VDMA: agreement with Vietnam will point the way for EU free trade

German mechanical engineering companies will benefit from significantly improved trade conditions with customers from Vietnam in future. On 2 December 2015, the EU and Vietnam signed a deal on a free trade agreement which provides for almost complete dismantling of tariffs and reformed investor protection with a court to settle investment disputes.

German mechanical engineering companies will benefit from significantly improved trade conditions with customers from Vietnam in future. On 2 December 2015, the EU and Vietnam signed a deal on a free trade agreement which provides for almost complete dismantling of tariffs and reformed investor protection with a court to settle investment disputes. After ratification, the agreement could enter into force in 2018. VDMA hopes this successful development will provide added impetus in trade negotiations with other regions, such as the US.

“The agreement with Vietnam will significantly improve opportunities there for the German mechanical engineering industry. The emerging Vietnamese economy will also benefit from better access to modern technologies,” underlined Ulrich Ackermann, head of VDMA’s Foreign Trade department. The association sees great potential in the south-east Asian country which has a population of over 90 million. In 2014, the German mechanical engineering industry exported goods worth over € 500 million to Vietnam, which represents a 15% increase compared to the previous year. The most important specialist segments to date have been food and packaging machinery, conveyor technology, tooling machines, construction and building materials machinery and textiles technology.

VDMA also sees the successful negotiations with Vietnam as a signal for free trade generally. “The agreement between Europe and Vietnam proves that free trade and transparency are not a contradiction in terms,” indicated Ackermann. “From the mechanical engineering industry’s perspective, the agreement on investor protection with a court represents an impressive model for future trade agreements.” Criticism has continually been voiced over investment protection based on arbitration tribunals in relation to the TTIP negotiations. VDMA has emphasized its support for reform of investment protection on several occasions. The association regards a court to settle investment disputes, which has now been provided for in the agreement with Vietnam, as a good option.

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Image provided: Diego Delso, Wikimedia