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EVFTA offers ample room for Vietnam – Netherlands cooperation in fashion industry

With the implementation of the EU-Vietnam Free Trade Agreement (EVFTA), trade ties between Vietnam and the Netherlands, especially in the fashion industry, are expected to grow strongly in the time ahead.

Substantial cooperation potential

Since the EVFTA took effect on August 1, 2020, rosy signs have been seen in Vietnam’s fashion sector, as many firms are restructuring their operational apparatus, preparing infrastructure and materials, and improving product quality to meet requirements of the deal.

According to Le Xuan Duong from the Vietnam Leather, Footwear and Handbag Association (LEFASO), Vietnam is the world’s third biggest producer and second largest exporter of footwear.

Vietnam has shipped footwear and handbags directly to about 20 EU countries, with the Netherlands being the country’s third largest buyer in the EU market, he said.

Over the past years, the Netherlands has remained Vietnam’s leading trade partner in Europe, and one of the biggest European investors in the Southeast Asian country.

Iwan Rutjens, First Secretary of Economic Affairs at the Dutch Embassy in Vietnam, said the economic, trade and investment ties have driven the relationship between the two countries.

With its good logistics and infrastructure, the Netherlands has received a large amount of Vietnamese exports to the EU via the port of Rotterdam, he said, stressing that the two-way trade is expected to grow further in the time to come.

He said each Western European consumer buys 22 kg textile products per year. Meanwhile, on average the Dutch buy 46 clothing items.

Ensuring product quality

To seek cooperation opportunities and optimise opportunities generated by the EVFTA, the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, and the Dutch trade association for fashion, interior design, carpets and textiles (MODINT) jointly held an online conference late November, enabling Vietnamese firms to introduce their products to Dutch partners.

Le Hoang Tai, Deputy Director of Vietrade, expressed his hope that their will be more cooperation activities between the two sides in order to bring about valuable opportunities for Vietnamese and Dutch businesses.

“To utilise advantages of the EVFTA in the fashion industry, Vietnamese and Dutch businesses have to observe commitments in the agreement,” Tai said, emphasizing the need to ensure product quality and meet the rules of product origin.

Iwan Rutjens also suggested Vietnam learn from the Netherlands’ experience and revamp technologies to diversify its economy and raise competitiveness of domestic firms, which, he said, would benefit both countries.

Guido van Rooy, Executive Director of the Dutch Business Association in Vietnam, pledged that his association will provide fashion firms of the two countries with information about the market and business conditions in Vietnam.

In 2019, Vietnam’s export value to the EU reached 4.3 billion USD, 3.8 percent higher than 2018. However, Vietnam accounted for only about 2 percent of this market which was very small compared to the demand. The EVFTA, effective from August 2020, was expected to help Vietnam’s textile and garment industry to increase its exports to the EU by about 67 percent by 2025 compared to the scenario without this agreement, according to the Vietnamese Ministry of Industry and Trade.

However, according to the commitments of the EVFTA, besides meeting strict quality criteria, to enjoy preferential tariffs local businesses must implement strict origin requirements. Specifically, the EVFTA requires rules of origin to apply from fabric onwards, meaning that exports to the EU must use fabric produced in Vietnam or the EU. The agreement also allows firms to use fabric from countries which have FTAs with both Vietnam and the EU.