EVIPA : what does it plan?

The Investment Protection Agreement between the European Union and the Socialist Republic of Vietnam (EVIPA)) is the "little brother" of the Free Trade Agreement (EVFTA) that came into force on August 1st between these two territories. 

The content of this “little brother” is as important as EVFTA to develop trade between the EU and Vietnam. 

Indeed, with a growth rate above 6% for several years and a growing middle class, Vietnam is seen as a promising market for many foreign investors. EVIPA is part of this landscape and intends to help develop European investments in ASEAN, especially  in Vietnam.

Respect of certain fundamental rules

Designed on the model of the EU-Singapore agreement (ESIPA), EVIPA replaces the 20 existing bilateral investment agreements between Vietnam and 21 EU countries. This new agreement focuses on two main aspects.

The first aspect concerns the liberalization of non-direct investments. The second aspect establishes the procedure for settling disputes between investors on the one hand, and States on the other hand. 

EVIPA reforms and strengthens the protection of investments of both parties by ensuring a high level of security. The stipulations of the agreement guarantee the respect of certain fundamental rules in the treatment of European investments. 

Among these standards, it is possible to mention the principle of non-discrimination, the rejection of any expropriation without prompt and adequate compensation, the possibility to transfer and repatriate any funds relating to an investment or the commitment of  the parties to compensate all losses in certain circumstances linked to war or armed conflict. 

The respect of these standards will reinforce the choice of European investors for Vietnam, making it more attractive. 

Moreover, in order to settle disputes between an investor and a State, the EVIPA has created special jurisdictions whose composition and procedures are governed by the rules of transparency, independence and impartiality. 

These elements will make the Vietnamese market a land of confidence for European investment

A long process of entry into force

Nevertheless, these two sets of measures are not - or no longer - found in the EVFTA. Indeed, according to the European justice system, these two areas do not fall within the exclusive competence of the European Union, but rather within a competence shared with the Member States. In other words, the EU is not empowered to conclude, alone, international agreements on these matters. Thus, ratification by the 27 Member States is necessary for EVIPA to enter into force. 

If EVIPA was approved by the European Parliament on February 12th, 2020 and then ratified by the Vietnamese National Assembly on June 8th, 2020, the process of entry into force may still be long. 

The EVIPA will enter into force when national and - in certain cases - regional parliaments will ratify the agreement. 

By way of comparison, twenty-two months after the approval of ESIPA by European Parliament, only 6 Member States have notified the Council of the Union of the ratification of the agreement ... 

For EVIPA, only Hungary, Lithuania, Romania and Sweden have already ratified it. 

 

© Article written by the France-Vietnam Chamber of Commerce and Industry (CCIFV). Reproduction rights reserved.

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