Prime Minister Pham Minh Chinh (left) and Vice President and Prime Minister of the United Arab Emirates (UAE) Sheikh Mohammed bin Rashid Al Maktoum witness the signing of the Comprehensive Economic Partnership Agreement.
CEPA is the first free trade agreement Vietnam has signed with an Arab country, opening a new era in the upgraded and increasingly substantive relationship between Vietnam and the UAE in particular and Arab countries in general.
The deal was signed in the context of the strong development of bilateral trade relations between Vietnam and the UAE. The signing of the agreement after a record one-year negotiation period with five official negotiation sessions, including three direct sessions at the ministerial level, is a clear demonstration of the commitment to bring trade and investment cooperation between the two sides to a new height.
The Agreement consists of 18 Chapters, 15 Annexes and 2 bilateral letters with contents including trade in goods, services - investment, rules of origin, technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), customs, trade defence, government procurement, intellectual property, legal and institutional issues.
Notably, the two sides have agreed to make a strong commitment to trade liberalization, with the UAE pledging to phase out tariffs on 99% of Vietnam's exports to the UAE, while Vietnam is also committed to phasing out tariffs on 98.5% of the UAE's exports to Vietnam. The agreement also includes many provisions to facilitate trade and investment, in line with current trends in digital transformation and green development.
The UAE is currently Vietnam's largest export market and second largest trading partner after Kuwait in West Asia. Statistics from the General Department of Customs show that in the 2018-2023 period, total trade between the two countries reached about US$5 billion per year. In terms of trade balance, Vietnam always has a large trade surplus with the UAE market (from US$ 3-4 billion per year).
During the 8 month period, total two-way trade reached over US$ 4.47 billion, up 45% over the same period from 2023, of which Vietnam's exports fetched US$ 3.85 billion, up 47.5% and imports hit US$ 623.5 million, up 32.5% on-year.
At present, the UAE is one of Vietnam's leading trade and investment partners in the Middle East, an important gateway for Vietnam to access markets in this region as well as other markets in West Asia and Africa.
In addition, the economic and trade structures of the two countries are complementary. Therefore, CEPA is viewed as a favorable premise for Vietnam to bolster the export of its key products to the UAE and then to countries in the Middle East, West Asia and Africa.
Simultaneously, it creates an opportunity for Vietnam to access advanced technology, capital and quality services of the UAE, thus helping to reduce production costs and improve the competitiveness of Vietnamese goods.
In return, UAE goods and services will have the opportunity to access the Vietnamese market as well as ASEAN member states through Vietnam's strategic location in the region.
In terms of commodity structure, Vietnam's major export items to the UAE include mobile phones, computers and components, electrical products, household electronics, pepper, seafood, footwear, textiles, grain products, plastic products, and wooden furniture. while Vietnam's key import items from the UAE include raw plastics, liquefied petroleum gas (LPG), petroleum products, animal feed ingredients, base metals, and chemicals.