Members of Vietnam’s National Assembly on a working visit to Europe this week met with key decision-makers in Portugal. Here’s what they discussed and what trade looks like between Portugal and Vietnam.
The Vice Chairman of the National Assembly of Vietnam Tran Thanh Man and Portugal’s Secretary of State for Foreign Affairs and Cooperation Francisco Andre met in Lisbon this week to discuss trade and investment between the two nations.
This was part of a tour of Europe that also included a working visit with the European Parliament’s International Trade Committee in Brussels. As the European Union Vietnam Free Trade Agreeement (EVFTA) enters its fourth year in operation Vietnam and the bloc are increasingly drawing closer in matters of trade.
This has seen trade between the two trade partners boom, with countries like Portugal regularly reporting increased imports from Vietnam. In fact, according to data from Vietnam’s General Department of Customs, two-trade between Vietnam and Portugal reach US$623 million in 2022. Of that, imports from Portugal into Vietnam totaled US$93 million and exports to Portugal from Vietnam reached US$524 million. A trade surplus in Vietnam’s favor of US$431 million.
With this in mind, the Vietnam Briefing looks at how trade between these two nations is governed and what products they are trading most.
Trade rules and regulations: Vietnam and Portugal
With Portugal part of the European Union, trade between the country and Vietnam is governed by trade agreements negotiated and implemented by the EU as a whole. These include:
EU-Vietnam Free Trade Agreement (EVFTA)
The EVFTA is an ambitious pact set to eliminate almost 99 percent of customs duties between the EU and Vietnam. This agreement is expected to increase Vietnam’s GDP by 4.6 percent and its exports to the EU by 42.7 percent by 2025, according to the Ministry of Planning and Investment (MPI). The European Commission also forecast the EU’s GDP to increase by US$29.5 billion as a result of the agreement.
EU-Vietnam Investment Protection Agreement (EVIPA)
Currently in the works is the EVIPA. This agreement would help to protect European enterprises investing in Vietnam and vice-versa. However, the agreement still needs to be ratified by several European nations. With this in mind, during his visit to Portugal Tran took the opportunity to ask the President of the Assembly of Portugal, Augusto Santos Silva, to encourage other EU member states to ratify the agreement.
Vietnam’s exports to Portugal
Vietnam’s main exports to Portugal are telephones, mobile phones, and parts thereof; fishery products; and computers, electrical products, spare parts, and components thereof. Combined these three categories of goods are worth upwards of US$254 million.
Computers, electrical products, spare parts, and components thereof
Amidst US-China tensions and increased manufacturing costs in China, Vietnam, as a center for electronics manufacturing, has benefited greatly—expanding its role in regional and global value chains.
In fact, Vietnam has climbed the ranks as a key electronics exporter, from a modest 47th place in 2001 to 12th place in 2019. The country has, in particular, recorded success in the telecommunications segment. In 2022, it exported mobile phones to the tune of US$57.9 billion.
This has seen electronics manufactured in the burgeoning Southeast Asian nation shipped around the world including to Portugal.
Telephones, mobile phones, and parts thereof
Vietnam’s low cost of production has made it an attractive destination for electronic device manufacturing. This is particularly important in the mobile phone industry where operating margins and competitive pricing can be crucial.
As the Portuguese market for mobile phones continues to grow, there is a rising demand for high-quality and affordable devices. Vietnamese companies have recognized this trend and are exporting their products to Portugal, seizing the opportunity to expand their market reach and increase their profits.
Portugal’s exports to Vietnam
As one of the smaller countries in the European Union, Portugal’s exports to Vietnam have been limited. With just US$98 million worth of goods exported to Vietnam, the balance of trade, in terms of revenue, clearly favors Vietnam. That said, some Portuguese firms have found a market for their products in Vietnam.
Portugal’s exports to Vietnam 2022
The future of trade between Vietnam and Portugal
In 2022, two-way trade between Vietnam and Portugal reached US$524 million It was not, however, evenly distributed, with Vietnam recording a trade surplus of US$431 million.
Looking ahead, following the National Assembly working group’s trip to Portugal it is anticipated that trade and investment between these two nations will continue to strengthen. In light of this, Portuguese companies seeking assistance in entering the Vietnamese market are encouraged to reach out to the business advisory professionals at Dezan Shira and Associates.
Source: CCIPV / Dezan Shira and Associates.