VEFTA – a strategic piece in Viet Nam’s FTA network in Europe

VEFTA does not exist as a stand-alone agreement; it plays a strategically complementary role in Viet Nam’s FTA network in Europe, which has already been firmly built on the foundation of the EU–Viet Nam Free Trade Agreement (EVFTA). Although not members of the European Union (EU), the EFTA States maintain particularly close institutional and economic ties with the EU. Norway, Iceland and Liechtenstein have been members of the European Economic Area (EEA) since 1994, thereby participating deeply in the EU Single Market. Switzerland – the largest economy in EFTA – is linked to the EU through a series of bilateral agreements concluded since 1999.

These linkages generate a “standards convergence effect” that is highly meaningful for Vietnamese businesses. Entering the EFTA market does not mean that enterprises must “reinvent the wheel” and rebuild their entire compliance systems from scratch. On the contrary, companies that have already invested significantly to meet the technical standards, safety regulations and sustainability requirements under the EVFTA will possess a clear advantage when approaching EFTA. In practice, the Norwegian Food Safety Authority (Mattilsynet), in many of its regulations, also applies standards of the European Commission, such as Regulations (EC) No 853/2004 and (EC) No 852/2004.

Thus, VEFTA not only opens the door to a market of more than 13 million people in the EFTA States, but also allows Vietnamese enterprises to reuse, expand and optimise their existing compliance systems, shortening the time and reducing the cost required to penetrate premium segments.

A decisive moment

After 12 years of negotiations, the VEFTA process is entering a pivotal stage. On the EFTA side, at the ministerial meeting held in Norway, ministers expressed a clear determination to soon conclude the negotiations, thereby creating a “strong political basis” for the signing of the agreement. On the Vietnamese side, the Government has tasked the Ministry of Industry and Trade with developing a concrete plan to negotiate and sign the FTA already in 2025.

What is special about the current phase is the convergence of three factors: political will from the EFTA States; clear, resolute instructions from the Government of Viet Nam; and the launch of strategic technical assistance projects, including the Sub-project “Promoting Viet Nam – EFTA Trade Relations” implemented by the Foreign Trade University (FTU) with financial support from the Government of Switzerland. This combination indicates that 2025 is a decisive preparatory year, laying the foundation for the possibility of concluding negotiations in the near future.

Enterprises that wait until the agreement formally enters into force before starting their preparations will find it difficult to move ahead of the curve and fully capitalise on the preferences, particularly in market segments that demand high standards.

Decoding the opportunity: a market of value, standards and sustainability

In terms of population, the EFTA States have just over 13 million inhabitants. However, this is one of the wealthiest economic groupings in the world, with a combined GDP of more than USD 1.1 trillion, per capita income exceeding USD 58,000 and total merchandise trade of around USD 700 billion. A high degree of trade openness and strong purchasing power, together with new consumption trends, have created a “high-end playground” where the core value lies not in low prices, but in standards and sustainability.

Countries such as Switzerland and Norway consistently rank very high in the Human Development Index (HDI) and are among the global frontrunners in sustainable consumption. Consumers there have clearly shifted towards prioritising products with a well-articulated “story” of ethics, social responsibility and environmental stewardship. They pay particular attention to production processes, environmental impact, carbon footprint, the extent to which renewable energy is used, as well as the use of biodegradable and recyclable packaging. Price remains a factor in their consideration, but it is no longer the central criterion.

Against this backdrop, Vietnamese enterprises cannot compete in the EFTA market on the basis of low labour costs or large-scale production. The real opportunity lies instead in high value-added niche products, tailored for discerning customer segments, backed by carefully built brands and clear scientific evidence of sustainability. Businesses that are able to tell their own “sustainability story” convincingly, supported by certification systems and independent audits, will be those that gain the upper hand.

The “entry ticket” to a premium market: technical barriers and the competition on standards

Once VEFTA is signed and tariffs are gradually removed, competition among suppliers to the EFTA market will quickly shift from a “price race” to a “standards race”. The main barriers will no longer be tariff levels but technical barriers to trade (TBTs), laid out in detailed, transparent yet highly stringent regulations.

In the textile and footwear sector, the requirements imposed on enterprises go beyond the quality of the final product to encompass the entire supply chain – from raw materials, chemicals and wastewater treatment processes to working conditions. One of the central standards is OEKO-TEX®. Notably, the new OEKO-TEX® requirements for 2025 place a strong focus on the biodegradability of chemicals used in production. Surfactants, softeners, complexing agents and other relevant substances must be proven biodegradable, and such proof must be verified by the OEKO-TEX® institutes or an approved third party. The transition period for enterprises to comply is very short, after which non-compliant products will not be able to enter the market.

This challenge is supply-chain-wide in nature. A Vietnamese garment manufacturer may operate a “clean” production process at its own facility, but if its dyeing and finishing chemical suppliers do not comply with the OEKO-TEX® 2025 requirements, the entire consignment may be rejected. This compels companies to review their entire supplier network, not just the final stage of production.

In the wood sector, the core requirement is transparency of origin and sustainability of forests. EFTA markets, in line with European regulations, treat FSC® certification – particularly FSC® CoC (Chain of Custody) – as a near-mandatory condition. FSC® CoC is granted to organisations within the supply chain once the timber leaves the forest, ensuring that the final product genuinely originates from forests managed in a sustainable manner. The certificate is valid for five years and subject to annual surveillance audits. It not only serves as an “entry ticket” but also as a powerful marketing tool, strengthening EFTA consumers’ trust in a company’s sustainability commitments.

For food and seafood, food safety is one of the most stringent barriers. The EFTA market is considered to have extremely high food hygiene and safety standards. In Norway, the Norwegian Food Safety Authority (Mattilsynet) strictly supervises processing establishments, requiring them to comply with national legislation as well as with European Commission regulations such as (EC) No 853/2004 and (EC) No 852/2004. Facilities must rigorously apply the Hazard Analysis and Critical Control Point (HACCP) system and ensure comprehensive traceability. In this context, Vietnamese seafood companies that have successfully exported to the EU will enjoy a significant competitive advantage, as they can simply extend the scope of their existing quality management systems instead of establishing new ones from scratch.

From policy opportunity to enterprise capability: the earlier the preparation, the better

Once VEFTA is implemented, tariff advantages will be available in principle to all exporters that meet the rules of origin. At that point, differentiation will no longer stem from a zero-tariff rate, but from whether enterprises are ready to comply with technical standards. Those that have proactively invested to meet OEKO-TEX® 2025, FSC® CoC, HACCP under EC regulations and similar benchmarks will be able to capture market share from the outset, benefiting from a “first-mover advantage”. Conversely, companies that delay adjustments until after the agreement enters into force will find themselves in a situation where they enjoy tariff preferences on paper but lack the practical eligibility to export.

A feasible roadmap for Vietnamese enterprises should begin with a systematic internal assessment. The entire supply chain – from raw materials, chemicals and packaging to production processes, quality management and traceability – needs to be reviewed against the requirements of the EFTA markets. The key question is not only whether the final product meets the standards, but also whether each “link” in the value chain is already prepared.

Based on such an assessment, enterprises must be willing to invest in compliance capacity and technology: shifting towards greener chemicals and inputs in the textile sector, upgrading digital traceability systems in wood and seafood value chains, and training specialised staff on EFTA technical rules and standards. This is also an opportune moment to leverage FTA-driven opportunities on the import side, such as importing high-tech machinery and equipment from Norway and other EFTA countries to comprehensively upgrade production and management capacity.

Finally, enterprises should not “go it alone” in their journey towards the EFTA markets. Proactively participating in support ecosystems – such as the Sub-project “Promoting Viet Nam – EFTA Trade Relations” implemented by the Foreign Trade University, trade promotion programmes run by agencies such as ITPC, and other specialised advisory activities – will help significantly shorten the trial-and-error process. Becoming one of the enterprises receiving one-to-one consulting from experienced experts is a golden opportunity to design a market entry roadmap tailored to the company’s product profile and internal capabilities, while saving costs and time for market research.

Ultimately, VEFTA is not simply an agreement opening another “trade gateway”, but a test of Vietnamese enterprises’ ability to transform their competitive model – from competing on price to competing on value, standards and sustainability. Those who treat this as an impetus to restructure their supply chains, standardise governance systems and invest seriously in international benchmarks will be the ones who truly turn the EFTA “niche playground” into a strategic springboard in the global high-end market.

Việt Thành