Free trade, investment deals to boost Vietnam-Germany trade ties hinh anh 1Germany has high demand for pepper. (Photo: VNA)

Hanoi (VNA) – Vietnam-Germany trade relations will thrive on the back of the freshly inked free trade and investment deals, including the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA), according to insiders.

Nguyen Son Tra, deputy head of the WTO and Trade Negotiation Division under the Ministry of Industry and Trade’s Multilateral Trade Policy Department, said the EVFTA will bring distinct advantages to Vietnamese goods as right after the deal takes effect, 85.6 percent of the tax lines imposed on Vietnamese goods, or 70.3 percent of the country’s exports to the EU will be reduced in the first year.

Meanwhile, the lifted tariffs will be 99.2 percent, or 99.7 percent of the country’s total export turnover to the bloc, in the next seven years, she said.

Particularly, Germany, together with the UK and the Netherlands, has been Vietnam’s leading importer in the EU since 2017. According to statistics from the General Department of Vietnam Customs, two-way trade reached 9.5 billion USD in 2017, with Vietnam shipping some 6.3 billion USD worth of commodities to Germany. Exports to the European country continued to increase to 6.68 billion USD the following year.

In the first half of 2019, Vietnam earned over 3.3 billion USD from selling products in the German market. Key earners comprised footwear, garment and textiles, coffee, seafood, cashew nuts and pepper, among others.

There is huge room for Vietnamese commodities to enter Germany, where consumers have increasing demands for imports. Last year, Germany became the world’s second largest purchaser of furniture with import revenue making up 8.1 percent of the world’s total amount.

Although local furniture firms have tried to penetrate the German market, their market share remains modest. In the first quarter of 2019, Vietnam’s furniture exports to the country only stood at 80.8 million USD, much lower than the market’s demand.

Vietnam’s Trade Office in Germany said the European country is the world’s second biggest importer of pepper, accounting for 10.1 percent of the total import revenue in 2017.

As the second largest supplier of pepper for Germany, just behind Brazil, Vietnam ships average 5,000 tonnes of pepper to the market each year. In 2018, Vietnam pocketed 35.11 million USD from exporting 8,510 tonnes of pepper to Germany, up 5.61 percent in volume but down 34.45 percent in value due to low prices.

Meanwhile, Marko Walde, Chief Representative of the German Chamber of Industry and Commerce in Vietnam, said the EVFTA and EVIPA will open export opportunities and boost investment activities for enterprises of both nations.

There are some 300 German firms operating their business in Vietnam, 55 percent of which have plans to expand investment in the Southeast Asian nation.

Unlike 20 years ago when German firms invested heavily in China, they are now seeking to move their production bases to another country, and Vietnam and Thailand are considered as the most promising destinations, he said.

Walde suggested the Vietnamese Government complete legal frameworks soon so as to build confidence among foreign investors.-VNA