Vietnam and the United Arab Emirates Sign Comprehensive Economic Partnership Agreement to Boost Trade to US$10 Billion
Vietnam and the United Arab Emirates (UAE) entered a new economic relationship phase by signing a Comprehensive Economic Partnership Agreement (CEPA) on October 28, 2024, in Dubai.
The agreement was signed by Vietnamese Prime Minister Pham Minh Chinh, UAE Vice President, and Prime Minister Sheikh Mohammed bin Rashid Al Maktoum, marking a historic milestone as Vietnam's first free trade agreement with an Arab country. The deal is expected to boost bilateral trade to US$10 billion and broaden cooperation in multiple strategic sectors.
The agreement comes after over a year of intense negotiations, showcasing the determination of both nations to deepen their economic and trade partnership. Under CEPA, Vietnam and the UAE have committed to creating significant business and investment opportunities while supporting each country’s growth objectives.
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CEPA's Benefits for Vietnam and the UAE
One of the most significant outcomes of the agreement is the UAE’s commitment to gradually remove tariffs on 99% of Vietnamese products, which will pave the way for increased exports of key Vietnamese goods. This includes consumer goods such as textiles, footwear, and electronics, as well as fisheries and wooden products.
Vietnam’s Minister of Industry and Trade, Nguyen Hong Dien, emphasized that Vietnam’s export sectors will benefit directly from the tariff reductions, enhancing the competitiveness of Vietnamese products in the UAE and the broader Middle Eastern market.
Additionally, Vietnam’s agricultural sector is expected to experience a positive impact. Agricultural products such as cashew nuts, pepper, and honey—known for their high quality and halal certification—are expected to gain wider market access in the UAE. The strong demand for clean, organic products in the Middle East presents a major opportunity for Vietnamese farmers and producers to showcase their goods.
On the other hand, Vietnam has agreed to gradually eliminate tariffs on 98.5% of UAE exports, which aims to further strengthen the flow of bilateral trade. The agreement also extends beyond trade in goods, covering key commitments such as opening service markets, ensuring transparency in government procurement, and promoting digital transformation and sustainable green development.
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Encouraging UAE Investment in Vietnam’s Key Sectors
Moreover, the CEPA is anticipated to attract increased UAE investments in Vietnam, particularly in strategic sectors such as manufacturing, high-tech agriculture, and infrastructure.
With its rapidly growing economy, Vietnam is seen as a potential market for Middle Eastern investors seeking opportunities outside their region. Such investments will likely reinforce Vietnam’s position as a manufacturing hub in Southeast Asia.
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Moving Towards a Comprehensive Partnership
During Prime Minister Pham Minh Chinh’s visit to the UAE, he and UAE President Mohammed bin Zayed Al Nahyan agreed to elevate bilateral relations to a Comprehensive Partnership.
This upgrade signifies a recognition of the importance of the economic and political ties between the two nations and underscores their commitment to expanding cooperation in areas such as digitalization, green energy transition, innovation, tourism, and culture.
Both leaders also agreed to enhance dialogue at multilateral levels, supporting one another in various international forums and encouraging exchanges across all levels to ensure the effective implementation of the CEPA. This is expected to accelerate the growth of bilateral trade beyond the US$10 billion target soon
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Strengthening Vietnam-UAE Trade Relations
Diplomatic relations between Vietnam and the UAE were established in 1993. Since then, the UAE has become an important partner for Vietnam in West Asia. Currently, the UAE is Vietnam’s largest export market in the region and its second-largest trade partner after Kuwait.
In 2023, bilateral trade between the two countries reached nearly US$4.7 billion, marking a 6% increase from the previous year. This upward trend has continued into 2024, with bilateral trade in the first eight months of the year already totaling almost US$4.5 billion. Vietnamese exports accounted for US$3.85 billion, representing a 45% increase compared to the same period the previous year.
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Future Potential
With the signing of the CEPA, both Vietnam and the UAE stand to gain substantial opportunities on the global stage. Vietnam, with its strong production base and commitment to sustainable development, and the UAE, as a major trade and investment hub in the Middle East, complement each other in leveraging existing economic potential.
Beyond boosting trade in goods and services, the agreement also opens avenues for the two countries to collaborate on global issues such as green transformation, digital economy, and food security.
With effective implementation and strong commitment from both sides, this agreement is expected to bring significant benefits to both nations and bolster their standing in global trade.
