textile and apparel industry by 2020.

1.3.2 Strengths and Oppoturnities Phần này hỏi Minh xem có trùng
của nó không
Strengths
 Plentiful competitively-priced labor - Vietnamese salaries are lower than those in
China, giving the country a distinct cost advantage; and cái phần này bài t nó lại là
điểm yếu r vì thấp hơn Trung Quốc nhưng cao hơn nhiều so với Bangladesh với
mấy nước nữa cơ
 Supportive government policies, including incentives to attract foreign direct
investment.
 A generally supportive government policy, allowing, for example, duty-free
imports of raw materials on the condition they are re-exported as clothing products
within 90-120 days; and
 The Vietnamese industry has shown capacity to react quickly and flexibly to new
orders.
Opportunities
 Development of ‘non-traditional’ markets for Vietnamese clothing products holds
out promise: the industry is looking at the Middle East and Russia as important new
opportunities in this regard; and
 Greater product differentiation and specialization may boost margins – for example
in functional work-wear, home furnishings, and other niche markets.