Industry urges EU-Vietnam FTA ratification

The spirits industry has urged a speedy ratification of the free trade agreement between the EU and Vietnam, expected to provide a “major boost” to the sector.

A free trade deal between the EU and Vietnam is expected to be ratified in early 2017

The European Union and Vietnam concluded FTA negotiations in December last year, paving the way for the elimination of Vietnam’s 45% tariff for spirits and creating provisions for the protection of geographical indication status products such as Cognac and Scotch whisky.

Speaking at an event held by the Mission of Vietnam to the EU and BusinessEurope in Brussels last week, chief negotiators and ambassadors from both sides were joined by EU trade association representatives in urging the agreement to be put into action.

Ratification is expected in early 2017, with the FTA planned to come into effect by 2018.

“Trade is hugely important for our sector,” said Paul Skehan, director general of trade body Spirits Europe. “We’ve already seen a doubling of our export revenues over the last decade from five to €10 billion and removing tariffs which are currently at 45% for EU spirits entering Vietnam will greatly expand the market.

“The provisions for the protection of geographical indications such as Scotch or Cognac would also maintain the value of the market.”

He added: “It will take seven years for the tariffs to drop to zero but ASEAN [regional] trade in spirits will be duty-free from 2018 so we’ll already be at a disadvantage for many years.”

This will mark the EU’s second FTA with a Southeast Asian country, after Singapore, and links the EU market with the 90m consumers in Vietnam – with a middle class expected to reach 30m by 2020.

The agreement will eliminate 99.8% of duties on European products gradually over a 10-year period. EU negotiators hope the same model will follow in more countries, such as Philippines, Malaysia and Indonesia.