The Free Trade Agreement between the European Union and Vietnam, or EVFTA, has been recognized by international organizations such as the Organisation for Economic Cooperation and Development (OECD), the World Bank, and the World Economic Forum (WEF) as a key case study in shaping strategies for developing countries, particularly those in ASEAN, in an era when the EU emphasizes quality, labor standards, and environmentally responsible production.<\/p>\n\n\n\n
EVFTA has enabled Vietnam to gain preferential access to the EU market, with tariff reductions or exemptions covering up to 99% of its exports. This has driven Vietnam to undertake serious labor law reforms, such as recognizing workers\u2019 rights to unionize, protecting vulnerable labor groups, and raising occupational safety standards. According to the OECD, these changes foster long-term investment attractiveness and lay the foundation for sustainable global supply chains trusted by international markets.<\/p>\n\n\n\n
The World Bank highlights that increased FDI from the EU has fueled continuous growth in Vietnam\u2019s key industries, including textiles, electronics, and seafood. By advancing policies that integrate its economy into global value chains while opening opportunities for broad-based participation, the Vietnamese government has contributed to income distribution and expanded new opportunities for small enterprises.<\/p>\n\n\n\n
Another key strength lies in Vietnam\u2019s use of EVFTA as a tool to foster qualitative growth of its small and medium-sized enterprises (SMEs). The WEF has recognized Vietnam as an \u201cSMEs Friendly Country\u201d due to its ongoing initiatives, such as holding regular consultations with businesses, facilitating adaptation to standards like the EU\u2019s Carbon Border Adjustment Mechanism (CBAM), offering training programs, and establishing support funds for transitioning toward low-carbon business models. These measures are set to enable Vietnam\u2019s smaller industries to keep pace with global trade trends between 2025 and 2030.<\/p>\n\n\n\n
EVFTA focuses not only on \u201cpolicy dimension\u201d but also on building systems for greenhouse gas emission monitoring and third-party verification processes. These ensure that Vietnamese exports comply with rules of origin requirements throughout the entire supply chain\u2014from upstream to downstream. This approach not only reduces hidden costs such as default values under CBAM but also allows Vietnamese businesses to verify emission reductions at every stage transparently, while enhancing their reputation among EU buyers.<\/p>\n\n\n\n
Vietnam is also accelerating investments in technology for production processes and value chain development in line with EU regulations. This is evident in state\u2013business cooperation that supports enterprises in adopting advanced technologies such as automation, traceability systems, and digitalization, thus improving greenhouse gas data management and supply chain transparency.<\/p>\n\n\n\n
Another dimension of Vietnam\u2019s strategy reflects the growing importance of \u201cdata management.\u201d Having transparent supply chains supports CBAM compliance and meets global standards, enabling both large corporations and small enterprises to compete and upgrade their products for the EU market without facing restrictive trade barriers. To achieve this, Vietnam has also established FTA information centers and support hubs across the regions to help businesses adapt to changes.<\/p>\n\n\n\n
By comparison, Thailand\u2019s FTA negotiations with the EU may require a mindset shift\u2014from seeing the agreement primarily as a \u201cmarket-opening tool\u201d toward treating it as a \u201cmechanism to upgrade the entire economic system.\u201d Thailand should pursue reforms in labor and environmental legislation to align with EU standards while safeguarding national interests. This includes establishing transparent supply chain auditing systems, third-party certifications, and greenhouse gas management systems across all production stages. At the same time, support for target industries, development of SME-related technologies, and the establishment of FTA information centers and SME communication platforms will be key to ensuring readiness for new EU measures.<\/p>\n\n\n\n
Thailand\u2019s path to achieving success comparable to Vietnam\u2019s involves more than technical adjustments; it requires a paradigm shift. The country must foster a business culture based on sustainability and transparency, with a clear vision of becoming a \u201ckey player\u201d in the EU market rather than simply trying to catch up with competitors. Progress will depend on collaboration among the government, businesses, and the public\u2014from legislative reforms on labor and the environment to carbon monitoring systems and accessible FTA information infrastructures.<\/p>\n\n\n\n
Moreover, Thai SMEs should receive targeted support in areas such as CBAM training, greenhouse gas certification, and production cost adaptation to remain globally competitive. A comprehensive system of public engagement, communication, and ongoing consultation with businesses must be established. If Thailand can successfully transform its economy and implement genuine reforms as demonstrated in this case study, it will be able to create new opportunities, strengthen its negotiating position with the EU, and ultimately conclude an FTA agreement.<\/p>\n\n\n\n
Author:
Ms. Warunya Yossai
Senior Researcher
International Institute for Trade and Development (Public Organization)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section\/World Beat
Volume: 38 Issue: 12971
Date: Wednesday, Aug. 20, 2025
Page: 8 (bottom)
Column: \u201cAsean Insight\u201d<\/p>\n","protected":false},"author":501,"featured_media":109486,"template":"","categories":[35,29],"tags":[352,583,1236,1237,967,770],"class_list":["post-109485","itd-data-center","type-itd-data-center","status-publish","has-post-thumbnail","hentry","category-article-en","category-data-center-en","tag-asean-en","tag-eu","tag-evfta-en","tag-fta-4","tag-smes-2","tag-vietnam-en"],"pp_force_visibility":null,"pp_subpost_visibility":null,"pp_inherited_force_visibility":null,"pp_inherited_subpost_visibility":null,"yoast_head":"\n