Highlight 30/2026: The EU–Vietnam Free Trade Agreement: Beyond commercial ties
Anh Thuy Phan, 20 October 2026
The EU–Vietnam Free Trade Agreement (EVFTA), which entered into force on 1 August 2020, is one of the European Union’s most significant economic agreements in Southeast Asia. It removes or reduces more than 99% of tariffs and gradually opens markets for European and Vietnamese goods, services and investment. The agreement also includes provisions on labour rights, environmental protection, intellectual-property protection and regulatory transparency.
For Vietnam, the EVFTA offers preferential access to the European single market, one of the world’s largest and wealthiest markets. The agreement also helps Vietnam diversify its economic partnerships and avoid becoming overly dependent on China or the USA. In this respect, the EVFTA strengthens Vietnam’s strategy of maintaining balanced relations with major powers while defending its economic autonomy.
Europe also benefits from this cooperation. European companies get better access to Vietnam’s rapidly growing market. Vietnam has become the EU’s most important trading partner in ASEAN in goods, and the agreement serves as a stepping stone for deeper European engagement with the wider region.
In addition, the significance of the EVFTA goes beyond trade. Economic interdependence creates channels for dialogue on climate change, human rights, sustainable development and regional security. The EU and Vietnam cooperate through political and human-rights dialogues, the Just Energy Transition Partnership, and initiatives addressing maritime security, crisis management and cybersecurity. The EVFTA’s sustainable-development provisions give the EU instruments to encourage higher labour and environmental standards, although their effectiveness depends on implementation and continued political engagement.
This cooperation is particularly important because the Indo-Pacific has become a theatre of increasingly complex competition between the United States and China. ASEAN countries seek to preserve strategic autonomy, avoid choosing sides and maintain an open regional order. Vietnam, because of its economic dynamism, strategic location and concerns regarding sovereignty in the South China Sea, is an especially important player. By working with Vietnam, the EU can support ASEAN centrality, freedom of navigation, international law and peaceful dispute settlement without automatically adopting a confrontational approach towards China.
Europe’s prosperity depends on secure sea lanes, stable supply chains, access to critical technologies and respect for international law. The war in Ukraine and tensions in the South and East China Seas have shown that economic interdependence cannot replace strategic preparedness. Nevertheless, the EU lacks “hard power”: credible military capabilities, maritime surveillance, cyber-defence, resilient supply chains and the ability to protect its citizens, infrastructure and commercial interests. This means that European values and economic interests are not backed by the capacity to act they are violated. As a (partial) substitute, the EU’s Indo-Pacific strategy therefore combines trade, climate cooperation, diplomacy and security.
The EVFTA is not only a commercial instrument. It is also part of a broader strategic partnership that allows the EU to contribute to a more balanced, resilient and rules-based Indo-Pacific while strengthening its own ability to act as a geopolitical power. However, Europe’s influence will remain limited as long as its economic and diplomatic ambitions are not matched by stronger military capabilities.
Anh Thuy Phan, Highlight 30/2026: The EU–Vietnam Free Trade Agreement: Beyond commercial ties, 20 October 2026, available at www.meig.ch
The views expressed in the MEIG Highlights are personal to the authors and neither reflect the positions of the MEIG Programme nor those of the University of Geneva