A future Free Trade Agreement (FTA) between Vietnam and the European Union (EU) will boost the Vietnamese economy. This statement was made by Deputy Director of the Ministry of Trade and Industry’s Multilateral Trade Policies Department Le Quang Lan during a seminar held by the European Chamber of Commerce in Vietnam and the Vietnam Chamber of Commerce and Industry in  ${bigcity_Hanoi:"Hanoi"}. According to Lan, an FTA “would afford Vietnam with opportunities to sharpen its competitiveness, attract more foreign investment and promote its exports.” Political and economic advisor to the EU delegation in Vietnam Juan-Jose Almagro Herrador agrees with Lan, saying that lower EU tariffs will greatly help in boosting Vietnamese exports especially in the field of textiles, seafood and footwear. At
the same time, decreasing Vietnamese tariffs will make the local economy more competitive for a long-term period and encourage EU to invest in Vietnam.

Under the Free Trade Agreement (FTA), EU import tariffs imposed on Vietnamese textiles will be nullified from 12% to 0%, of course enabling local garment exporters to compete more in their sector. According to Nguyen Huu Phai, Bac Giang Garment Joint Stock Co. general director, Vietnamese textile exports to the EU are lower compared to exports to the United States, Japan and South Korea even after encouraging growth in the export sector.

During the first nine months of 2010, there was a 22.1% increase in Vietnamese textile exports to the United States from 2009, totaling to US$4 billion. Exports to Japan increased 15%, totaling to $700 million. Exports to the EU though increased by only 6%, a total of $1.18 billion. Thus, an FTA was crucial in importing machinery; technologies; and cheaper and better materials from the EU in order to improve production capacities and product quality.

The EU has been an important trading partner for Vietnam in the last ten years. The two-way trade between the nations resulted in a yearly growth rate of 15-20% in the recent years totaling to $15.5 billion in 2010. In March of this year 2011, EU has invested in 1,079 projects in Vietnam, equivalent to $16 billion.