Sources say this is the most ambitious and comprehensive FTA that the EU has ever concluded with a developing country, the second in the ASEAN region after Singapore.
The EU-Vietnam FTA will eliminate nearly all tariffs (over 99%), except for a small number of tariff lines for which the EU and Vietnam agreed on partial liberalisation through zero-duty Tariff Rate Quotas (TRQs).
Vietnam will also open its market for most EU food products, both primary and processed, allowing EU high quality exports to reach its growing middle class consumers. Vietnam is currently the EU’s 18th largest export market for dairy products.
Dairy products exported by the EU to Vietnam will be duty free after a maximum of 5 years.
The EU is the third largest exporter of dairy products to Vietnam by value with dairy exports in 2014 worth NZ$128 million. This follows US dairy exports to Vietnam at NZ$277 million and New Zealand dairy exports to Vietnam at NZ$264 million.
Vietnam is NZ’s 15th largest dairy market and 6th largest market for whole milk powder.
New Zealand has an agreement with Vietnam on dairy trade encompassed by the NZ-Australia-ASEAN FTA that was signed in 2009. New Zealand will benefit from the eventual elimination of tariffs on 99% of New Zealand's current exports to the four key ASEAN markets of Indonesia, Malaysia, the Philippines and Vietnam.
Tariffs on dairy products exported from NZ to Vietnam start to be removed in 2016 on whole and skim milk powder and butter fat. This is followed by removal of tariffs on butter, liquid milk and cream, cheese and whey, in 2017. Between 2018-2020 tariffs on ice-cream, dairy products (including casein and buttermilk), and butter oil will further be eliminated.
The standard tariff rate on milk powder imports range from 3-5%. By 2020 tariffs will be eliminated from all dairy exports to Vietnam for both EU product and New Zealand product which is likely to assist more product into that market.
