Beyond Cost 2024

The EU-Viet Nam Free Trade Agreement (EVFTA) is a comprehensive trade deal that eliminates tariffs on nearly all goods between the European Union and Viet NamPUBLIC SECTOR INTERVENTION 7 EU-Viet Nam Free Trade Agreement PUBLIC-PRIVATE PARTNERSHIP 6 Production Linked Incentive Scheme, India Emerging in 2020 as an inter-agency effort by the Indian Government to provide industry incentives for sales from domestically manufactured products, the Production Linked Incentive (PLI) Scheme has aided in providing India with a more stable and investment-friendly trade manufacturing environment. Guaranteed financial incentives based on in-country manufacturing production volumes represent a major component of the PLI. For example, the programme pledges up to 6% incentives on incremental sales of manufacturing goods over a five-year time horizon. This has spurred companies like Apple and its suppliers, including Foxconn, to work closely with the Indian government to increase in-country operations and expand product assembly portfolios. As a result, a greater reliance on domestic sourcing components has taken hold, reducing imports and benefiting the country’s manufacturing capabilities. Source: World Economic Forum. (2023). World Economic Forum and ISSB Partner to Compile Learnings on Early Sustainability Reporting Effect; The National Law Review. (2024). ISSB Takes The Lead on Global Sustainability Disclosure Standards – Will The U.S. Follow?. Impact Financial Regulatory Operational Strategic Vietnamese exports to the EU have grown by 50% since the agreement, with a focus on key sectors like apparel, food and beverages, and textiles. Consequently, the EU has risen to the top of the list of contributors to Vietnamese FDI, particularly in high- technology sectors.The EVFTA has eliminated 99% of customs duties between Viet Nam and the EU – however, strict regulation on rules of origin have been put in place to aid a reduction in tariffs, including geographical indications across the food and beverage industry.The EVFTA seeks to reduce customs procedures and should allow for ease of business. However, supply chain visibility is crucial to meet origin requirements, as numerous materials originate from non-EU partners, which would limit tariff benefits.The EVFTA benefits both the EU, by allowing for greater value chain diversification as Viet Nam takes on a greater manufacturing role, and Viet Nam, which benefits from EU investment in renewable energy industries, helping both parties meet their energy transition goals. Source: VCI Legal. (n.d.). The EU-Vietnam Free Trade Agreement (EVFTA); Vietnam Briefing. (2024). The EU-Vietnam Free Trade Agreement: Key Provisions and Implications for FDI. Beyond Cost: Country Readiness for the Future of Manufacturing and Supply Chains 21