As soon as NAFTA enters into force, 49% of EU export tariffs to Vietnam will be released, while the remaining exports will be phased out over a 10-year period (excluding some products). Products that will be duty-free from day one include exports of almost all machinery and appliances, chemicals, all textiles and half of EU pharmaceutical exports. As soon as the agreement comes into force, 85% of import duties will be removed, with the remainder abolished over a seven-year period. Textile products, clothing and footwear, which are currently Vietnam`s main imports, are examples of imports that will benefit from the agreement. These products will be tariff-free either immediately or after three years, while sensitive products will be liberalized after 7 years. Although many products imported from Vietnam already benefit from the Generalized Preference System (GSP), preferential treatment under the free trade agreement is often more advantageous. The GSP will remain in force for two years after the ENA comes into force, with only the CEFTA applicable. The legal text of the TUEA contains a series of joint declarations and agreements which, in accordance with Article 17.21, are an integral part of the agreement. The bank capital agreement requires the Vietnamese authorities to examine the investments of EU financial institutions at “cheap” in order to hold up to 49% of the chartered capital in two Vietnamese equity banks within five years of the entry into force of THE TUEFTA. There is a special body to exclude four commercial banks, the Investment and Development Bank of Vietnam (BIDV), Vietinbank, Vietcombank and Agribank, of which the Vietnamese government is currently the majority shareholder. Given the continued interest of foreign investors in Vietnamese banks, we expect EU financial institutions to try, when the time comes, to use this FDI exemption.
In addition, it could be a deliberate attempt by the Vietnamese government to introduce a more diversified investor base in its banking sector – existing minority foreign investors in the sector are primarily Asian banks. However, the fact that this is limited to only two Vietnamese banks indicates that this should not be a forerunor of more comprehensive reforms related to broader reforms of foreign ownership of Vietnamese banks – this and the way the Vietnamese government interprets this undertaking within its broader regulatory framework, it remains to be seen. The United States and the Republic of Korea signed the U.S.-Korea Free Trade Agreement (KORUS Free Trade Agreement) on June 30, 2007. The United States and the Republic of Korea implemented the agreement on March 15, 2012.