EU deal to spur Vietnam container trade

EU deal to spur Vietnam container trade

About 71 percent of duties on Vietnamese exports to the EU have now been removed, with the remainder being phased out over a period of up to seven years. Photo credit:

Vietnam’s growing containerized exports to the European Union are set to strengthen even further through 2020 when the benefits of an ambitious free trade agreement signed with the EU start paying off.

It has taken almost six years to conclude the deal that was signed in Hanoi on June 30, a pact that will eliminate 99 percent of customs duties between the two blocks. 

About 71 percent of duties on Vietnamese exports to the EU have now been removed, with the remainder being phased out over a period of up to seven years, while 5 percent of duties on EU exports to Vietnam are gone, with the remainder to be phased out gradually over a period of up to 10 years, the European Council said in a statement.

Even without the removal of duties, trade between the EU and Vietnam has been growing strongly. According to a forecast by IHS Markit’s Global Trade Atlas — compiled before this bilateral pact — EU-Vietnam trade will grow 3.3 percent in 2019 compared with the previous year, 3.1 percent in 2020, and almost 4 percent in 2021.

In terms of container volume, this year’s prediction is certainly on track. Rod Riseborough, CEO of Container Trades Statistics, said Vietnamese exports to Europe averaged 63,360 TEU per month in 2018, but have averaged 66,696 TEU in the first four months of 2019, up 5.2 percent year over year.

“I would think that this will grow for two reasons — natural growth allied to the moves from China that have already taken place, and an increase due to the new agreement,” he told

Slow, steady shift away from China

Rising wages as China moves up the value chain have resulted in a slow but steady shift in manufacturing out of China, with Vietnam one of the most popular destinations. While the US-China trade war has not yet affected Asia-Europe trade, the dispute is accelerating the southwards shift in manufacturing with factories producing goods for both the eastbound and westbound trades. 

Following the May 10 increase in US tariffs from 10 percent to 25 percent on $250 billion of Chinese goods, a survey by the American Chambers of Commerce for Shanghai and China found more than 40 percent of US businesses with operations in China were either considering relocating manufacturing facilities out of the country, or had already done so. Among those that have chosen to go elsewhere, 25 percent have shifted to destinations in neighboring countries in Southeast Asia, most notably Vietnam.

Riseborough said direct calls on the Asia-Europe services would initially be limited to the larger ports such as Cai Mep and much of the cargo would be fed to the hubs in the region. He said in the longer term there will be a number of key hubs in Vietnam as new terminals come online, but for the moment, most of the other ports can only handle vessels of about 3,000 TEU, even Ho Chi Minh.

Vietnam is the EU's second-largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth almost $56 billion a year and almost $4.5 billion in services, according to EU statistics. 

The main EU imports from Vietnam include telecommunications equipment, clothing, and food products, while the EU exports to Vietnam goods such as machinery, transport equipment, chemicals, and agricultural products.

Contact Greg Knowler at and follow him on Twitter: @greg_knowler.