Vietnam has signed sixteen free trade agreements in three decades, more than any economy of comparable size, and the two that changed its exports most are the CPTPP, in force from January 2019, and the EVFTA with the European Union, in force from August 2020. They opened Canada, Mexico and the EU on preferential terms, forced a rewrite of Vietnamese labour and investment law, and helped pull exports past $400 billion. The catch is in the fine print: strict rules of origin, a fisheries yellow card, and the EU’s new carbon and deforestation regimes mean that only a fraction of eligible exports actually claim the tariff cuts, and the biggest market of all, the United States, is covered by no agreement whatsoever.
Vietnam’s trade agreements are the reason it could win the China Plus One race, and also the reason its win is less complete than the headline export numbers suggest. Between 1995 and 2025 the country went from a trade embargo to sixteen agreements covering some sixty economies, a network denser than that of any Southeast Asian neighbour except Singapore. This article examines how the two flagship deals, the CPTPP and the EVFTA, were negotiated, what they actually opened, which companies used them and which could not, and why the export boom they enabled now runs into environmental and origin rules that the treaties themselves helped create. It is part of the Vietnam Company Stories hub.
Why do the CPTPP and EVFTA matter more than the other fourteen deals?
Because they reached markets Vietnam had no other preferential access to, the EU and North America outside the United States, and because they bound Vietnam to labour, state-enterprise and investment disciplines that the ASEAN-centred deals never required.
How much of Vietnam’s exports actually use the preferences?
Roughly a third of exports to the EU claim EVFTA tariff cuts, according to certificate-of-origin data, and the CPTPP share is far lower because Japan and others were already covered by older deals. Rules of origin, particularly for textiles, are the main constraint.
What is the strategic lesson?
A trade agreement is a licence to compete, not a guarantee. The Vietnamese firms that captured the gains were those that reorganised sourcing to meet origin rules; the ones that did not still pay full tariffs while their competitors in Bangladesh or Turkey do not.
Why did Vietnam sign so many trade agreements in the first place?
Because it had nothing to lose and everything to catch up on. Emerging from a US embargo in 1994 with an economy smaller than Slovakia’s, Vietnam treated market access as the scarcest resource it had, and used each agreement to lock in domestic reforms that would otherwise have been politically difficult.
The sequence was deliberate. ASEAN membership in 1995 and the ASEAN Free Trade Area came first, followed by the bilateral trade agreement with the United States in 2001, which for the first time gave Vietnamese garments and footwear normal tariff treatment in the American market and set off the first great export surge. WTO accession in January 2007 forced a general overhaul of trade law. The ASEAN-plus agreements with China, Korea, Japan, India, Australia and New Zealand followed through the 2000s and early 2010s, each one incremental.
What changed in the mid-2010s was ambition. Vietnam negotiated the original Trans-Pacific Partnership as the poorest member by a wide margin, and simultaneously concluded talks with the EU in December 2015. Both were “new-generation” agreements covering labour rights, state-owned enterprises, government procurement and intellectual property, disciplines that a one-party state with a large state sector might have been expected to resist. Hanoi accepted them because the leadership calculated that being the only low-cost manufacturer inside both clubs was worth the domestic adjustment.
The calculation was vindicated by events it did not foresee. When the United States withdrew from the TPP in January 2017, Vietnam stayed in the successor CPTPP, and when the US-China tariff war began in 2018, the country found itself with preferential access to Japan, Canada, Mexico and soon the EU at exactly the moment multinationals were looking for a place outside China to ship from. The relocation wave described in the China Plus One story was built on that foundation.
What did the CPTPP change for Vietnam when it came into force in January 2019?
It gave Vietnam preferential access to Canada, Mexico and Peru for the first time, tightened the rules for Japan, and, less visibly, committed the country to labour and state-enterprise reforms. The tariff gains were real but concentrated; the institutional commitments were broader than most observers noticed.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was signed in Santiago in March 2018 and entered into force for Vietnam on 14 January 2019, after the National Assembly ratified it in November 2018 as the seventh member to do so. Of the other ten members, Vietnam already had agreements with Japan, Australia, New Zealand, Singapore, Malaysia, Brunei and Chile. The genuinely new markets were Canada, Mexico and Peru, and it is there that the trade numbers moved: exports to Canada roughly doubled between 2018 and 2024 to something over $6 billion, and exports to Mexico grew at a similar pace, according to Vietnamese customs data. The United Kingdom’s accession, in force from December 2024, added a market already covered by the bilateral UKVFTA.
The deeper changes were legal. To comply with the CPTPP labour chapter Vietnam ratified ILO Convention 98 on collective bargaining in 2019 and Convention 105 on forced labour in 2020, and passed a new Labour Code in November 2019 that, for the first time, permitted worker representative organisations at enterprise level outside the official trade union federation. Implementation has been slow and the freedom-of-association convention, number 87, remained unratified as of mid-2026. But the legal architecture exists because of the agreement.
The disappointment was preference utilisation. Ministry of Industry and Trade data through 2023 and 2024 showed only a low single-digit percentage of exports to CPTPP markets claiming the agreement’s tariff rates, partly because exporters to Japan continued to use the older, more familiar bilateral deal, and partly because the CPTPP’s “yarn-forward” rule for textiles, requiring yarn as well as fabric to originate in a member country, excluded most Vietnamese garments, which are sewn from Chinese fabric. The agreement rewarded the electronics and footwear sectors that could meet the rules and bypassed the one sector that lobbied hardest for it.
How was the EVFTA negotiated, and what did the EU actually give?
The EVFTA took eight years from launch to entry into force and gave Vietnam the most generous tariff schedule the EU had ever offered a developing country: 71 percent of tariff lines to zero on 1 August 2020, and roughly 99 percent within seven years. Vietnam’s own liberalisation runs over ten.
Negotiations began in June 2012 and were concluded in December 2015, but the agreement then spent four years in legal review and political limbo. The European Court of Justice ruled in 2017 that investment protection provisions required ratification by every member state, so the deal was split into a trade agreement the EU could approve centrally and a separate investment protection agreement, the EVIPA, which still awaited ratification by several member states in 2026. The trade agreement was signed in Hanoi on 30 June 2019, approved by the European Parliament in February 2020 by 401 votes to 192 after a contentious debate on human rights, and ratified by Vietnam’s National Assembly that June.
The commercial terms favoured Vietnam by design, reflecting the development gap between the parties. Footwear, the single largest Vietnamese export to Europe, saw duties of up to 17 percent phased out; seafood, coffee, rice within a 80,000-tonne quota, furniture and most electronics went to zero immediately or within three years. The EU gained tariff-free access for cars after ten years, for pharmaceuticals, wine, spirits and machinery on shorter schedules, and a chapter on government procurement that for the first time opened Vietnamese central-government tenders to European bidders. Vietnam also agreed to protect 169 European geographical indications, from Champagne to Parma ham, and the EU recognised 39 Vietnamese ones including Phú Quốc fish sauce.
The numbers since have been strong but not spectacular. Two-way trade rose from roughly $49 billion in 2019 to something over $65 billion in 2024, with Vietnam running a surplus of around $35 billion, and Vietnam became the EU’s largest trading partner in ASEAN after Singapore. The pandemic, the European energy shock of 2022 and weak consumer demand in 2023 flattened the curve; the recovery in 2024 and 2025 was led by electronics, machinery and, notably, coffee, where the price spike described in the robusta story lifted the value of an already tariff-free product.
Why do so few Vietnamese exporters actually claim the tariff cuts?
Because rules of origin are hard to meet when your inputs come from China. An EVFTA preference requires the product to be made in Vietnam from Vietnamese or EU materials, or transformed enough to change its tariff classification, and much of Vietnam’s manufacturing does neither.
The textile rule illustrates the problem exactly. The EVFTA applies a “fabric-forward” rule, less strict than the CPTPP’s yarn-forward but still requiring the fabric to be woven or knitted in Vietnam or the EU. Vietnam imports roughly 60 to 70 percent of its fabric, most of it from China, and its own weaving and dyeing capacity has lagged because provinces have refused the wastewater-heavy investment. The agreement offered a workaround, allowing fabric from South Korea, which also has an EU FTA, to count, but Korean fabric is costlier than Chinese. The result, according to the Vietnam Textile and Apparel Association, is that a large share of garment exports to Europe continued to pay the full duty five years after the deal took effect. The structural weakness of the sector is examined in the garment industry profile.
Preference utilisation across all exports to the EU has climbed slowly, from around 15 percent in the first year to roughly a third by 2023 and 2024, measured by the value of shipments accompanied by an EUR.1 certificate or a registered-exporter declaration. The high performers are the sectors with naturally Vietnamese content: seafood, coffee, cashews, rice, furniture from certified timber, and footwear, where the leather or synthetic upper can be cut and assembled locally. The low performers are electronics and machinery, whose MFN tariffs into the EU were already near zero, so there is little to claim, and garments, where the tariff saving is large but the origin rule is unreachable.
There is also a capability gap. Self-certification under the EU’s REX system requires exporters to maintain origin documentation that would survive an audit, and many small and medium Vietnamese firms, selling through foreign buying agents, never see the paperwork and never learn what they are entitled to. The Ministry of Industry and Trade’s own surveys found in 2023 that a majority of SMEs could not name the specific tariff line or origin rule for their main product.
What happened when the EU’s fisheries yellow card hit Vietnamese seafood?
The European Commission issued Vietnam a “yellow card” for illegal, unreported and unregulated fishing in October 2017, and it was still in place when the EVFTA entered into force and, as of mid-2026, had not been lifted. It has cost the seafood sector market share it was supposed to gain from the agreement.
The card is a warning under the EU’s IUU regulation, triggered by Vietnamese vessels caught fishing illegally in Pacific island waters and by weak monitoring at home. It does not ban imports, but it subjects every consignment of wild-caught seafood to full document checks at the EU border, adding days and cost, and it hangs the threat of a red card, a full import ban, over the industry. Vietnam’s wild-caught exports to the EU fell after 2017 and have never recovered their previous share, even as farmed shrimp and pangasius, which are outside the regulation, grew.
Hanoi has treated the card as a national priority, installing vessel-monitoring systems on the offshore fleet, criminalising illegal fishing in 2024 and receiving Commission inspection teams in 2018, 2019, 2022, 2023 and 2024. Each inspection found progress and residual gaps, particularly in tracing catch from small vessels and in enforcement at the provincial level. The government’s target of lifting the card by the end of 2025 slipped again. The commercial stakes for the processors profiled in the shrimp and seafood story are significant, but the deeper cost is reputational: a yellow card is a signal to every EU retailer that Vietnamese origin documentation may not be trustworthy.
The episode is a preview of what the next decade of European trade will look like. The tariff schedule of the EVFTA was the easy part. The hard part is the growing list of EU regulations that condition market access on how a product was made, and the fisheries regulation was merely the first of them to bite.
How do CBAM and the deforestation regulation change the value of the EVFTA?
They convert some of the tariff cuts back into costs. The EU’s carbon border adjustment mechanism began charging on steel, aluminium, cement and fertiliser imports from January 2026, and the deforestation regulation will require proof that coffee, rubber, wood and other commodities come from land not cleared after 2020.
CBAM is the more immediate. After a transitional reporting period from October 2023, importers of covered goods must from 2026 buy certificates matching the embedded carbon emissions of what they bring in, priced at the EU carbon market rate. For Vietnamese steel, where the largest producer runs coal-fired blast furnaces, the charge could be significant relative to the product’s margin, and the tariff-free access secured by the EVFTA becomes worth correspondingly less. Hoa Phat, Vietnam’s dominant steelmaker, has publicly discussed the exposure and the cost of lower-carbon routes; the aluminium and fertiliser sectors face the same arithmetic on a smaller scale.
The EU Deforestation Regulation, or EUDR, is more sweeping in scope if slower in arrival. It covers coffee, cocoa, rubber, palm oil, soy, cattle and wood, and requires the importer to geolocate every plot where the commodity was grown and prove it was not deforested after December 2020. Vietnam is the world’s second-largest coffee exporter and a top-three exporter of rubber and wood products, and the EU is a major market for all three. After lobbying from producer countries and European industry, the Commission delayed application to December 2025 and then, in late 2025, agreed a further one-year delay for large companies. Vietnamese coffee cooperatives and the ministry of agriculture spent 2024 and 2025 building plot-level databases in the Central Highlands in anticipation.
Neither regulation is discriminatory, in the sense that they apply equally to all origins. But they shift the advantage inside Vietnam from the cheapest producer to the best-documented one, and they hand a new source of leverage to the European buyer, who can now demand data as a condition of the order.
What does RCEP add, and does it undercut the other two deals?
RCEP, in force from January 2022, gives Vietnam almost no new tariff cuts, because it already had agreements with all fourteen other members. Its value is a single set of origin rules across Asia, which makes Chinese inputs easier to use, and that partly works against the diversification the CPTPP and EVFTA were meant to achieve.
The Regional Comprehensive Economic Partnership brings together ASEAN, China, Japan, Korea, Australia and New Zealand, and for Vietnam its main innovation is cumulation: a component from China or Korea counts as originating when the finished product is exported to Japan or Australia under RCEP. That is useful for the electronics assemblers who dominate Vietnamese exports and whose supply chains run across exactly those borders. It is also, however, a formal recognition that Vietnam’s manufacturing is a node in a China-centred network rather than an alternative to it.
The tension between the agreements is real. The CPTPP’s strict origin rules and the EVFTA’s fabric-forward rule push Vietnamese firms to localise inputs or source from members; RCEP rewards them for doing the opposite. Vietnam’s trade deficit with China, which exceeded $80 billion in 2024 by Vietnamese customs figures, grew after RCEP took effect. The Chinese-content question and its consequences for US tariff treatment are the subject of the transshipment story.
Hanoi’s position is that the agreements are complementary, and in a narrow sense that is true: a Vietnamese exporter can choose whichever agreement gives the best terms for a given shipment. But the choice, product by product, reveals which agreement a firm’s supply chain was actually built for, and for most of the electronics sector the answer is RCEP.
What do sixteen trade deals mean for founders, investors and operators?
That market access is no longer Vietnam’s constraint; capability is. A company operating in Vietnam has preferential entry to Japan, Korea, the EU, the UK, Canada, Australia and most of Asia, but capturing it requires investment in origin compliance, traceability and, increasingly, environmental data that most local firms have not yet made.
For manufacturers, the practical test is a bill of materials. Map every input to its origin and check it against the product-specific rule of the agreement covering each target market. Where the rule fails, the options are to localise the input, switch to a supplier in a member country, or accept the MFN tariff and compete on price. Firms that did this work between 2019 and 2022 are now the preferred suppliers of European and Japanese buyers; those that did not are competing with Bangladesh on cost, which is a losing position.
For investors, the agreements are a screen. A Vietnamese exporter that can show its preference utilisation rate, its REX registration and, for agricultural goods, its plot-level traceability, has demonstrated an operating discipline that correlates with quality elsewhere in the business. One that cannot is exposed to a tariff it does not know it is paying and to a regulatory change it has not prepared for. The gap between the two is a due-diligence question that takes an afternoon to ask.
For founders in services, the agreements are more relevant than they look. The EVFTA and CPTPP contain commitments on cross-border services, data and investment that have been the basis for opening sectors from logistics to education, and the government procurement chapter of the EVFTA gives European-invested firms a right to bid for state contracts that domestic rivals sometimes forget exists. The outbound expansion of Vietnamese companies described in the going-global story has also been eased, at the margin, by the investment protections the same deals extend in reverse.
The overarching lesson is that Vietnam’s trade strategy has delivered an asset that most of its own companies underuse. The agreements exist; the exports flow; the preference goes unclaimed. That is an inefficiency, and inefficiencies are where the returns are.
Frequently Asked Questions
How many free trade agreements does Vietnam have?
Sixteen were in force as of mid-2026, including the ASEAN agreements, bilateral deals with Japan, Korea, Chile, the UK, Israel and the Eurasian Economic Union, and the CPTPP, EVFTA and RCEP. A comprehensive economic partnership with the United Arab Emirates, signed in October 2024, and a deal with EFTA were at various stages of ratification. None of the agreements covers the United States, which remains Vietnam’s largest export market.
When did the EVFTA enter into force and what does it cover?
On 1 August 2020. It eliminates roughly 99 percent of tariffs between Vietnam and the EU over a period of up to ten years, with the EU removing 71 percent of duties immediately and Vietnam 65 percent. It also covers services, investment liberalisation, government procurement, intellectual property including geographical indications, and a sustainable-development chapter with labour and environmental commitments.
Why is Vietnam’s CPTPP preference utilisation so low?
Mainly because most CPTPP members were already covered by older Vietnamese trade agreements that exporters continue to use, and because the CPTPP’s yarn-forward rule of origin excludes garments sewn from Chinese fabric. The tariff gains were concentrated in Canada, Mexico and Peru, where Vietnamese exports have grown fast but from a small base.
Has the EU lifted Vietnam’s IUU yellow card?
Not as of mid-2026. The warning issued in October 2017 remained in place after multiple Commission inspections found progress but continuing gaps in vessel monitoring and catch traceability. Vietnam has repeatedly set targets to have the card lifted and has strengthened enforcement, but the decision rests with the European Commission.
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