HCMC - Vietnam and the European Union (EU) signed a much-awaited free trade deal and an investment protection pact at a ceremony held in Hanoi today, June 30.

Prime Minister Nguyen Xuan Phuc, his four deputies Pham Binh Minh, Truong Hoa Binh, Vu Duc Dam and Trinh Dinh Dung and other Government ministers witnessed the signing of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA).

Senior officials of the EU and foreign embassies also showed up at the significant signing ceremony, which is yet another milestone of Vietnam’s consistent path of integrating into the world economy.

The deals are highly expected to spur economic growth in Vietnam in the years to come as bilateral trade is poised to grow strongly thanks to massive tariff cuts.

In a statement issued earlier, the European Council described the EVFTA as the most ambitious FTA ever concluded with a developing country since it provides for the almost complete elimination of customs duties between the two sides.

Up to 65% of duties on EU exports to Vietnam will be eliminated as soon as the EVFTA takes effect while the remainder will be phased out over a period of up to 10 years. For Vietnamese exports to the EU, 71% of duties will be removed when the deal comes into force, the remainder being phased out over a period of up to 7 years.

Vietnam’s exports to the EU are entitled to more tariff cuts than EU exports to the country, so it takes the Southeast Asian country a shorter period of time to have the remaining duties lifted.

Commenting on this gap, the EU side said that this demonstrated the bloc’s support for a developing market like Vietnam.

The EVFTA, after being signed, will be sent to European Parliament for ratification and will come into force in 2020. Meanwhile, it will take IPA a longer time to be ratified by all members of the EU.

Vietnam, which has one of the region's fastest growing economies, backed by robust exports and foreign investments, has already signed about a dozen free trade pacts, including an 11-country deal that will slash tariffs across much of the Asia-Pacific, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The EU is Vietnam's second-largest export market after the United States, with main exports including garments and footwear.

Last year, Vietnam exported US$42.5 billion worth of goods and services to the EU, while the value of imports from the EU reached US$13.8 billion, official data shows.

The Vietnamese Government said that the EVFTA would boost EU exports to Vietnam by 15.28% and those from Vietnam to the EU by 20% by 2020.

To make the most of the free trade pact between Vietnam and the EU, domestic enterprises have been urged to make preparations now.