Vietnam

[graduated 01/01/2023] Vietnam currently still benefits from the Standard GSP and will leave the GSP scheme in 2022 due to the preferential trade agreement which entered into force in August 2020. The World Bank considers Vietnam a lower middle-income country with a per capita income of $4.010 (2022).

What is the GSP?

The Standard GSP targets developing countries that are classified by the World Bank as lower or lower-middle income countries and which do not have equal preferential access to the EU market through any other arrangement. Standard GSP beneficiary countries can benefit from duty suspension for non-sensitive products as well as duty reductions for sensitive products across approximately 66% of all EU tariff lines.

Vietnam flag
group

98,19 M

Population

account_balance
Communist State

Government

trending_up

8.00%

GDP Growth

equalizer

3.40%

Inflation

money

$ 408,80 B

GDP

19 -

Freedomhouse index

4 -

ITUC Global Rights Index

20.1 v

Environmental Performance Index

Facts about Vietnam's economy

Export Products

Vietnam's most important export products are mobile phones and components, electronic integrated circuits, footwear, and sportswear as well as other electrical parts. Cashew nuts and coffee are the most important agricultural export products.

Trade Partners

Vietnam's most important trading partners are neighbouring China, the US, South Korea. Still, they only account for a share of around 53% of overall trade, reflecting the overall diversification of trading partners.

Economic Structure

Though the traditionally important agricultural sector slowly loses its significance, it still employs the majority of the Vietnamese population and remains an important source of raw materials for the processing industries. The processing of food and beverages remains a pillar of the economy and is based on the country's agricultural output: Seafood, coffee, and tea. Other cornerstones include the cement industry, fertilizer, and steel as well as the growing textile and garment industry and automotive manufacturing. The services sector has become increasingly important for the Vietnamese economy and is mainly driven by telecommunication, finance, assembly, marketing, research, and tourism.

Usage of GSP Preferences

Vietnam uses trade preferences granted under the GSP for about 21% of its total EU exports. The preference utilisation rate, which represents the ratio of preferential imports to GSP-eligible imports, currently stands at 24.5%, which implies that less than half of eligible products are imported using reduced tariffs.

Trade with the EU

Total trade with Vietnam amounted to € 64,325 million in 2022. With a share of 8.6%, the EU is Vietnam's fourth most important trading partner. It is the third most important export destination for Vietnamese products.

Coffee Production

With an annual production of about 1.7 million metric tons, Vietnam is the second largest producer of coffee in the world. Vietnam accounts for about 20% of the world coffee market.

Vietnam and the EU (2022)

Imports from Vietnam by product section

Imports from Vietnam over time (in € m)

VIETNAM AND THE EU’s GSP

Economic Impact

43%

About 43% of Vietnam's exports to the EU market are eligible for reduced tariffs granted by the GSP

25%

Vietnam makes use of GSP preferences for about 25% of its eligible exports to the EU market.

Preference utilisation and export diversification

Vietnam's imports to the EU

Preference Utilisation vs. total eligible imports

Vietnam’s preference utilisation rate steadily increased between 2011 and 2019 with an average of 59%. This increase corresponded with rising eligible imports during the same period. From 2020 utilisation rate dropped, until the lowest figure of 25% in 2022.. Some product sections, including chemicals, hides and skins, apparel and clothing, and machinery, still show potential for improved use of preferences.

The largest product sections under the GSP

Preferential imports from Vietnam are dominated by footwear articles. But this product category alongside the other major product sections experienced a drop in the utilisation rate between 2020 and 2022. Despite this, the overall level of diversification is comparatively high.

SUSTAINABLE DEVELOPMENT

As a beneficiary of the Standard GSP, Vietnam is not obligated to ratify any conventions to be able to benefit from preferential access to the European market. Nonetheless, Vietnam maintains a high level of ratification of international conventions. The country has ratified 13 out of 15 fundamental conventions on the protection of human rights and labour standards. Additionally, Vietnam has ratified 8 international conventions on environmental protection and 4 conventions on good governance.

Core international conventions on human rights and labour standards

Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)
  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Not Ratified

  • Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
  • Convention concerning the Abolition of Forced Labour, No 105 (1957)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Vietnam Bilateral Development Assistance

DG INTPA

Access all info about EU-Vietnam relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/vietnam_en

Opportunities in Vietnam

  • Robust macroeconomic environment with considerable domestic demand and a strong focus on manufacturing for export
  • Continuing economic growth with an average of about 7% since 2016, which makes it one of the fastest growing economies in the region
  • Vietnam scores high on the human capital index (HDI) and ranks 48 out of 157 countries. Only Singapore has a better score among ASEAN countries.
  • Stable political environment and ambitious development goals
  • Large investments in the expansion of 5G coverage and digital infrastructure
  • Increasing FDI due to ongoing diversification of supply chains
  • Vietnam has established itself as an alternative production site to China, especially for higher-quality electronic products

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