Vietnam has signed a free trade agreement (FTA) with the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland, and Liechtenstein, after more than a decade of negotiations. The agreement will gradually reduce tariffs on most traded goods, while both sides have committed to expanding investments in advanced technology and industrial cooperation. However, meeting stringent technical and environmental standards poses a significant challenge for Vietnamese exporters.
According to Vietnamese economic media VnEconomy, the FTA was finalized on October 21, concluding 21 rounds of negotiations that spanned over ten years. The EFTA is an economic cooperation group comprising Switzerland, Norway, Iceland, and Liechtenstein, and the agreement includes provisions for tariff reductions as well as cooperation on technological innovation and sustainable development.
Both parties discussed practical implementation strategies for the agreement during the '2026 Vietnam-Switzerland Economic Forum' held on October 19. This event was organized to mark the 55th anniversary of diplomatic relations between Vietnam and Switzerland, focusing on expanding trade and investment cooperation following the FTA.
The core of the agreement is the gradual reduction of tariffs on most items. Both sides aim to establish a legal framework that allows businesses to trade securely and promotes investment in patents, advanced technologies, and high-value products.
Unlike previous agreements centered on market opening, this one also addresses climate change, green transition, and quality labor standards. The goal is to expand tariff benefits while establishing responsible production and trade systems in environmental and labor sectors.
Helene Budliger Artieda, the Swiss State Secretary for Economic Affairs (SECO), emphasized during the forum's opening that this agreement, finalized after 21 rounds of negotiations, marks the beginning of enhanced practical cooperation between the two sides. She explained that the agreement's value extends beyond mere market access improvements to support technological innovation and sustainable development.
Switzerland's approach to supporting Vietnam is also evolving. Since 1991, Switzerland has participated as a development cooperation partner, providing over $800 million in official development assistance (ODA). Recently, the focus has shifted from direct financial aid to strengthening technical capacities and improving institutional frameworks to support the self-reliance of Vietnamese private enterprises.
Philipp Rösler, former Vice Chancellor of Germany and chair of the Vietnam-Switzerland Economic Forum, highlighted that free trade and fair competition are key drivers of economic prosperity. He noted that despite advancements in technology and online services, direct interactions between businesses and individuals remain crucial, as these relationships can foster future trade and direct investments.
The Vietnamese government believes that the success of the FTA should be assessed based on actual business activities rather than just the scale of tariff reductions. Ngo Trung Khanh, Deputy Director of the Ministry of Industry and Trade's Department of Multilateral Trade, stated that the agreement's success should be evaluated through actual export contracts, technology transfer volumes, and improvements in worker incomes.
To achieve this, the Vietnamese government has identified three key challenges for businesses. First, even with tariff elimination, substantial export growth will be difficult if companies fail to meet technical regulations, food safety standards, and sustainability requirements. The EFTA market, while possessing high purchasing power, also imposes strict product standards. Vietnamese companies must verify origin regulations and carefully assess costs related to digital tracking systems and various certifications before exporting.
Attracting investment in advanced industries is also a major priority. Vietnam aims to move beyond simple machinery imports and contract processing to attract Swiss investments in precision machinery, pharmaceuticals, green energy, logistics, and digital technology to strengthen domestic production capabilities.
Additionally, the government plans to enhance administrative support to help companies effectively utilize tariff benefits. The Ministry of Industry and Trade is establishing an integrated management and implementation system centered around three frameworks: an 'FTA portal' providing relevant information and services, an 'FTA index' assessing local governments' implementation levels, and an 'FTA ecosystem' connecting businesses with relevant agencies.
While the agreement improves access for Vietnamese companies to the markets of the four European countries, tariff reductions alone do not guarantee increased exports. Strict technical and safety standards, as well as origin regulations, must be met for actual trade to occur. The support system being developed by the Vietnamese government is also focused on overcoming these barriers, meaning the effectiveness of the agreement will depend on companies' compliance capabilities and technology transfer outcomes.
* This article has been translated by AI.
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