EU-Vietnam Free Trade Agreement: opportunities for the European Healthcare industry

The EU-Vietnam EVFTA Agreement

The EU-Vietnam Free Trade Agreement (EVFTA) is part of a broader strategy to promote trade with Asian countries. Negotiations started in June 2012 and concluded at the end of 2015. Since then, Europe and Vietnam¹ have been engaged to define all the details, taking into account the similar trade deal recently signed between the EU and Singapore.
Last February, the European Parliament voted for the EVFTA, while the European Council voted on March. On 8th June 2020, Vietnam in turn approved the Free Trade Agreement; confirmation of the date of entry into force, currently scheduled for 1 August 2020, is now awaited, but it may be brought forward.

Market accessibility: changes for EU businesses

The EVFTA is made up of 18 chapters, with the overall objective of encouraging mutual economic development through the trade liberalization and the removal of barriers. Like others recent trade deal signed by the EU, the agreement goes beyond purely trade and customs matters to regulate the legal framework of bilateral trade between countries and also includes provisions on regulation of the internal market, in order to facilitate competition, transparency and economic development.
The key points of the agreement are:

• Elimination or gradual reduction of tariff barriers for many products made in EU
• Reference to the WTO regulation about trade safeguard measures, according to which it is allowed to reactivate duty imposition if imports result in a threat for national industry
• Rules of Origin following the EU principles and the Generalized System of Preferences, in line with the EU-Singapore Free Trade Agreement
• Dismantling of non-tariff barriers, modernization and simplification of customs regulations, requirements, and procedures WTO standards for health measures
• Technical regulations, standards, and statements of compliance to avoid obstacles to trade
• Compliance to WIPO Treaties about the Internet and to the Hague Agreement on the protection of trademarks, licences, and industrial designs.
• Norms on specific industries: automotive, pharmaceutical, alcoholics
• Setting up of a permanent court for settlements of investment disputes
• Provisions on sustainable trade and development: standard ILO at work; obligation to comply with national rules on job; promotion of the social responsibility of companies; obligation to preserve and sustainably manage the biodiversity.

Opportunities for the Healthcare Sector

In the last decade the Vietnamese market followed a steep upward trend in demand of the Healthcare Industry: import of health products and equipment reached € 4.5 billions (compared to less than € 2 billions at the beginning of 2010). Furthermore, import in the High and medium/High segment is growing up: in 2019 Premium price import exceeded €1.3 billions (29% of overall imports), compared to €280 millions at the beginning of the decade (19% of overall import).

Elements of greater accessibility from the EVFTA Agreement

Following the entry into force of the agreement, Vietnam is going to eliminate duties on about 50% of EU export of health products, the rest will be progressively liberalised in 7 years. Furthermore, Vietnam will allow to the European pharmaceutical companies to implement direct investments in the country to directly import the products to be sold in Vietnam avoiding any distributor. Alternatively, the foreign companies will also be allowed to sell their products to distributors and wholesalers in Vietnam, preserving their right to carry out studies and clinical trials in the country.

With regard to the protection of intellectual property rights, the pharmaceutical industry is one of the major beneficiaries, achieving a better level of data protection, and the possibility of extending the duration of licences until 2 years in case of delay in the authorisation of the commercial procedure. The agreement engages the parties to protect information and data about clinical trials undertaken by the companies and required by the competent authorities. In particular, these data must not be used by the competitors, for not less than 5 years, to justify the request of trade of pharmaceutical products.

Vietnam will allow the European industry to participate, without any preference for national competitors, to public tenders of the several Departments and Agencies of the Ministry of health, local departments of Hanoi and Ho Chi Minh City, Vietnamese Academy of Science and Technology, University of Vietnam, and several hospitals throughout the country. The Agreement shall apply even if Vietnam will implement a centralised system for healthcare products' procurement in the future.

Specific requirements of market accessibility

The Ministry of Health is the administrative authority for medicines, cosmetics, medical equipment, vaccines and biological products for human use. Importers must register the products and obtain an import permit from that authority; vaccines and organic products for human use must also be registered. Foreign companies may apply for a registration of their products, but they must be authorised to conduct their business operations in order to conclude an import contract with a company in Vietnam.

• Registration of Medicines;
• Registration of Vaccines and Biological Products;
• Certificate for Business Operations with Vaccines and Biological Products;
• Import Permit for Medicines and Cosmetics;
• Certificate of Analysis;
• Free Sale certificate;
• Certificate of Good Manufacturing Practice.