Proposal for a Council Decision concerning the conclusion of an Agreement between the Government of the Socialist Republic of Vietnam and the European Community on market access
Date: 2005-01-04
Institutions: European Commission
Subjects: European Union, Viet Nam, market access, trade agreement

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.1.2005 
COM(2004) 847 final 

2004/0291 (ACC) 

Proposal for a 

COUNCIL DECISION 

concerning the conclusion of an Agreement between the Government of the Socialist 
Republic of Vietnam and the European Community on market access 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On  9  October  2004,  the  European  Community  concluded  bilateral  negotiations  with  the 
Socialist  Republic  of  Vietnam  regarding  its  accession  to  the  WTO.  The  results  provide 
important  commitments  on  both  goods  and  services  of  benefit  to  EC  business.  The 
Vietnamese government also expressed its interest in pursuing an “early harvest agreement” 
which would bring forward the implementation of certain commitments in the interest of both 
partners. 

On 3 December 2004, representatives of the Commission and of the Vietnamese government 
initialled the enclosed Agreement between the European Community and the Government of 
Vietnam. 

The Agreement provides for the following undertakings by Vietnam: 

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Vietnam commits to reduce its customs duties for EC imports of yarns to 5%. 

Vietnam commits to reduce its customs duties for EC imports of wines and spirits to 
65%. 

Vietnam commits to provide treatment no less favourable to EC investors and service 
providers than that provided to US investors and service providers on the basis of the 
provisions of US-Vietnam Bilateral Trade Agreement. 

Vietnam commits to provide treatment no less favourable to EC investors than that 
provided  to  Japanese  investors  through  the  Japan-Vietnam  Bilateral  Investment 
Agreement. 

Vietnam will introduce a number of liberalisation measures in other sectors: 

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 From 1.1.2005, it will allow EC operators to invest in the sector of cement and 
clinker production on the same terms as Vietnamese industry. 

From 1.1.2005, it will allow existing EC operators in the telecommunications 
sector,  currently  operating  in  Vietnam  on  the  basis  of  Business  Co-operation 
Contracts with Vietnamese operators, to have the option either to renew current 
arrangements  or  to  convert  them  into  another  form  of  establishment,  under 
conditions no less favourable than those they currently enjoy. 

From 1.1.2005, it will remove all restrictions regarding the customers to whom 
existing  European  Community  suppliers  of  computer  services,  construction 
services,  engineering,  integrated  engineering,  architectural  services  and  urban 
planning services, currently operating in Vietnam, may provide these services. 

From  1.1.2005,  European  Community  operators  may  be  granted  licences  to 
establish 100% European Community-owned enterprises in Vietnam to provide 
computer  services,  construction  services,  engineering,  integrated  engineering, 
architectural  services  and  urban  planning  services,  without  restrictions  on  the 
customers to whom these services are provided.  

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From 1.1.2005, it will issue 4 licences to European Community pharmaceutical 
firms  allowing  them  to  carry  out  toll  manufacturing  in  Vietnam  without 
requiring  the  transfer  of  licenses  to  Vietnamese  partners,  while  also  retaining 
any  existing  authorization  which  they  may  have  to  market  the  imported 
products. 

From  1.1.2005,  it  will  permit  joint  ventures  to  be  established  between 
European Community companies and Vietnamese partners in order to invest in 
construction  of  office  buildings  and  apartments  for  sale  and  lease,  without  a 
limitation on the European Community capital contribution. 

By 31.3.2005, it will provide one licence to a European Community distributor 
to establish a 100% European Community-owned enterprise in Vietnam. 

By 31.03.2005, it will issue an additional life insurance licence to a European 
Community firm. 

By 31.03.2005, European Community shipping lines will be authorised to enter 
into joint ventures with Vietnamese partners with 51% EC capital contribution. 

By  31.03.2005,  one  European  Community  shipping  line  will  be  authorised  to 
establish  a  100%  European  Community  invested  enterprise  to  carry  out  all 
activities  for  its  shipping  line,  which  is  currently  not  permitted  for  non-
Vietnamese firms. 

By  31.03.2005,  it  will  grant  a  licence  to  one  European  Community  service 
supplier to provide computer reservation system services in Vietnam. 

By 31.03.2005, it will introduce a tariff quota for the import of motorbikes and 
scooters of EC origin, while ensuring that at least 50% of this quota is allocated 
specifically 
to  agents  officially  authorised  by  European  Community 
manufacturers. 

By  31.12.04,  the  list  of  pharmaceutical  molecules  which  are  prohibited  from 
being  imported  into  Vietnam  will  be  reduced  to  a  maximum  of  7.  By 
31.12.2005,  this  list  will  be  completely  abolished  for  European  Community 
manufacturers. 

During  the  period  of  2005-2006,  a  total  of  3  licences  will  be  granted  to 
European  Community  suppliers  of  environmental  services  to  operate  in 
Vietnam as 100% European Community-owned enterprises, for the purpose of 
providing  environmental  services,  in  the  following  sub-sectors:  cleaning 
services  of  exhaust  gases,  noise  abatement,  refuse  disposal  services,  sewage 
services. 

It will permit those European Community distributors which are already legally 
operating in Vietnam to open a maximum of 4 additional stores between them 
during 2005, and two further stores in 2006. 

During  2006,  one  licence  will  be  allocated  to  a  European  Community 
distributor  to  operate  in  Vietnam  as  a  100%  European  Community-owned 
enterprise. 

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In exchange, the EC will suspend all textile and clothing quotas currently imposed on 
Vietnam. The intention is to allow Vietnam to enjoy equivalent treatment to existing 
WTO members and to compete on the same basis. 

The  Agreement  contains  provisions  according  to  which  the  EC  can  re-impose  the 
textile quotas in the case that Vietnam does not comply with its obligations. 

The  Agreement  takes  into  account  the  termination  of  the  ATC  agreement  and  the 
capacity  of  other  important  WTO  members  in  this  sector,  hence  the  suspension  of 
quotas  for  Vietnam  is  not  expected  to  have  a  significant  negative  impact  on  the 
interests of the European textile and clothing sector. 

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2004/0291 (ACC) 

Proposal for a 

COUNCIL DECISION 

concerning the conclusion of an Agreement between the Government of the Socialist 
Republic of Vietnam and the European Community on market access 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
133 thereof, in conjunction with the first subparagraph of Article 300 (2) thereof, 

Having regard to the proposal from the Commission1, 

Whereas: 

(1) 

The Commission has negotiated on behalf of the Community a bilateral Agreement on 
an  early  implementation  of  market  access  commitments  relating  to  Vietnam’s  WTO 
accession; 

(2) 

The Agreement was initialled on 3 December 2004; 

(3) 

The Agreement should be approved on behalf of the Community; 

HAS DECIDED AS FOLLOWS:  

Article 1 

The  Agreement  between  the  Government  of  the  Socialist  Republic  of  Vietnam  and  the  European 
Community on market access is hereby approved on behalf of the Community. The text of the 
Agreement is annexed to this Decision. 

Article 2 

The President of the Council is hereby authorised to designate the person empowered to sign, 
on behalf of the European Community, the Agreement referred to in Article 1 in order to bind 
the Community.  

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Article 3 

1. 

2. 

The Commission shall, in accordance with the procedure referred to in Article 17 of 
Regulation  (EEC)  No  3030/93  on  common  rules  for  imports  of  certain  textile 
products from third countries2 adopt the measure provided for in Article 5 (1) of this 
Agreement, consisting of reapplication of textile and clothing quotas in case Vietnam 
fails  to  fulfil  its  obligations  under  Articles  2,  3  and  4  of  this  Agreement  and 
paragraph 9 of the Agreement in the form of an Exchange of letters, initialled on 15 
February 2003. 

The  provisions  of  this  decision  approving  the  Agreement  shall  prevail  over  the 
Regulation  (EEC)  No  3030/93  to  the  extent  that  the  same  subject  matter  is 
concerned.  

Done at Brussels,  

For the Council 
The President 

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OJ L 275, 8.11.1993, as last amended by Council regulation (EC) 138/2003 (OJ L 23, 28.01.2003, p.1) 

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ANNEX  

AGREEMENT  BETWEEN  THE  GOVERNMENT  OF  THE  SOCIALIST  REPUBLIC 
OF VIETNAM AND THE EUROPEAN COMMUNITY ON MARKET ACCESS 

The  Government  of  the  Socialist  Republic  of  Vietnam  and  the  European  Community 
(hereinafter referred to collectively as the “Parties” and individually as the “Party”); 

Acknowledging  the  importance  of  co-ordinating  and  strengthening  the  friendship,  co-
operation  and  interaction  between  the  Socialist  Republic  of  Vietnam  and  the  European 
Community; and 

Desiring  to  develop  and  broaden  trade  and  investment  relations  between  the  Socialist 
Republic of Vietnam and the European Community; 

Have agreed as follows: 

ARTICLE 1 

From  the  1st  January  2005,  the  European  Community  shall  suspend  with  the  aim  of 
elimination of the textile and clothing quotas imposed on the Socialist Republic of Vietnam. 

From the 1st January 2005, the Socialist Republic of Vietnam shall: 

ARTICLE 2 

-  Apply  the  tariffs  for  clothing,  fabrics  and  made-up  articles,  and  fibres  at  the  levels  as 
committed  by  Vietnam  in  the  Agreement  on  trade  in  textiles  and  clothing  and  other  market 
opening measures initialled in Hanoi on the 15th February 20033; 

- Apply a tariff rate of 5% for yarns; 

- Apply a tariff rate of 65% for wines and spirits; 

- Grant to European Community investors and services providers treatment no less favourable 
than  that  accorded  to  US  investors  and  services  suppliers  as  provided  for  in  the  Investment 
and  Trade  in  Services  Chapters  of  the  Bilateral  Trade  Agreement  between  the  Socialist 
Republic of Vietnam and the United States of America and the relevant Annexes thereof; 

- Allow European Community operators to invest in cement and clinker production, subject to 
the regulations applied in this sector in Vietnam. These regulations are non-discriminatory; 

- Allow European Community investors in the telecommunications sector, currently operating 
under Business Co-operation Contracts with Vietnamese operators, to have the possibility to 
renew  current  arrangements  or  to  convert  them  into  another  form  of  establishment  with 

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Published in the Official Journal of the European Union L 152/42 dated 26.6.2003 as “Agreement in the 
form  of  Exchange  of  Letters  amending  the  Agreement  between  the  European  Community  and  the 
Socialist  Republic  of  Vietnam  on  trade  in  textile  and  clothing  products  and  other  market  opening 
measures,  as  last  amended  by  the  Agreement  in  the  form  of  an  Exchange  of  Letters  initialled  on  31 
March 2000”. 

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conditions  no  less  favourable  than  those  they  currently  enjoy,  in  accordance  with  the  WTO 
Arrangement initialled by Vietnam and the European Community on the 9th October 2004;  

- Eliminate restriction on the customers to whom European Community suppliers of computer 
services, construction services, engineering, integrated engineering, architectural services and 
urban planning services, which are currently operating in Vietnam, provide the services; 

- Consider to grant licences, on a case by case basis and under the conditions set forth in the 
WTO  Arrangement  initialled  by  Vietnam  and  the  European  Community  on  the  9th  October 
2004,  for  the  European  Community’s  operators  to  establish  100%  European  Community-
owned  enterprises  in  Vietnam  to  provide  computer  services,  construction  services, 
engineering,  integrated  engineering,  architectural  services  and  urban  planning  services 
without restrictions on the customers to whom these services are provided; 

- Allow 04 (four) European Community pharmaceutical firms to carry out toll manufacturing 
in  Vietnam  without  license  transfer  and  while  retaining  their  authorization  to  market  the 
imported products; 

-  Allow  European  Community  companies  to  establish  joint  ventures  with  Vietnamese 
partners, without limitation on European Community capital contribution, in order to invest in 
construction of office buildings and apartments for sale and lease, subject to Vietnam’s laws 
and regulations on property sale and lease. 

ARTICLE 3 

No later than the 31st March 2005, the Socialist Republic of Vietnam shall: 

-  Grant  to  01  (one)  European  Community  distributor  a  licence  to  establish  a  100%  
European Community-owned enterprise in Vietnam, subject to the conditions provided for in 
the  WTO  Arrangement  initialled  by  Vietnam  and  the  European  Community  on  the  9th 
October 2004; 

-  Grant  to  01  (one)  European  Community  insurer  a  licence  to  operate  in  the  life  insurance 
sector in Vietnam; 

- Allow joint ventures with 51% capital contribution by European Community shipping lines, 
and  allow  01  (one)  European  Community  shipping  line  to  set  up  a  100%  European 
Community-invested  enterprise  in  Vietnam  to  carry  out  activities  of  its  own  shipping  line, 
under  the  conditions  provided  for  in  the  WTO  Arrangement  initialled  by  Vietnam  and  the 
European Community on the 9th October 2004; 

-  Grant  to  01  (one)  European  Community  service  supplier  a  licence  to  provide  computer 
reservation  system  services  in  Vietnam,  under  the  conditions  provided  for  in  the  WTO 
Arrangement initialled by Vietnam and the European Community on the 9th October 2004; 

-  Grant  tariff  quota  for  the  importation  of  3500  units  of  Completely  Built  Units  (CBU)  of 
motorbikes  or  scooters  of  European  Community  origin  at  70%  of  the  current  tariff  rate.  At 
least  50%  of  these  quotas  shall  be  allocated  to  Vietnamese  agents  and  distributors  duly 
authorised by European Community manufacturers. 

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The Socialist Republic of Vietnam shall: 

ARTICLE 4 

Grant  to  European  Community  investors  treatment  no  less  favourable  than  that  accorded  to 
Japanese investors as provided for in the Bilateral Investment Agreement (BIT) between the 
Socialist Republic of Vietnam and Japan, upon the entry into force of the said Agreement; 

-  In  2005  and  2006,  grant  03  (three)  licences  to  European  Community  suppliers  of 
environmental  services  to  operate  in  Vietnam  as  100%  European  Community-owned 
enterprises,  for  providing  environmental  services,  except  environmental  impact  assessment 
services,  subject  to  the  scope  of  activities  and  conditions  provided  for  in  the  WTO 
Arrangement initialled by Vietnam and the European Community on the 9th October 2004, 

-  Allow  European  Community  distributors,  legally  operating  in  Vietnam,  to  open  04  (four) 
more stores in 2005 and 02 (two) additional stores in 2006; 

-  Grant  to  01  (one)  European  Community  distributor  a  licence  to  operate  in  Vietnam  as  a 
100% European Community-owned enterprise in 2006, subject to the conditions provided for 
in  the  WTO  Arrangement  initialled  by  Vietnam  and  the  European  Community  on  the  9th 
October 2004; 

- Reduce the list of prohibited molecules to 5-7 molecules no later than December 2004, and 
abolish this list for the European Community no later than 31st December 2005. 

ARTICLE 5 

The European Community may reapply the textile and clothing quotas at the level of the total 
quantity of the textile and clothing quotas accorded by the European Community to Vietnam 
in  2004,  increased  by  the  annual  growth  rates  provided  for  in  the  Agreement  on  trade  in 
textiles  and  clothing  and  other  market  opening  measures  initialled  in  Hanoi  on  the  15th 
February  2003,  in  the  event  that  Vietnam  fails  to  fulfil  any  of  the  obligations  contained  in 
Articles 2, 3 and 4 of this Agreement or in paragraph 9 of the 2003 Agreement cited above. 

In the event that the European Community fails to fulfil its obligations under Article 1 of this 
Agreement  or  in  paragraph  9  of  the  Agreement  on  trade  in  textiles  and  clothing  and  other 
market  opening  measures  initialled  in  Hanoi  on  the  15th  February  2003,  Vietnam  may 
suspend the application of its commitments under Articles 2, 3 and 4 of this Agreement. 

ARTICLE 6 

This  Agreement  shall  enter  into  force  upon  the  exchange  of  written  notifications  by  the 
Parties of the completion of their respective internal procedures for that purpose. 

Either  Party  may  at  any  time  propose  modifications  to  this  Agreement  or  denounce  it, 
provided  that  at  least  six  months’  notice  is  given.  In  the  event  of  denouncement,  the 
Agreement shall come to an end on the expiry of the period of notice. 

This Agreement will expire upon the date of accession of Vietnam to the WTO. 

The  Parties  shall  endeavour  to  complete  their  respective  internal  procedures  with  a  view  of 
implementing this Agreement by the 31st December 2004. 

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ARTICLE 7 

This  Agreement  shall  be  drawn  up  in  duplicate  in  the  Danish,  Dutch,  English,  Finnish, 
French, German, Greek, Italian, Portuguese, Spanish, Swedish, Czech, Estonian, Hungarian, 
Latvian,  Lithuanian,  Maltese,  Polish,  Slovakian,  Slovenian  and  Vietnamese  languages,  each 
of these being equally authentic.  

Done at Hanoi, the 3rd December 2004. 

For the Government of the 
Socialist Republic of Vietnam  

For the European Community 

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