Vietnam, EFTA Sign FTA After 14 Years of Talks, Lowering Tariff Barriers

Vietnam and the European Free Trade Association (EFTA) signed a free trade agreement (FTA) 14 years after beginning negotiations in 2012. With U.S. tariff policies increasing uncertainty in global trade, the agreement is seen as an effort by both sides to diversify their trading partners.

Vietnam's Ministry of Industry and Trade said on October 18 local time that it had signed the FTA with EFTA in the capital, Hanoi. To Lam, Vietnam's Communist Party General Secretary and State President, attended the signing ceremony. Le Manh Hung, Vietnam's Minister of Industry and Trade, and representatives of EFTA member states, including Swiss President Guy Parmelin, also attended.

Vietnamese National Assembly Chairman Tran Thanh Man delivers greetings to National Assembly Speaker Cho Jungsik during a meeting between the speakers of the South Korean and Vietnamese national assemblies at the National Assembly on the 7th. Yonhap News Agency

EFTA is an economic cooperation bloc comprising four countries that are not members of the European Union (EU): Switzerland, Norway, Iceland and Liechtenstein. Once the agreement takes effect, EFTA member states will eliminate import tariffs on Vietnamese industrial products and seafood, among other goods. Vietnam plans to gradually reduce or eliminate tariffs on most products imported from EFTA member states over the next 11 years. Some EFTA agricultural products, including cheese, coffee and chocolate, will also be able to enter the Vietnamese market duty-free.

Vietnam mainly exports seafood, footwear, textiles, machinery and equipment, and electronic products and components to EFTA member states. In return, it imports industrial machinery and equipment, chemical products, pharmaceuticals and raw materials for production. In a separate statement, the Norwegian government said that once the agreement takes effect, about half of Norway's exports to Vietnam will qualify for tariff exemptions, with that share expected to rise to more than 98% within seven years.

Agence France-Presse (AFP) reported that the two sides had signed the FTA to diversify their markets as U.S. tariff measures disrupt global trade. Experts also said the agreement reflected both sides' determination to reduce their reliance on major trading partners.

Trade between Vietnam and EFTA member states averages $2 billion (about 2.675 trillion won) a year. EFTA member states have a combined population of about 13 million and a combined gross domestic product (GDP) of $1 trillion (about 1,337 trillion won). EFTA is the world's ninth-largest goods-trading bloc and fifth-largest services-trading bloc.

The two sides began formal FTA negotiations in 2012, but talks had stalled since 2018. They resumed negotiations in September last year and reached a final agreement in July this year before formally signing it on October 18.

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